Chapter 3

Management Capital

Overview of personnel system reforms

Promoting the development and active participation of personnel

Net One Systems revised its evaluation system in April 2023 before adjusting its grading and compensation system in July of
the same year.
Moving forward, we will ensure that each and every employee performs at a high level and helps deliver value to society
by creating more comfortable work environments through a strategy combining our new personnel system with a wide
variety of existing internal systems that facilitate flexible work styles.

Goals and key points behind our personnel system reforms
Realization ofmanagement
strategies

Human capital management overview and personnel system reforms

PMVV

Unleashing the potential of people and networks
Solving the problems of society
and our customers

Creating a prosperous future

Personnel Management Policy
TAKUMI

Fairness

Encourage co-creation
among diverse members
to create value as a teamSupport the enhancement of expertisein each area, so that each person cancontribute to their team as a TAKUMI

Reward contributions to
the organization in a fairand impartial manner

Personnel requirements profile

Personnel must have a wealth of knowledge regarding cutting-edge technologies and a spirit which enables them to boldly
take on unprecedented challenges and fulfill customer needs.

2

Personnel are required to be capable of leading innovative efforts by leveraging their communication skills and building
collaborative relationships with all project partners.

3

Personnel must be capable of mapping out multiple self-designed career paths and acting independently in pursuit ofobjectives.

Support management through the growth and success of our diverse personnel
Providing an environment where personnel can thrive

Personnel system reforms

net one report 2023

Corporate culture reforms

Resolving current systematic issues

4

Implement corporate culture reforms ensuring that each and every employee exhibits behavior
that reflects well on the Company while also generating results

5

Ensure that personal and corporate growth motivate employee performance

6

Identify appropriate personnel through the application of diverse perspectives and fair processes

Evaluation system that contributes to long-term growth and human resource development

We have adjusted our approach to evaluations, introducing an evaluation system based on two axes: achievements andactions. With this change, we aim to ensure that our evaluations place greater emphasis on the behaviors leading up toactions and achievements and the activities in which personnel will need to engage when attempting to assume higher
positions within the Company. Additionally, we extended evaluation cycles from their previous length of six months to one
year, bringing them in line with our business cycles. From a long-term perspective, we are confident that this change will
facilitate growth for both the Net One Group and its employees. Furthermore, to reinforce systems that support employee
growth throughout our organization, we will convert our existing semi-annual personnel development meetings into
forums for discussion focusing on the specific growth issues and future development paths of our individual employees.

Grading system suited to changes in business and work styles

We have adjusted our classification of professional positions to facilitate personnel management in response tochanging nature of our business operations and work styles. To complement our previously existing sales and engineer
positions, we have created two new classifications: for ICT business staff, who are equipped with technological,
market-related, and industrial expertise and provide solutions for issues facing both customers and society at large,
and for corporate staff, who are endowed with corporate knowledge and support the Company’s operations while
ensuring strategically sound and stable administration. By enhancing the expertise of employees in all of thesecategories, we aim to provide added value to our customers and establish a steady business base.
We characterize management and specialist billets as positions required on an organizational level and do not view
them in terms of individual abilities. In accordance with this approach, we only appoint to these roles individuals
equipped with the necessary skills and abilities. By adopting these strategies, we aim to develop personnel that will
strengthen the Company’s competitiveness while both retaining and acquiring superior human resources.

3

Compensation system that ensures market competitivenessWe will realize competitive compensation levels commensurate with market benchmarks to ensure that benefits andremuneration are appropriate to grading levels and the scales of the roles we have defined through our position
classification schemes while strengthening our ability to compete for the acquisition of personnel within target markets.
Effective from July 2023, we raised monthly salaries by an average of 8% across the Company while also eliminating
our system of gradually reducing base salaries for employees over a certain age, which was previously implemented,
to ensure that priority was given to each employee’s individual abilities.
In addition, we will establish our own internal certification system, which will enable us to recognize personnel who
have acquired or generated the knowledge, experience, and results necessary to achieve our management strategies
while empowering us to motivate these personnel in their pursuit of further skill development. We plan to launch thisinternal certification system beginning with technical certifications commencing in 2H FY2023.
Furthermore, we are prepared to raise starting salaries beginning with new employees who join the Company inApril 2024. To achieve a fair balance between existing base salaries and those of these freshly recruited new
graduates, we will also raise the base salaries of previously recruited young employees effective from the same month.

net one report 2023

Business Segments

Professional personnel training

Establish corporate functions that can support and check frontline operations while building
healthy inter-organizational relationships

