Tadashi Shikimori(Chief Fellow, Institute for International Socio-Economic Studies)

April 2019 to March 2020

Digital Transformation (DX) is a term that refers generally, to initiatives that use digital technology to reform products, services, businesses, organizations and culture, and produce new businesses. Currently, enterprise is being required to actively and continually adopt digital technologies and produce new businesses from one minute to the next, to adapt to changes in society, customer needs, and core business models, as innovative technologies such as AI, IoT, the cloud, mobile, and 5G continue to evolve.

In their “DX Report,” published in 2018, the Ministry of Economy, Trade and Industry announced that if industry in Japan does not move forward with DX, the economy could face losses of up to 12 trillion yen per year in 2025 and thereafter, and that it would strongly support DX in industry to improve Japan’s industrial competitiveness. Similarly, more and more governments and regional administrative agencies in advanced countries are using DX to advance and optimize work and services, to deal with increasingly complex policy issues and increasingly stringent human and budgetary constraints in the future.

In this study we conducted a survey and analysis covering the above issues, on how DX, and mainly AI, is being used to reform administrative services in governments and regional administrations in advanced regions such as Europe and America, covering systems, policies, social issues, and the status of demonstration projects in advanced countries.

As a result of the study, we point out that DX has changed enterprise activity competing in services by creating new customer-experience value and with digital business platforms, that administrations in advanced countries are targeting economic growth through digitization (DX) of base registries, and that DX of administration in advanced countries is still in the initial stages. We also propose three initiatives for governments, which are: (1) that they increase promotion of base registry digitization (DX), (2) that they build an ecosystem for DX administration, such as introducing private human resources and startup activity into government, and (3) that they introduce service design concepts for reforming government services.