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1 ATA DRIVEN GLOBAL VISION CLOUD PLATFORM STRATEG N POWERFUL RELEVANT PERFORMANCE SOLUTION CLO IRTUAL BIG DATA SOLUTION ROI FLEXIBLE DATA DRIVEN V WHITE PAPER How Information Technology Drives Social Innovation Hitachi Builds a Sustainable Society Through a Social Infrastructure Based on Information Technology By Hitachi Data Systems and Hitachi, Ltd. March 2013

2 WHITE PAPER 2 Contents Introduction: IT Is a Tool to Achieve Social Innovation in Business 3 What Does Today s World Require? 4 Advance of Globalization 4 Paradigm Shift in the Global Economy 4 Advance of Urbanization 5 Merits and Demerits of Urbanization 5 From Competition to Coexistence 5 Social Innovations of Hitachi Group 6 Social Innovation Business by Hitachi 6 Expansion of the Total Solution Business 7 Information-Driven Social Infrastructure Solutions 8 Social Innovation Example: Railway Business 9 Summary: Hitachi Works to Achieve a Sustainable Society 11

3 WHITE PAPER 3 How Information Technology Drives Social Innovation Introduction: IT Is a Tool to Achieve Social Innovation in Business Hitachi, Ltd., President Hiroaki Nakanishi defines the social innovation business as business that achieves a sustainable society in which environmental friendliness and economic needs are balanced. 1 He explains that, to innovate society, it is necessary to solve many diverse issues. For example, the world faces social issues such as chronic traffic congestion, environmental pollution, global warming, and depletion of energy resources. Hitachi is committed to solving these and other social issues. We seek to make business and life more comfortable and richer by enhancing social infrastructure through information technology (IT), as shown in Figure 1. In short, Hitachi strives to make social innovation a reality. To achieve a sustainable society, Hitachi aims to bring the world s ecosystems and people into harmony, reducing the load on the environment, and increasing comfort, safety, convenience and enjoyment. Hitachi believes that social infrastructure systems should play a role in achieving these goals. We have incorporated these goals into the IT infrastructure we have been building over many years. Recently, rapid developments in IT have required equally rapid and dramatic changes in infrastructure capabilities. Earth s population is creating more digital data than ever before. At the same time, IT infrastructure has evolved to enable us to capture and capitalize on greater amounts of data, transforming our ability to create value from it. By collaborating among the different types of infrastructure, Hitachi further harnesses the power of data to create new services and social innovations. And, our endeavors to create new possibilities for people and companies are becoming more and more important for society. Figure 1. The Social Innovation Business 1 Statements from the guest keynote speech at Gartner Symposium ITxpo 2012 on October 4, 2012.

4 WHITE PAPER 4 What Does Today s World Require? Advance of Globalization The pace of globalization is increasing in all areas, including politics, economics, culture and the environment. The Great East Japan Earthquake and the floods in Thailand delayed shipments by the myriad of affected companies, and caused global economic confusion. These tragedies are a reminder that all things, including politics, economics, the environment and culture, influence each other at a global scale. Paradigm Shift in the Global Economy With the advance of globalization, developing countries are playing a bigger role in economic growth than developed countries. The global economy has almost tripled over the past 20 years, from US$23 trillion to US$74 trillion. In addition, it is expected to double over the next 20 years. As shown in Figure 2, China, India and the Association of Southeast Asian Nations (ASEAN) now play a central role in the world s economic growth. The economies in South America and Middle East are also expected to grow in the future. The paradigm shift will be evident, as the Asian gross domestic product (GDP) is expected to account for half of the global GDP in It is expected that the GDP per person will exceed US$10,000 in China and US$3,000 in India by 2016, and the incomes in these most populous countries will increase. Figure 2. Paradigm Shift in the Global Economy: Asia (not including Japan) Will Account for Half of the World s GDP in 2030.

5 WHITE PAPER 5 Advance of Urbanization The activities that support economic growth have advanced as urbanization has progressed. Urbanization requires increased investment in social infrastructure to support a growing population. The Asia region, for example, is making significant investment, as many cities in the region are experiencing high population growth. In fact, by 2025, it is expected that Asian cities will make up three-quarters of the world s 20 cities that have the fastest-growing populations (see Figure 3). Construction investment includes investment for housing, transportation and energy infrastructure. The need for such investment is expected to increase as the numbers in the middle class increase. Figure 3. Advances of Urbanization: Regional Investment and Population Merits and Demerits of Urbanization In conjunction with economic development in Asia, South America and other emerging countries, urbanization brings convenience and comfort to the people living there. However, if social infrastructure development cannot keep pace with rapid urbanization, a variety of issues result. For example, social issues may arise involving the environment, security, traffic congestion, waste and energy problems, slums and economic gaps. Other challenges may rise in education and healthcare. There may also be concerns about how to address aging social infrastructure and a lack of disaster planning. More than ever, a smart approach is required to solve such issues. This approach must be based on the harmonious coexistence of economics and the environment. An urban infrastructure should be resilient.