Governance1

2002-2004 medium-term business plan: personnel strategy

39

1

2

Team

Realization of management strategies

Resolving current
systematic issues

3Management Capital

Outstanding expertiseand high ethical standards

Corporate
culture reforms

2

Form a group of personnel equipped with highly specialized skills consistent with the courseof our operations
Provide high added value to customers through team collaboration

Growth Strategy

Personnel are the source of the Net One Group’s competitiveness, and the Group views the development of personnel capableof acting independently and creating solutions as essential to its achievement of sustainable growth. During 2022, weestablished our Personnel Management Policy and a personnel requirements profile to serve as supportive pillars for our humancapital management strategy. At the same time, we formulated a personnel strategy focused on “professional personnel training”
and “providing an environment where personnel can thrive” under our Medium-Term Business Plan.
The first measure on which we embarked as we implemented our personnel strategy was to reform our personnel system. As
the Net One Group began undergoing changes to facilitate its transition into a new phase of growth, including a shift toward
services and corporate culture reforms, it encountered the need to adapt its personnel system to accommodate these changes.
In accordance with our Purpose and our Personnel Management Policy, we adjusted our personnel system with the primaryaims of “realizing management strategies,” “achieving corporate culture reforms,” and “resolving current systematic issues.”

1

Value Creation

The Net One Group defines human capital management as developing and deploying outstanding personnel
capable of thinking and acting independently with the aim of generating value through the application of essential
technologies. In accordance with the personnel strategy formulated pursuant to our Medium-Term Business Plan,
we will ensure effective human capital management by providing the Group’s personnel with opportunities for
growth and environments that encourage their active participation.

Introduction

Professional personnel

40

Management Capital

Chapter 3

Green ICTA service model that epitomizes competitive advantage

Development and expansion of green solutions

As ICT systems become increasingly large and complex, we are often finding that regular delivery of fully
customized solutions is not always in the best interests of our customers. Accordingly, we are committed tostandardizing our service model to ensure that we can provide high value-added solutions designed with emphasison the issues and requirements of our customers. Through this standardization process, we will efficiently render
solutions that leverage our knowledge and experience while building co-creation relationships through theestablishment of recurring-revenue business, thereby ensuring ongoing growth in our competitive advantage.

The Net One Group views facilitating the realization of a decarbonized society by developing and providing
solutions that help reduce the greenhouse gases emitted by both our customers and society at large as amateriality-related objective. Adopting a decarbonization-based perspective, we have reconceived solutions
heretofore rendered as “green solutions” and are addressing social challenges by making both ICT systems andtheir usage more environmentally friendly.

Green solutions portfolio

Social value (ripple effect)1fChargeValue creation

Linking of devices

3

n of Iin g

Integrated managementn

3.Burden reduction
realized throughoperational
standardization

41

net one report 2023

Virtual desktops

Market-specific2.Growth in delivery
speed

SASE / Zero trust

Managedservices

In-house
cloud services

ICT / OT security
Healthcare and work styleinnovation
Digital transformationin broadcasting

Operation

Security

XaaS

p ro c es se s i n v a ri o u s fi e l dReducing the movementof people and goods

Waste reduction

Reducing the power
consumption, and raising theefficiency, of ICT systems
Low-power devices,
centralized management,
cloud migration support

ITS

BEMS

HEMS

Environmental measurement
and forecastinga ti o
o

ou
s thr

6

Realization of a digital society
Online shopping
Electronic payment and application

netone Lab as a Service

ICT circular economy

Progress on the creation of green solutions
Development and delivery of solutions in fiscal 2022
Reducing electricity consumption

Cutting down on the movement ofpeople and goods

Eliminating waste

Visualization of data center electricity usage

Digital remote support

Proof of data deletion

Specialized data center infrastructure
management (DCIM) power monitoring
services that enable multifaceted
analyses of power consumption

Remote support solutions that merge
onsite and virtual environments using
Smart Glasses

Third-party (ADEC) certification verifyingthat data on storage disks has beenerased, thereby enabling secondary disk
usage

Development complete with several PoC phases currently underway

Business Segments

1.Higher quality
achieved throughstandardization

SharedThree benefits

DX strategy
consulting
services

Restructure operations
under a service-oriented
model that creates highadded value in anticipationof the shift toward
service-based models
among vendorsn dly

een by4

Improving energy
use efficiency

GovernanceOn-premises networks

delivery by incorporating
priority services, which
include XaaS (cloudservices) combined withmanaged services, aswell as market-specificpackages, into
standardized systems

