According to the results of our recent survey on business and technology priorities in Japan, we are seeing a continued growth in IT investments in the country despite subdued economic forecasts for 2023. Our survey found that 41% of business and technology professionals at Japanese enterprises expect to increase their group or department’s tech spending by more than 5% in the next 12 months, up from the 32% who reported an increase in the prior 12 months. At Forrester, we predict that tech spending in Japan will see growth of 2.1% in 2023, following a 3.3% growth in 2022. This growth is driven by investments in software, including software as a service and custom software. A deeper dive into the survey results reveals that business and IT objectives in Japan are highly aligned, with a focus on reducing enterprise risk and strengthening resilience.
- Business priorities focus on growth, profitability, and governance. Japanese firms are facing a multifaceted set of challenges in today’s business environment, which is characterized by macroeconomic uncertainty, geopolitical tensions, and pandemic-related disruptions such as labor shortages. To navigate this landscape, businesses are focusing on three key priorities: growth, profitability, and governance. Revenue growth and cost reduction are top of mind for Japanese firms as they contend with rising costs and the risk of consumer backlash due to accelerating inflation. Governance, risk, and compliance (GRC) is also a major concern for Japanese businesses, with over half of surveyed professionals viewing it as a business priority. Specifically, 60% of respondents reported prioritizing the strengthening of regulatory compliance, 54% the strengthening of governance, and 53% the reduction of enterprise risk. To achieve these objectives, Japanese firms are investing in GRC solutions, enhancing employee health and safety and aligning company culture with compliance priorities.
- On the IT front, Japanese businesses are primarily focused on resilience and risk management. Reducing IT risk exposure and improving security and privacy are top IT objectives. The Toyota supplier cyberattack in February 2022 highlighted the vulnerability of firms that rely on lean inventory to such attacks. Additionally, 58% of Japanese business decision-makers at enterprises are prioritizing the move toward a digital business. Communication of the value of these IT priorities to employees can enhance cross-organization IT/business collaboration, increase business adaptivity, align tech strategy with business value priorities, and align IT performance with business outcome metrics.
- Technology priorities also focus on improving resilience. Forty-six percent of respondents indicated that implementing Zero Trust is a priority for their IT organization in the next 12 months, while many enterprises are also planning to prioritize hybrid multicloud strategies, use open source tools, and increase cloud-native development. This is necessary given the significant burden of aging systems and legacy technologies such as COBOL in Japan. It’s surprising, however, to see only 46% of Japanese business and tech pros reporting that their enterprise’s IT organization regards the upgrade, refresh, or consolidation of business apps, hardware, and software infrastructure as a priority for the next 12 months. This legacy infrastructure represents an existential risk for Japanese firms.
Forrester clients can read more details about the 2023 priorities for Japanese organizations in the report: Business And Technology Priorities In Japan, 2022.