Founded in 1997, SIOS technology has acquired an expertise in the sale of software, system integration, and support. Today, it is making tremendous investment in FINTECH by leveraging on AI and Machine Learning Technology. SIOS president Mr. Nobuo Kita speaks about this and more in this interview with The Worldfolio
How will the 4th industrial revolution impact SIOS’ business model?
The 4th industrial revolution will transform the financial industry, and we believe that SIOS can be an integral part of that change. By leveraging on our expertise of AI and M2M learning, we believe that we can be an integral part of this transformation.
What is your assessment of Japan’s current software knowledge and capacity when compared to the USA?
In our industry, I believe that Japan is lagging behind the USA. When we look at the companies that have successfully created digital clouds, the latter is dominated by American corporations. While Japan does have some important players, such as NTT or Fujitsu, as of today, no Japanese corporation is able to compete with the likes of Amazon, Microsoft, Google or IBM. To put it in simple terms, the USA is simply dominating platform usage.
At SIOS, our objective isn’t to provide a platform per se, but rather to supply a solution to the monopolies imposed by these platforms. From the point of view of the users, the market leaders are unable to provide for the specific requirements of their customers; and that is where opportunities arise for SIOS.
Take the example of Fintech. The Amazons and Googles of our era have a broad understanding of such technologies, but they lack in technical expertise and are therefore unable to provide a tailored service for specific customers. At SIOS, we leverage on the massive platforms of these leaders by providing specialized teams and services dedicated to niche markets. Throughout the years, we have established positive relationships with Amazon, Microsoft and Google; and we provide tailored expertise and specific applications on top of their cloud.
SIOS has the chance to leverage on some of the world’s biggest names as technological partners. Amazon, Microsoft, SAP… all these companies work in collaboration with you. What is your relationship with these companies?
Unfortunately for them, some large Japanese corporations such as NTT or FUJITSU are directly competing with Microsoft and Amazon; and for them, the biggest challenge is to acquire market share as platformers. At SIOS, we are too small to compete with these organizations. So, instead of competing with them, we use these platforms as our market. We have an acute knowledge in certain applications and sub-sectors in which platformers do not have expertise. To a large extent, our role is to find “holes” within the pre-established systems and to fulfil these holes with tailored solutions. From FUJITSU to Microsoft, passing by Amazon and Google, our role is to provide specific solutions to all platformers.
How do you see the future of the FINTECH sector in Japan?
FINTECH is a truly interesting sector. The bitcoin market, along with other cryptocurrencies, is growing tremendously and will soon become mainstream. I personally have a BITCOIN account, and the latter has been a great investment. However, cryptocurrencies are but a fragment of the many innovative technologies currently developed for the FINTECH market.
At SIOS, we are currently researching a solution that will enable us to use our AI technology in order to facilitate banking transactions. Commercial banks have a multitude of accounts and they process an astonishing number of transactions on a daily basis. However, these banks have never used the acquired data to create new markets. At SIOS, we are assisting these banks in doing just that. Current technological advancements, such as big data and digital analytics, have the power to allow banks to further explore the information of their customers. At SIOS, we are designing a solution in collaboration with large commercial banks in order to leverage on the humongous information that they process. If treated and analysed correctly, this pool of data can become an incredible business tool. To put it in simple words, our goal is to facilitate and revolutionize the entire banking and credit system.
Can you give us an example of a service that SIOS is currently working on that will benefit end users?
We are currently developing a system to facilitate financial and banking transactions. If banking institutes had access to cross-continental transaction data, they could further analyse your credit record. For example, there are people today that are not able to borrow bank money when they live abroad. When I lived in America in the 90s, I did not have a banking track record in the USA. I was therefore unable to apply for an American credit card. However, I had a historical track record in my home country, Japan. And if banks were enabled to access my oversea track record, they would have granted me the credit card.
On the one hand, that would have been convenient for me. On the other hand, the bank would have acquired a new customer. If banks had access to cross-national financial data, they could identify trustworthy clients in a reliable and safe manner. At SIOS, we are developing that precise tool. Our aim is to create a centralized pool of financial transactions through big data in order to revolutionize the international banking system.
2017 marks the 20th anniversary of SIOS. What milestones would you like to highlight in these 20 years of existence?
