Obic - Company History

Obic began in April 1968 as Osaka Business, a shop in Nishi-ku, Osaka selling used accounting machines to small Kansai firms. Noda Yoshihiro had sold office equipment at the Kintetsu department store while studying at a university night division, quit when good sales numbers could not outweigh the stigma of a night degree, spent a period selling for a foreign office-machine maker, and then went out on his own. The form of the business mattered: he did not become an agent carrying a manufacturer’s new machines, but a distributor moving second-hand ones — a trade in which he, not the maker, set the terms.

The same year he signed a leasing tie-up with Orix, and it did more for the company than the machines did. A small firm that could never find the capital for a computer could find a few tens of thousands of yen a month, so the lease converted a purchase decision into a running cost and opened a customer layer that had simply been priced out. The share of sales riding on leases kept climbing; by 1979 it reached 90%. Branches followed the money — Tokyo in 1971, Nagoya in 1973 — giving the company a sales net across Japan’s three metropolitan regions.

Then came 1973, the year that fixed the company’s character. Obic recruited twenty experienced salesmen from a rival; almost immediately all twenty resigned together and set up a competing firm. Noda’s response was absolute and permanent: stop hiring mid-career staff altogether, take new graduates only, interview them himself, and grow them slowly inside the company. Around it he set three principles — develop in-house, sell direct, keep fixed costs low — that would still be governing the business half a century later.

In January 1974 the company dropped the place name from its title and became Obic. What it really discarded was an occupation. As long as it carried a manufacturer’s machines, the maker set the price, the delivery date and the product cycle, and the dealer’s margin shrank toward freight and installation. Noda began calling the hardware raw material and the reservation system for a golf course or a hotel the product — moving the basis of pricing off the cost of the machine and onto the customer’s own operations. A firm that had started as roughly six engineers now had a business definition that matched why it employed them.

That choice dictated the shape of everything else. Owning the software meant permanently keeping people who could write it, which in turn justified the new-graduate pipeline; from about 1978 the Flex Library pooled each engineer’s work as company property, cutting development and training time. Packaged products followed — OFFICE in 1980, the Japanese-language OFFICE 0 in 1981 — carried on Mitsubishi Electric’s MELCOM line, on which Obic became the top dealer. By 1979 sales were $26.1M (¥6bn) against 310 employees, of whom only 50 were in sales and 260 in systems and engineering; profit, by then, came from the software.

The vertical-package strategy also taught the company what concentration costs. Early-1980s growth leaned heavily on systems for the booming consumer-finance lenders, and when the moneylending law of 1983, tightened in 1985, pushed those lenders into failure, the customer base evaporated at once. From 1985 Obic carried the industry-specific know-how sideways instead — booking systems for driving schools, collateral appraisal for banks — and in 1988 redefined itself from a sales company into a company of sales and systems development. The line ended in April 1997 with OBIC7, an ERP suite for mid-sized firms that split production, sales, accounting, HR and payroll into packaged modules and finally made the product industry-neutral.

Obic listed on the second section of the Tokyo Stock Exchange in December 1998, thirty years after its founding, and reached the first section in March 2000 — barely a year later. It raised money from the market exactly once, a 600,000-share offering in January 2000 at $573 (¥61,740) a share, and has carried no borrowings since. Windows 98 helped: with software running across machines from any maker, the ground that NEC’s PC-9800 had held gave way, and Obic could move from per-customer bespoke work to packaged business software — turning a line that had carried almost no profit into the source of it. Group affiliate Obic Business Consultants, founded by the accountant Wada Shigefumi with Obic’s backing, went public in 1999 and later reached the first section on its own.

Then the company tried, once, to be something else. In 2003 Noda moved up to chairman and Aiura Akira, a lifer who had joined straight from university in 1974, took the presidency. He introduced quarterly performance evaluation in place of annual review and, with Works Applications in view, took Obic into ERP for large enterprises with revenues around $862.7M (¥100bn). The product itself was not the problem. The constraint was arithmetic: a company that hired a few dozen graduates a year could not staff the work, and the obvious remedy — buying experienced engineers — was the one thing the 1973 rule forbade. Sales chasing quarterly numbers took orders that would lose money, engineers absorbed the overrun in overtime, and the rest leaked out to subcontractors.

The fix came from inside. In 2005 the chairman brought Tachibana Shoichi, then head of the Yokohama branch and top of the sales rankings thirteen years running, to Tokyo, and he put sales staff and systems engineers at desks on the same floor rather than on separate ones. Loss-making projects fell by 70–80%, the margin began to recover, and attrition turned down. In 2006 Obic effectively withdrew from large-enterprise ERP, Aiura stepped down, and the founder returned to the presidency. The detour had shown the mechanism plainly: relax the founding principles and the work does not fit; keep them and some markets are simply out of reach. Two functional subsidiaries were absorbed in 2012 to tighten the structure further.

In 2013 Noda became chairman and Tachibana Shoichi took over as president — the first head of the company from outside the founding family, forty-five years in. His first move was to change how OBIC7 was sold rather than what it was: from April that year, Obic Cloud delivered the suite as SaaS on Microsoft Azure, keeping the company’s own data centres and servers to a minimum. The commercial point was the revenue shape. Selling new build-outs (SI) is lumpy; running and maintaining systems (SS) is not, and a core accounting or payroll system is the thing a customer is least able to rip out. Recurring revenue from installed customers accumulated, an SOC 1 Type 2 report in 2019 removed the last audit objection for large buyers, and that year Obic passed a market capitalisation of ¥1 trillion.

What sits underneath is a contrarian structure that almost no listed integrator runs. Obic subcontracts virtually nothing and still hires no one mid-career; new graduates are trained to carry sales, implementation consulting and maintenance in one hand, requirements are standardised industry by industry so that nothing is left vague at the point of order, and even security testing is done in-house — which is why, as its planning office puts it, work that takes a competitor a year takes Obic six months. Where a typical Japanese integrator earns an operating margin near 10%, Obic reported $809.9M (¥121bn) in revenue and $523.9M (¥78bn) in operating profit for the year to March 2025, a margin of 64.6%, on an equity ratio above 90% and cash of roughly $1.1B (¥150bn). Nine in ten SI contracts are now cloud; Tachibana says the climb is still at its first station.

The unresolved question is ownership rather than operations. At the 2023 annual meeting, support for re-electing the 89-year-old founder-chairman fell to 83%, with 17% against — institutional investors dividing over a founding family’s long hold and a balance sheet that keeps piling up retained earnings, including $292.4M (¥32bn) of investment securities bought in FY2021 to work the surplus cash. Tachibana continues to widen cloud OBIC7 among mid-sized companies and lift the subscription share, but how voting control held by the founding family and executive responsibility held by a non-family president are meant to be re-divided is still undecided. The 1968 idea — lower the customer’s upfront burden and take the money monthly — has survived into the SaaS era; how far it can now be extended is the live question at fifty-seven.