Tokyo Stock Exchange 1st Section: Securities Code 3992

Needs Well Inc.

Medium-Term Management Plan
(Fiscal Year 2021 – Fiscal Year 2023)
November 12, 2020

1. Business environment

1) Business environment & strategy2) Growth track

2. Management strategy

1) Management philosophy
2) Medium-Term Vision: Improve corporatevalue3) Medium-Term Basic Policy

3. Growth strategy

1) Improve business value(1) Performance targets(2) Sales composition ratio by service line
(3) Positioning of service lines(4) Our three strengths(5) Promotion policies: Sales growth
Increased profit
Investment
2） Improve social value(1) Initiatives directly linked to business(2) Initiatives supported by systems andactivities

4. Reference– Company profile– Business fields– Business system diagram1. Business environment

1) Business environment & strategy
IT investment has stagnated due to the spread of COVID-19,
but IT investment demand is expected to continue expanding in themedium to long term

“Post-COVID” / “With-COVID” Growth Strategy
Current situation

Aim to acquire new orders and improve profitability■ Shift from dispatch and residential styles, in which development is performed for clientcompanies on-site, by promoting the enhancement of remote development performed at ourhead office and nearshore base in Nagasaki■ Introduce online sales through web conferences, etc. to sales activities that previously

revolved around face-to-face sales and exhibitions■ Develop sales advantages by providing an enhanced lineup of new solutions■ Aim to expand business field by engaging in system development for the logistics industry

Investment for future
growthAgile response to the influx of development projects
accompanying the recovery of domestic demand■ Practical application of nearshore development bases and acquisition of highly capable personnel

Other initiatives

Active exploration■ Research and development of solutions utilizing AI technology■ Search for target companies to proactively pursue M&A growth
中期経営計画 2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

42) Growth track
Oct 2020 Started Logistics, Connected Businesses
Net sales
Number of personnel

Aug 2019 Started AI Business
Jun 2019 Tokyo Stock Exchange 1st Section

Jun 2018 Tokyo Stock Exchange 2nd Section
Oct 2017 Started Solution BusinessSep 2017 JASDAQ-IPO
Apr 2013 Started developing Embedded Systems
Oct 2012 Started Infrastructure Services, transaction with leading
telecommunication carriersApr 2005 Started transaction with leading hotels
Apr 1998 Started transaction with leading
insurance companies

543

employees
by end of
FY2020Aug 1992 Started developing
Business System SI
EstablishedOct 1986
Started business consulting
中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

Bankruptcy of Lehman
Brothers

COVID-19
Pandemic

FY2021/9 forecast52. Management strategy

1) Management philosophy

Contributing Broadly to the Economy andSociety

中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

72) Medium-Term Vision
Realize management philosophy of“Contributing Broadly to the Economy and Society”
Breaking away from the dispatch business,becoming a true system integrator

Try & Innovation

Focus point

Medium-Term Vision
NeedsWell Value
Improve (corporate value)

Medium-Term Basic Policy■ Performance / IR / capital policy/ sustainability

Strategy for transformation into a true system integrator■ Improve business value ~ Achieve performance/business targets■ Improve social value ~ Realize a sustainable society

Initiatives directly linked to business, initiatives supported by systems and activities

Reviewed every year to respond to changes in IT investment needs■ Seven focus points; FY2021/9

中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

82) Medium-Term Vision:

Improve Corporate Value
Promote our management philosophy of“Contributing Broadly to the Economy and Society”
through improvement of the NeedsWell Value• Institutional investor• Individual investors• Media• Promotes CI, VI

IR

Capitalpolicy• Public offering• Issuing newshares• M&A

CI: Corporate Identity
VI: Visual Identity

Performance• Net sales growth rate 20%• Ordinary profit margin 10%• Gross profit margin 25%• SG&A expenses rate 10%• Net sales 10.0 billion JPY (FY2023/9)• Liquidity – market capitalization 10.0 billion JPY (FY2022/9)

中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

Sustainability• ESG, SDGs
• Corporate
governance93) Medium-Term Basic Policy

Breaking away from the dispatch business,becoming a true system integrator

中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

10

3. Growth strategy

1) Improve business value(1) Performance targets

FY2023/9

10.0

Net
sales

1.0

Ordinary
profitbillion JPY

billion JPY

Billion JPY
10.0

CAGR (compound annual growth rate) 10.0

23.1

Billion JPY
1.0

%

24.8

%

5.0

0.5

0.0

0.0

2020

CAGR (compound annual growth rate) 1.0

2021

2022

Existing businesses
中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

M&A

2023

2020

2021

2022

Existing businesses

2023

M&A
12

1) Improve business value(2) Sales composition ratio by service line

FY2023/9• Ensure that main service line, Business Systems SI, maintains a 70% composition
ratio and reliably secures profits• Position Solutions/Products, etc. as a growth driver and increase sales
composition ratio to 15%
Unit: %

Future6.0

FY2023/9

70.0

9.0

15.0
4.5

FY2022/9

75.8

10.2

9.5
3.1

FY2021/9

78.6

10.6

7.7

Current
Business Systems SI

中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

Infrastructure Services

Connected Systems

Solutions/Products, etc.