We started as a solution provider for Open Source Technology in 1997. When we started our business, the term “open source” did not exist. For the record, the term was created in 1998 as a marketing tool by Erick Reimond, a historical advocate for open source and free software. Today, SIOS is trying to provide alternatives for IT users, by granting them with a solution to break from the pre-established monopolies of IBM or MICROSOFT.
What are the advantages of Open Source Software?
Open Source Software allows its users to choose whatever software or application they see fit; they no longer have to be the slaves to MICROSOFT or any other massive corporation. Instead of following what the vendors are offering them, we started our company in order to grant IT-users the freedom to do whatever they want. We did our IPO in 2004 and we are now expanding our business in overseas markets.
In order for customers to make their open source software robust and highly available, they need solutions. So we acquired Steel Eye Technology, a company that provides high-availability and reliability for open source software. By acquiring Steel Eye, we became able to offer high-availability solutions for all customers. After that, we expended into other business areas and we acquired financial companies to provide services to financial institutions.
How do you see the future of the open source software solution?
Open Source allows for freedom of choice. In an Open Source Software, the coding matrix is fully available and the user is authorized to do whatever he wants with it; that's the beauty and importance of Open Source Software.
Other differences between Open Source and proprietary software are: lack of transparency, lack of ability to change, and lack of access to the source code; proprietary software users are the slaves of their vendors. Whatever the vendor does, the user has to follow, and that is not the case for Open Source. At SIOS, we grant our customers with the freedom to choose their own route.
Throughout the years, your company has evolved into a diversified software provider. Not only do you offer business continuity, but you also provide Open Source Solutions, as well as developing smart applications, and more recently, dealing with integrating services; and offering AI/Machine-learning software for operational analytics. Can you tell us a bit more about your services, and what amelioration do they bring about?
We provide solutions that help our customers choose alternatives from proprietary technologies. Our aim is to let our clients understand that the choice is theirs to make. Alternatives exist for IT users; and these alternatives, this freedom, it will allow them to achieve more than what they are currently doing. So what we provide is an alternative. We tell our clients that they have the freedom to choose by showing them different services could help them save money or improve their customer’s happiness.
Our machine learning technology shares a similar objective. Through Machine Learning, we enhance our customers’ IT services. At the end of the day, it is a win-win-win situation: We sell solutions which ameliorate the services of a company, which then benefits the end-user.
Our next development will be to apply our AI and Machine Learning technology to FINTECH. We are also exploring the use of Machine Learning Technology for IT operational analytics.
Both nationally and abroad, your company faces tough market competition, with industrial giants and local competitors wanting to get their slice of the pie. What makes SIOS competitive on the global stage?
Through our physical presence in the USA we are able to provide high availability solutions to all entities undergoing IT operations. Since we are already implanted in the market, we also beneficiate from having acquired local knowledge. Furthermore, our engineers have the best understanding of open source software in the whole of Asia pacific. SIOS’ human resources are, quite frankly, unparalleled in terms of skills and expertise. We also have a powerful alliance with the largest OS software company, RED HAT. Our competitive advantage is a mix of these three features: human resources, powerful partnerships and local knowledge.
Your company is present all around the world, with bases all around Japan, but also in the Americas and Europe. From FY 2015-16, you had substantial growth in sales. Japan, for example, increased by 30%, as the Americas lived a +16% increase in sales, passing from 425 million to 497 million yen. What were the reasons for this growth?
Over the last three years, our growth spawned from the financial industry. We have been aggressively acquiring companies and expanding our business segments. Fintech developments has been our fuel for growth.
Blockchain, cryptocurrencies, AI… The financial industry is currently living a fascinating period; one where ground-breaking technologies are re-designing the entire market. At SIOS, we want to be an integral part of that transformation.
Can you tell us more about the products you are currently developing for the FINTECH market?
ALM (Asset Liability Management) software is our most significant R&D solution. We are also researching the credit solution I mentioned earlier so that commercial banks and customers can build a better credit system for all.
Can you tell us more about the philosophy of SIOS?
We are currently in the midst of a global expansion, and as such, we have created a new brand message addressed to the global market. At SIOS we work in “Making the impossible possible for the people of the world.”