NTT Global Business NTT , SVP of Global Business & Member of the Board Tsunehisa Okuno October 2 nd , 2015
Agenda Current and Further Steps of NTT Global Business 20 min Dimension Data The Transformational Journey 40 min Panel Discussion 40 min Achieving Operation Profit $1.5B by 2017 • Global Cloud Strategy • Ｑ＆Ａ 20 min Jason Goodall Brandon Lee Kaz Nishihata Tsunehisa OKUNO SVP CSO EVP COO NTT Com Asia NTT DATA Dimension Data NTT 1
Current and Further Steps of NTT Global Business 2
Global business performance track record (USD Billions) 22 .0 2014 20 .0 2013 2012 2011.6 15 .0 2010.12 12 .2 2010.10 11 .9 2010.7 11. 4 2009.10 2008.10 *1 2008.1 4 .8 *2 2 .9 2 .6 2 .0 2016 2017 2010 2008 2009 2011 2012 2013 2014 2007 Target Target *1 Month and year as of M&A completion *2 Consolidated sales of NTT Group companies excluding those in Japan (FY of NTT) 3
Revenue by Region NTT Global Business (USD) (FY2014) Total AMERICAS EMEA APAC (EBITA/Rev 4.5%) 36% 31% 2.4B 4.6B 0.4B 42% 10% 1.8B 10.3B 2.5B 4.3B 3.6B 69% 58% 64% 90% ICT Market 1,610B 940B (60%) 490B (30%) 180B (10%) Legend 67% 33% 54% 46% 47% 53% Application IT Infrastructure *Source: Created by NTT based on McKinsey’s data (excluding Telephone market) 4
Global recognition TeleGeography colocation database 2014 Category Position Company Data Center Retail data center operator total floor space, Global Top class Gartner’s report Category Position Company Gartner’s Magic Quadrant for Network a Leader Network Services, Global * 1 Network Gartner’s Magic Quadrant for a Leader 2 Communications Outsourcing and Professional Services * Integration Gartner’s Magic Quadrant for Imple- a Challenger SAP Implementation Service Providers, Worldwide * 3 mentation Apps Gartner’s Magic Quadrant for (SAP) AMO SAP Application Management Service Providers , Worldwide * a Niche Player 4 Gartner’s Magic Quadrant for a Leader Disaster Recovery as a Service * 5 a Challenger Gartner’s Magic Quadrant for Cloud-Enabled Managed Hosting Asia/Pacific * 6 a Visionary Cloud Gartner’s Magic Quadrant for a Challenger 7 Cloud-Enabled Managed Hosting Europe * Gartner’s Magic Quadrant for a Niche Player Cloud-Enabled Managed Hosting North America * 8 Gartner’s Magic Quadrant for a Niche Player 9 Cloud Infrastructure as a Service, Worldwide * Gartner’s Magic Quadrant for Security a Challenger 10 Managed Security Services, Worldwide * Source; *1 "Magic Quadrant for Network Services, Global" Neil Rickard, et al. 14 Jan 2015 *2 "Magic Quadrant for Communications Outsourcing and Professional Services" Christine Tenneson, et al. 4 Nov 2014, *3 "Magic Quadrant for SAP Implementation Service Providers, Worldwide” Susan Tan, 23 Jul 2015 *4 "Magic Quadrant for SAP Application Management Service Providers, Worldwide" Frances Karamouzis et al., 16 Oct 2014 *5 "Magic Quadrant for Disaster Recovery as a Service" John P Morency, et al. 21 Apr 2015 *6 "Magic Quadrant for Cloud-Enabled Managed Hosting, Asia/Pacific" To Chee Eng et al. 10 Dec 2014 *7 "Magic Quadrant for Cloud-Enabled Managed Hosting, Europe" Tiny Haynes, et al. 30 Jun 2015 *8 "Magic Quadrant for Cloud-Enabled Managed Hosting, North America" Douglas Toombs et al., 28 Jul 2015 *9 “Magic Quadrant for Cloud Infrastructure as a Service, Worldwide” Lydia Leong, et al. 18 May 2015 *10 "Magic Quadrant for Managed Security Services, Worldwide”, Kelly M. Kavanagh, 30 Dec 2014 The Gartner Report(s) described herein, (the “Gartner Report(s)”) represent(s) data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this enterprise report) and the opinions expressed in the Gartner Report(s) are subject to change without notice. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, 5 including any warranties of merchantability or fitness for a particular purpose.