Services expected to
grow as the shift toward
digital transformationand the use of cloudtechnology progresses

fr i eth
I C T gh theWork style innovation

Remote support solutions,video recording management
services

Data erasure certification
services, extended
maintenance, sales ofremanufactured products

rou

iro

Tested systems for which
design patterns extending
from integration to
Synergy
operation have been
establishedAccelerate service

Targets

Gr

gh

nv

Test combinations of products
and technologies, improve thelevel of efficiency at which
man-hours are spent onplanning, and promptly deliver
systems of high quality

Three priority services

ll ySupply chain management

Power/energy visualization
dashboard

5

ap

re e

Standardized systems

nta

Reduction of electricity
consumption

Data application

Data management
consulting, PoC support fordata analysis

2

Sensing networks

p li cmo

Channelme

Targets

DX strategy consulting,
advice concerning CO2
emissions reduction (planned)

CT

ChangeImproving operational
efficiency

Management Capital

Ma
kin

g

me
nta
lly

Streamlining the production
and consumption of goods

Value delivered through our operations

en of I T
Gres more envirC
on

em
yst
Ts
IC

Growth Strategy

Adopting an approach based on circular economy models and efforts aimed at making both ICT systems and their application moreenvironmentally friendly (referred to as “Green of ICT” and “Green by ICT,” respectively), the Net One Group is formulating a portfolioof green solutions covering six areas defined according to the type of value provided. During fiscal 2022, we achieved progressprimarily in the areas of “reducing electricity consumption,” “cutting down on the movement of people and goods,” and “eliminating
waste,” conducting development and booking orders in association with three projects in total. When implementing green solutions,
we must first understand what should and can be done with ICT to achieve decarbonization. Accordingly, while providing thesesolutions, we are also developing internal education programs to foster understanding and spread awareness. Moving forward, weplan to expand these programs outside the Company as well.

A c hie v

Strategic connections and targets associated with our standardized systems and our three priority services

Overview of green solutions and associated initiatives

ly
nd
rie

In accordance with the service strategy of our Medium-Term Business Plan, we aim to widely leverage precedent-setting applicationsof our fully customized “priority services” while establishing recurring-revenue businesses (managed services, in-house cloudservices, etc.) through which we can build ongoing relationships with our customers.
Harnessing these precedent-setting examples, we will build standardized systems with well-established design patterns covering
all stages from integration to operation, thereby ensuring efficient usage of man-hours and uniform quality assurance for new
projects with similar issues and requirements. As a result of these efforts, we will be able to provide added value to our customers byincreasing delivery speed and reducing operational burdens.
In the past, our application of knowledge and experience had been somewhat limited to specific projects and divisions, but theconsolidation of our engineering divisions into a single Sales Engineering Unit in 2022 has enabled us to achieve company-widestandardization. As a strategy to be employed throughout the Net One Group, we are standardizing common operational procedures
and elements, including patterns for proposed scenarios, comparisons of our products with those of competitors, the testing ofdifferent combinations of solutions, basic design, and partner selection, while ensuring that this standardization is maintained whenhandling projects. By sharing the results generated through these efforts, we promote a continuous cycle of improvement.
Moving forward, we will demonstrate the optimal applications of ICT for the business environments of our customers whileproviding services that leverage the technology and experience we have cultivated throughout our existence. Using the knowledge
gained through the administration of these services, we will strengthen our proposal models and systems to ensure ICT utilizationthat fulfills the needs of our customers.

Value Creation

Business model transformation achieved through our focus on priority services and standardization

Introduction

Design capabilities

Orders booked in association
with actual projects

net one report 2023

42

Chapter 3

Management Capital

Introduction

Co-creation capabilities

Co-creation with stakeholders

To further improve customer success, we are enhancing our customer-facing activities, which enable us to adopt a
more in-depth approach to addressing customer issues. Moving forward, we will establish support systems for allprocedural phases extending from planning to operation while firmly establishing our position as a strategic partner
through supportive frameworks, solutions, and services that help our customers successfully implement their strategies.

The strength of the Net One Group lies in its ability to establish optimal systems for customers while leveraging its
multi-vendor status, which frees it from undue influence from specific manufacturers or corporate groups; discovering
new products; and ensuring effective functional integration. In recent years, changes in customer needs have forced boththe Net One Group and its vendors to undergo changes. Given these circumstances, moving forward, we will leverage
mutual strengths to enhance our co-creation relationships and provide new value while optimizing our product portfolio.