6 WHITE PAPER 6 From Competition to Coexistence Although the principle of competition accelerates economic development, the concept of coexistence is expected to become more important for the solutions of many social issues in the future. Because the resources of the Earth are limited, there is a need for mechanisms to ensure good balance and operation. At Hitachi, we believe that the goal of coexistence cannot be met just by expanding the existing infrastructure. We believe that an advanced social infrastructure that is based on IT will make innovations in business and society possible and will take the world to the next level. It is on this new, combined infrastructure that we can build a sustainable society. Hitachi is committed to achieving a sustainable society by providing systems and services that combine IT with social infrastructure. We are putting all our effort into the social innovation business to achieve balance of operations and resources, and thus, coexistence. Social Innovations of Hitachi Group Social Innovation Business by Hitachi We define the social innovation business as establishing an IT-based advanced social infrastructure while ensuring a balance between the economy and the environment. With a good record of establishing social infrastructure, Hitachi is committed to the social innovation business and to enhancing mutual innovation among the many Hitachi groups involved (see Figure 4). Figure 4. Social Innovation Business Melds Social Infrastructure and IT

7 WHITE PAPER 7 Expansion of the Total Solution Business Hitachi already builds innovative social infrastructure for smart cities, healthcare, water, transportation, energy, mining and industrial parks. We innovate to meet future needs, beyond just currently optimal products and services. And we deliver these solutions flexibly to address the changing environment and to balance both the economy and the environment. To deploy such an innovative business, Hitachi is investing heavily in customer-oriented engineering (see Figure 5). Customer-Oriented Engineering Through customer-oriented engineering we build and deliver products and systems that are driven by the needs of our customers. Our customer-oriented engineering ensures that we correctly monitor situations, analyze problems and propose solutions. We create these solutions by considering what organizations and businesses need, rather than focusing on what our products and systems can do. We also add value to our social infrastructure solutions through innovative services, including: Operation and maintenance services. Hitachi not only supplies products and systems but also uses operations technology to collect system information and IT to analyze and respond to system conditions. Operations technology and IT will support operation and maintenance services throughout the entire lifecycle of systems. These systems include railways, energy and other social infrastructure. Total engineering service. In addition to operation and maintenance services, Hitachi coordinates and provides comprehensive business operation services, including finance and partnering, to help advance social infrastructure and business innovation, such as those related to smart cities and mining. Figure 5. Expansion of the Total Solution Business

8 WHITE PAPER 8 Information-Driven Social Infrastructure Solutions Operations technology includes the plant control and automation technologies that we have cultivated through collaboration with customers in traditional social infrastructure and other systems. Information technology includes various technologies, such as big data management and cloud computing. When we bring them together, the result is transformative. We reach higher levels of information and insight that generate new value and drive new innovation. An end-to-end, information-driven solution that is driven by intelligent data delivers optimal service levels to meet business needs, while ensuring safety and continuity. As shown in Figure 6, we can continuously collect information about the health and operation of the system through operations technology. Through IT, we can analyze, predict and recognize patterns to fine tune the system, identify early indicators of problems, and enable fast and flexible response to disasters. Collecting, analyzing and predicting the supply-side control data and the demand-side data can improve value for both sides, including: Assurance of safety and continuity. Balance between demand and supply. Matching of needs and service levels. Coexistence of environmental friendliness and convenience. Promoting the use of information through the integration of operations technology and IT creates new business and value. Figure 6. Integrate Operations Technology and IT to Use Information Fully

9 WHITE PAPER 9 Social Innovation Example: Railway Business Hitachi Rail Europe is part of our social innovation business and is a representative example of integrating social infrastructure and IT. We run a railway vehicle business in the United Kingdom (see Figure 7). Our high-speed railway vehicles run 109 km between London and Ashford in the southeast of England in 37 minutes. For the 2012 Summer Olympic Games, the railway ran shuttles between Olympic Games sites and London. We built a rail yard in Ashford by sharing the skills and technologies of Japan and the U.K. Figure 7. Railway Business Example: Hitachi Rail Europe Use IT to Create Value in the Railway Business To expand the railway business globally, Hitachi uses IT to improve maintenance and to reduce maintenance costs to the optimal level. We will use the distributed autonomous technology that we have cultivated in Japan to globally provide detailed control and regulation of railway operations. Hitachi will also offer services such as a train card system that is based on a rechargeable contactless smart card. This strategy: Optimizes maintenance costs through on-demand maintenance. Gathers real-time information from onboard sensors; through pattern matching, it can identify early indicators of problems. Reduces the need for scheduled downtime and improves safety through on-demand maintenance. Monitors component status, linking with parts management systems.

10 WHITE PAPER 10 Achieves stable traffic. Promotes the knowledge Hitachi has in traffic management. Provides flexible traffic plans and quick recovery of operations in case of a failure. Provides ancillary services. Globally promotes smart card ticket system. Innovation in the Hitachi Railway Business Hitachi integrates operations technology with IT in our railway business in the U.K. We provide a value-added railway infrastructure, advanced operation, and various services by combining our expertise and technologies with IT (see Figure 8). This expertise includes : Monozukuri or product manufacturing. Operations technology, such as technology for safe and reliable vehicle control and operation. System operation management and maintenance. We innovate for U.K. railway services in operations management, maintenance and the provided services themselves. Figure 8. Further Innovation By Our Customers and Society

11 WHITE PAPER 11 Summary: Hitachi Works to Achieve a Sustainable Society Hitachi will continue to make efforts to advance social infrastructure and innovate business by integrating operations technology and information technology and by promoting the use of information. We also aim to solve social issues and achieve a sustainable society based on safe and secure social infrastructure. We will achieve this through innovation. We believe that our unprecedented, unique approach should take the market and industries to the next level of a sustainable society. We continue to commit to creating value through the integration of operations technology and information technology, plus control technologies and social infrastructure systems to help solve social and business issues.

12 Corporate Headquarters 2845 Lafayette Street Santa Clara, CA USA Regional Contact Information Americas: or Europe, Middle East and Africa: +44 (0) or Asia Pacific: or Hitachi Data Systems Corporation All rights reserved. HITACHI is a trademark or registered trademark of Hitachi, Ltd. All other trademarks, service marks, and company names are properties of their respective owners. Notice: This document is for informational purposes only, and does not set forth any warranty, expressed or implied, concerning any equipment or service offered or to be offered by Hitachi Data Systems Corporation. WP-454-A DG March 2013

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