131) Improve business value(3) Positioning of service lines
Establish a solid business foundation with Business Systems SI, Infrastructure
Services, and Connected Systems, and use Solutions/Products, etc. toaccelerate business expansion and increase added value
Service lines that establish the business foundation
Business Systems SI

Infrastructure Services

Connected Systems■ Expand into the financial sector byaccumulating business knowledge andtraining highly-skilled engineers■ New development into the logistics
sector■ Coordinate with Business
Systems SI for total orders■ Strengthen connected technology inaddition to specialization in
automobiles and medical equipment

Solutions/Products,
etc.

中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

Service line that accelerates

business expansion andincreases added value■ Enhance service lineup by introducing new solutions· Invoice PA· Speed EA· Speak Analyzer· IT Re-engineering etc.
■ Integrate AI, IoT technologies with solutions provided byother companies
Strengthen competitiveness by expanding functions141) Improve business value(4) Our three strengths

Capacity for
financial systemdevelopment

Financial sector accounts for 50% of net sales inmain service line, Business Systems SI.
Particularly advanced in life insurance and accident
insurance sectors.
Strong performance record in developing systems
for banks, credit cards, and securities.

Proficiency indirect sales to
end users

High level of direct transactions with end
users such as life insurance companies,
leading hotels, telecommunications
carriers, etc., composing over 50% of
Proficiency insales.

direct sales to
end users

Ability toprovidesolutions

Capacity for
financialsystemdevelopment

Our
three
strengths

Ability toprovidesolutions

Provides solution services optimized foreach customer’s business objectives
through 5G, AI, RPA, remote work, etc.

中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

151) Improve business value(5) Promotion policies: Sales growth
Logistics Business

Market scale (our forecast)Logistics IoT software solutions market(WMS, etc.)2018

123.0 bil. JPY

66.7 bil. JPY

Smart cities market

2022

990.0 bil. JPY

2018

460.0 bil. JPY

AI’s major markets*

2023

64.0 bil. JPY

2018

19.6 bil. JPY

Connected Business
Proceed to engage in connected technologies toenrich lives, such as smart cities which utilize IoT
and AI to make the entire neighborhood more
efficient and convenient, etc.

+1.2

+0.3
+0.9

Existing businesses

2025

Logistics industry is facing a serious labor shortageas the selection of diversifying needs continues toincrease. There is urgent demand for immediate
investment in streamlining, improving quality, andreducing environmental burden through the use of
AI, IoT, etc.

Unit: billion JPY

4.7

中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

+2.3

M&A

* AI’s major markets: Image recognition, speech recognition, speech synthesis, language
analysis, search and retrieval, translation

FY2023/9+
billion JPY

Demand for investment is high due to structuralreform for DX.
Introduce unique and differentiated products withintegration functions that utilize AI and RPA.

Expand the scale of existing technologies andstrengthen/introduce new technologies. Focus
on logistics, connected functionality, AI, IoT, web,etc.

billion JPY

Sales growth

Solutions Business

M&A

10.0

[Breakdown]• Existing
businesses• M&A

2.4 bil. JPY
2.3 bil. JPY

5.3

billion JPY
FY2020/9

161) Improve business value(5) Promotion policies: Sales growth, Logistics BusinessEntering the logistics sector, which is facing labor shortages as
the selection of diversifying needs continues to increase
Seeking business alliances in the logistics industry tosave labor and improve efficiency for logistics warehouses
Collecting/utilizing information on shipping, inventories, delivery, etc. via

IoT

Warehouse

Product supplier

AGV(automated guided
vehicles)Packaging WMS currently
under development
中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)• WCS (warehouse control system)
for managing AGVs, etc.
• WMS (warehouse management system)
optimized for integration with WCS

Destination

Aim for development as a logistics
solution171) Improve business value(5) Promotion policies: Sales growth, Connected BusinessEntering the connected sector through data collection/utilization
Contribution to building smart cities throughautonomous driving and medical care