NTT’s Capability in Global Business Telecom Cloud IT Vendor SIer NTT (A) (A) (A) (I) - - Data Center Leader Network - Integration - - - Network Imple- - - mentation Apps ( ERP ) - - AMO Attacker - Public Cloud Hosted - - Private - - Security - nd Tier Legend ： Global capability Top Tier 2 Specific capability Not competitive/Local Out of scope 6
Global Business Sales / Operating Income （ USD ） Sales 22B Sales 20B Sales 15B Operating Income* Operating 1.5B Income* 0.7B FY2014 FY2016 FY2017 (Target) (Target) * Operating Income excludes M&A-related temporary expenses, such as depreciation costs of intangible fixed assets. 7
Global ICT Services Market (enterprise customers) 1,770 (USD Billions) 5 % Growth ← New business per annum ← BPO 1,460 1,500 ← Traditional apps ← SI for traditional apps Cloud 1,000 10% of ICT market SaaS = $160B market ← Cloud SI （ GAGR 23% ） IaaS/PaaS ← IT infrastructure 500 ← Network services ← ITO/AMO 0 2013 2014 2015 2016 2017 Source: NTT’s calculation based on inputs from McKinsey, etc. * Those numbers exclude software/hardware direct sales and telephone service. 8
Customers’ Needs by Size Customer’s needs on cloud Lots of large, complicated customized At-scale legacy Apps Fortune 100 Enterprise 100 (US companies) → Mostly cloud migration by SIers /Govt. Companies who implemented existing legacy Apps Higher mix of packaged Apps such as SAP 3,000 and Oracle, etc. Large 5,000 employees or more Companies [Ave. Revenue: $6B - $8B] enterprise → Cloud migration driven by cost reduction & business transformation → Open to IT players who can provide Mid-market cloud migration of IT infrastructure and (upper-end) apps in total 16,000 From 500 to 4,999 employees Companies [Ave. Revenue: $110M - $320M] Mid-market (lower-end) Discard existing Apps, shifting to SaaS 6M → Limited migration service needs 499 employees or less SME Companies [Ave. Revenue: $5M - $10M] * The numbers of enterprises are examples of the US market. The market segments are defined based on those of a US census. 9
Toward Sustainable Business Model Transformation of Customer’s Businesses Full-stack Full-lifecycle Migration to Cloud/ Modernization of Total ICT Innovation Hybrid Cloud offering Applications Management Modularized, Standardized, Cloud systems and Automated Solutions Orchestration AMO IoT Business/ICT Consulting, Vertical solutions Cloud Apps Development DC Cloud SI ITO Big Data Network/NFV NI Security AI On-premise systems On-premise systems Tailor-made solutions Tailor-made solutions IT Infrastructure Applications Target / focus Legend NTT’s Strengths 10
Steps to Reach Sales/Operating Income Targets （ USD ） +7B Organic Growth, Strengthening GTM, M&A Sales 22B Profit thru Efficient revenue growth Sales Operation/Services +300M and Optimized 15B Procurement +500M Operating Income* Operating 1.5B+α Income* 700M FY2017 FY2014 (Target) * Operating Income excludes M&A-related temporary expenses, such as depreciation costs of intangible fixed assets. 11
Procurement and Efficiency of Services/Operation Optimized Procurement Efficiency of services/operations Direct materials Data Center Network Indirect materials ITO (Managed Service)/NI Application 12
Further Steps in GTM (1) Strengthen cross-selling activities Cross-selling between ADM and ITO Delivery-led selling Propose and win additional businesses in delivery/ operation phase (2) Transformational solution selling Apps modernization Cloud migration (3) Advisory-led selling Win more Provide total solution for specific industries Big Deals 13
WGs for Profit Generation Accelerate Efforts through Group-wide Projects Thorough Cost Optimization Deliver Steady Growth of Sales Strengthen Products/Services Optimize Services and Operations ✓ Strengthen consulting/industry-specific solutions ✓ Optimize NTT Group efficiency (cloud, security and IT outsourcing services) ✓ Create solutions that integrate services provided by a variety of companies ✓ Avoid duplication in new service investments Strengthen Sales/Marketing Efforts Reduce Procurement Costs ✓ Expand our global accounts ✓ Collaborate within NTT Group re: procurement Strengthen Group Governance and Risk Management Standardize and Improve Strengthen Financial/Operations Systems IT Infrastructure ✓ Set common accounting standards ✓ Enhance collaboration ✓ Facilitate transparency of information within NTT Group’s global re: Group management ✓ Bolster cash management subsidiaries 14
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