Streamlining Fujitsu's Businesses Around the Globe

The 54-year-old IT industry veteran joined Fujitsu in Sydney in 2003 and turned around the company's struggling Australian operations. Nevertheless earlier this year, he was given a new role as president of Fujitsu's global business group. As the firm's only non-Japanese senior executive, he is charged with streamlining Fujitsu's fragmented overseas businesses and expanding its presence abroad.

Japan's largest information-innovation-services provider by revenue recorded a net profit of ¥55.09 billion and revenue of ¥4.528 trillion in the year ended March 2011. Its overseas business accounts for about a third of revenue.

NEC Corp., another major Japanese IT vendor, generated only 15% of its revenue outside Japan in the fiscal year ended March 31. As Japan's economic outlook remains uncertain, increasing overseas sales is a challenging but necessary task for many Japanese companies.

Mr. Vawdrey: The Australian unit was just breaking even when I took over as its CEO in 2003, and it now has a profit margin of more than 5%. Its revenue has tripled to about $1.2 billion.

The unit's business portfolio

We had to buy several companies to rapidly increase the unit's business portfolio. My strong philosophy in acquisitions is you should buy good companies, not distressed companies, even if they are cheap. Another thing is you should have your own business in good shape previously seeking acquisitions. Bad companies can't fix themselves by buying good companies.

Mr. Vawdrey: I always tell executives in Japan that our strength lies in having one Fujitsu around the world, instead of keeping overseas and domestic operations separate. More integration is necessary not just for cost efficiency, however also because our major clients are global companies that want more standardized innovation services wherever they operate.

If you are working at IBM, its CEO won't talk about the company's global business excluding the U.S. At Fujitsu, we as well shouldn't say "our global business except Japan."

In Europe, we've been very confident with our business in the U.K. and Ireland, nevertheless the governments are now going through a major austerity program and IT spending is declining. We have to re-engineer our work force to changing market dynamics, yet spending patterns changed faster than our ability to respond.

Mr. Vawdrey: There will be lots of players in cloud computing, because the innovation doesn't have huge barriers to entry. However it's a much more complex thing to as a matter of fact take clients from where they are today to a new model with lower cost, more efficient self-service and all the things that come with the cloud. There won't be many players that can do that.

Mr. Vawdrey: We believe our global business is in a robust condition and capable of meeting these challenges. A significant proportion of our business is in long-term services-based contracts. In many cases, this is a counterbalance to the short-term volatility. Our product businesses depend on raw materials that are bought and sold in a variety of currencies, and we have solid policies and controls in place to manage these risks across our business and in each country.