Examples of past development)

Examples of past development)• Image analysis programs for ultrasonicdevices (ultrasonic diagnostic equipment)• Programs that recognize objects and human bodies fromradar and sensor image data and control steering andbraking for autonomous driving• Programs for collecting large amounts ofanalytical data from blood, urine andother biological components, andproducing an image displaying the results
中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)• Programs to control devices that analyze radar and sensor
information at disaster sites, calculate optimal routes basedon comparisons with geographic information, andautomatically move vehicles
181) Improve business value(5) Promotion policies: Sales growth, Solutions Business

Expanding the Solutions Business to accelerate businessexpansion and increase added value• Add integration functions to stand-alone solutions.
Differentiate and strengthen competitiveness by independently enhancing
different functions with AI, IoT, RPA, etc.
1

Automate invoice entry
Invoice PA service

2

Quickly implement Concur
Speed EA service

3
4

WinActor x AI-OCR

plus

+

Well

: AI-OCR for invoice management cloud Concur Invoice

plus

+

: Quick operational know-how for expense settlement cloud
Concur Expenseplus: Automatic integration of peripheral systems into
core systemplus: AI-OCR for RPA tool WinActor

+

plus

+

+

• Enhance lineup• Start subscription sales of(unauthorized access prevention solution)• Package WMS (warehouse management system) developed by the Logistics Business for horizontal
expansion as a solution for the logistics industry• Continuous research and development to quickly incorporate future-oriented and cutting-edge
technologies based on client needs and market trends
中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

191) Improve business value(5) Promotion policies: Increased profit
Remote development/telework

Increased profit• Shift from dispatch and residential styles to remote development through utilization of nearshorebases and telework while focusing on efficient deployment of engineers.
Aim to raise productivity and improve profitability through a management system based on
thorough workload management.
Shifting to remote development offers many advantages for both Needs Well and our clients,
including reducing the costs involved in maintaining development environments and reducing theburden of project management.
• Utilize remote work to reduce the burden of commuting and encourage a system that allows
employees to concentrate on actual work performance.
Aim to raise productivity and improve profitability.

Solutions Business• Focus on the Solutions Business, which can easily attract new users and offers higher profit margins
than other service lines.
Aim to increase profit by providing Needs Well’s unique functions and expertise to the standard
implementation formats of solutions provided by other companies.

Increase direct sales to end users• Ratio of direct sales to end users is over 50%, a high level in the software development industry.
Aim to further stabilize orders and improve profit with a target ratio of 60%.
• Focus on continuing to work with existing customers, expanding the scale of projects inrelevant sectors, and cultivating new sectors of expertise.
• Cultivate new users through horizontal expansion to companies in the same or similarindustries as existing users.
• Focus on the Solutions Business, which accounts for a high percentage of sales to end users.
中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

201) Improve business value(5) Promotion policies: Investment
Recruitment and training
Acquire and train highly competent engineers and personnel proficient inproposal-based sales who can contribute to projects in an upstream process.
Continue to recruit highly competent new graduates and strengthen
development and proposal systems.
• Employee recruitment• Policy for retaining/securing personnel• Technical training and management education, etc.

Investment

Research and development

Proactive investment to quickly incorporate future-oriented and cutting-edge
technologies based on client needs and market trends• Designing, manufacturing and testing prototypes that utilize cuttingedge technologies such as AI, IoT, etc.
• Marketing research and exploration of new solutions/services• Development of new solutions/services• Intellectual property strategies such as patents, trademarks, etc.

Investment budget（approximate)2021 ~ 2023

0.5

billion JPY

0.2

billion JPY

M&A, capital and business alliances
Active pursuit of M&A growth in addition to improving performance from theutilization of internal resources. Continue to explore peripheral fields that havethe potential for synergies with our existing businesses.
• Logistics system-related technologies• Connected functionality-related technologies• AI, IoT underlying technologies• Web solutions-related technologies• Other peripheral technologies that have the potential for synergies with
our existing businesses

中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

2.0

billion JPY

212) Improve social value(1) Initiatives directly linked to business
Aim for sustainable management through business strategies thatincorporate the perspectives of SDGｓ, ESG, and CSR
Nearshore Development Promotion: Nagasaki Development Center tomaintain 100 employees by 2024
Promote development by committing to QCD (quality, cost, and delivery) through remote development
system that utilizes nearshore bases.
Aim to maintain 100 employees at the Nagasaki Development Center by 2024 and contribute toprosperous urban development through the development of an industrial foundation, technologicalinnovation, and creating employment opportunities by utilizing highly competent local human resources.