Policies and initiatives associated with customer-facing activity enhancement

Creating new value through enhancement of co-creation relationships
Vendors are also being forced to shift toward subscription-based business models that provide functionality rather than products.
While some vendors are now approaching customers directly, the Net One Group has the advantage of being able to design andoperate ICT platforms that track data movement throughout entire systems in accordance with a network-based approach.
Furthermore, with regard to Japan, where utilization of hybrid cloud structures combining internal ICT systems and cloud computing
is standard, we are confident that the opportunity to collaborate with the Net One Group, which is well-versed in the application of
products and services and fully capable of adapting this application to meet the unique needs of Japanese companies, represents asignificant advantage.
Given these circumstances, the Net One Group will pursue new business models while strengthening relationships with vendors
and customers to accelerate its shift toward services. By enhancing these relationships and establishing ecosystems for thedevelopment of managed services and other optimal solutions, we can ensure our ability to efficiently provide impeccable systems
with higher uptime rates.
Moving forward, the Net One Group will combine the best of its technologies to create system architecture (overall pictures) andcreate new value together with its customers and vendors, thereby further strengthening these relationships.

Forming teams to enhance customer-facing activities

Examples of ecosystem construction targeting new value co-creation●

Ensure overlap between the scopes of response for all divisions to eliminate interphase inconsistencies and maintainseamless support

Sharing of productdevelopment technology roadmaps

Vendors Providing feedback regarding

Proposals formulated in accordance with customer
issues and market trends / PoC and PoV

Service Incubation
Department

Engineering Department

Operations Technology
Department

Feedback on performance of
products usedmarket needs to vendors

Standardization andproject follow-up

Collaboration targetingthe enhancement ofmanaged services

Service Development
Management Department

Customers

Managed services
for hybrid cloud systems

Governance

Customer management

Market Strategy Department

Proposals regarding, and application of, optimal solutionsand services;
introduction of state-of-the-art products from overseas

Current
circumstances

Customers
Validation of measuresthat address customer issues

Management Capital

Clarify the divisions chiefly responsible for communicating with customers in accordance with applicable phases, roles,
skills, and responsibilities, thereby expediting response

Growth Strategy

The Net One Group is continuously adjusting the approaches through which it interacts with its customers, and these customers
have begun to demand solutions attuned to their business strategies and current industry trends. Societal needs surrounding digitaltransformation have grown and customer issues have become more complicated, so we can no longer fulfill client demands throughthe simple proposal of services. Rather than waiting for customers to define their requirements, our engineers, who routinely handle
cutting-edge technologies, must remain on center stage, acquiring intimate understandings of the concerns and quandaries facing
our customers. Furthermore, to ensure the fulfillment of client requirements, we must propose effective product combinations while
exploring opportunities to integrate services and providing wide-ranging support that includes operational assistance.
In 2022, we consolidated our engineering divisions into a single Sales Engineering Unit in an effort to facilitate more intensive
collaboration. Abandoning our earlier system, under which front departments were exclusively responsible for serving as customer
contact points for all procedural phases, we have shifted toward a system that enables speedy, smooth, and sustainable co-creationof value by assigning core phase responsibility to divisions equipped with suitably specialized expertise. By honing our expertisethrough specialization in a range of specific functions spanning from planning to operation and establishing systems facilitating
collaboration with front department engineering staff, we will strive to ensure that customers select the Net One Group as theirpartner of choice for issue resolution.

●

Value Creation

Enhancement of customer-facing activities

Ecosystem construction
Strategy Consulting
Department

Engineering
Department

Service Incubation
Department

Project Management
Department

IT Outsourcing
Department

Service Development
Management Department

System integration
operations

Planning

Proposal

IT Outsourcing
Department

Service Incubation
Department

Service operations

System integration Service operations
operations

Integration and implementation

Operation

Linking the systems of three parties(vendors, Net One, and customers)
and sharing/upgrading data
concerning ICT asset conditions,
vulnerabilities, cloud functionality, andother essential elements in real time

Relationshipenhancement
Linkage of various data
and furnishing of partner programs

Linking data concerning operations
and operational status

Provide new value through ecosystem construction

Scope of support

Service Incubation Department
Service Development Management Department43

net one report 2023

Key points associated with relationship enhancement efforts

Project Management Department and Engineering Department
IT Outsourcing Department

Business Segments

Market Strategy Department
and Strategy Consulting Department

Improvement of ICT platform operation
Monitoring, observability
Automation and assurance● Vulnerability management,
policy control

Knowledge enhancement
Sharing the expertise of TAKUMI
Application of generative AI● Standardization of proposedsystems

Fine-tuning of services
Product portfolio optimization
Standardization of lineups● Portal-based delivery● Utilization of digital marketing

●

●

●

●

●

●

net one report 2023

44