Development of new solutions to assist DX
Assist client companies in realizing and promoting DX to overcome the "2025 Digital Cliff" by building
platforms using AI technology, providing systems, analyzing data, saving labor through RPA integration,
etc.
Contribute to building the industrial foundation of a digital society.

Collaboration with partner companies
Promote partnerships with contractors and suppliers and aim to establish a structure for continuing todevelop together over a long period of time.
In March 2020, Needs Well entered into a core partner agreement with Meiji Yasuda Life Insurance
Company and Meiji Yasuda System Technology Limited for the purpose of building a strong future
partnership and maintaining long-term development engineers.

中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

222) Improve social value(2) Initiatives supported by systems and activities
Work style reform & personnel development• Incentive dates for paid leave, Premium Friday, overtime target of 20 hours• Expand selection of employees eligible for remote work
• System for encouraging skill improvement and motivation

Increase ratio of female employees and managers

Target female manager ratio: 30%, target female employee ratio: 30%

AI education for students

Arrange AI programming experiences and 5 days/3 weeks internships for students
Conduct programming classes on apps for submitting electronic applications and creatinginteractive AI chatbots (2020)

Donate to assistance programs for repaying student loans

Contribute to projects by Nagasaki Prefecture for assisting young adults in the repayment of
their student loans
Develop leaders who will establish themselves and play central roles in the local community

Support for V-Varen Nagasaki of the Soccer J League

Concluded a sponsorship agreement to support the promotion of sports culture andrevitalization of the local community
Please view the following link for other initiatives and more information:
https://www.needswell.com/ir/sdgs
中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

23

4. ReferenceCompany profile※ As of September 30, 2020
Company Name

Needs Well Inc

Head Office

13F, New Otani Garden Court, 4-1 Kioi-cho, Chiyoda-ku, Tokyo, 102-0094 Japan

Office- Shinjuku Office : 5F, South Tower, 13-15 Tomihisa-cho, Shinjuku-ku, Tokyo, 162-0067 Japan- Nagasaki Office: 5F, Meijiyasudaseimei Nagasakikozenmachi building, 2-21 Kozen-machi,
Nagasaki-shi, Nagasaki, 850-0032 Japan

Contact

TEL: +81-3-6265-6763 FAX: +81-3-6265-6764 URL: https://www.needswell.com

Representative

President and CEO

Established

October 1, 1986

Stock Listing

Tokyo Stock Exchange, 1st Section (3992)

Paid-in Capital *415 million JPY

Net sales *5,364 million JPY

Number of Employees *543

Qualification

Worker dispatch businessPrivacy mark

Board of Directors *President and CEO
Kozo Funatsu
Executive Director
Takeshi Tsukada
Executive Director
Nobumasa Goto
Director
Hiromi Kimura
E
I
Director
Hiroki Yanagawa
E
I
Director
Hideaki Sakaue

Kozo Funatsu

E ：External officer
I ：Independent officer

FY2020/9 3Q Financial Results

ISO27001 (ISMS) Certified
ISO9001 (QMS) Certified
Audit & Supervisory
Board Member Kazuhiko Kato
Audit & Supervisory
Board Member Toshio Yamamoto
Audit & Supervisory
Board Member

Yuji Dai

Audit & Supervisory
Board Member Kotaro Niwa

E

I

E
E

25

Business fields
Needs Well provides total IT services through four services focused on
Business Systems SI for finance.
Solutions
Business

FinanceBusiness
Systems SI

Information security

Logistics

Operational efficiency

Distribution/service

AI

Social infrastructure

Telecommunications
Web

IT platforms

Infrastructure
Services

Automobiles/medical devices/IoT

Connected Systems
中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

26

Business system diagram
Clients

Direct transaction*

End user

Systemintegrator

Manufacturer

Needs Well

Business
Systems SI

Subcontractor/supplier

Infrastructure
Services

Partnercompany

Connected
Systems

Supplier

Solutions/
Products,
etc.

Order
Provision of services/products, etc.

* High level of direct transactions with end users (approx. 55% of all sales)
中期経営計画2021年9月期－2023年9月期
Medium-Term
Management Plan (FY2021/9 – FY2023/9)

27

• All statements described herein have been prepared by Needs Well based on the currently available
information.
• Actual results may differ from forecasts due to various factors in the future.

Corporate Communication Division TEL: +81-3-6265-6763 e-mail: ir-contact@needswell.com