In this section, we provide an overview of LAC Co., Ltd., including the origin of the company name, our corporate history, the businesses of the two business segments and their structure, and business results trends.
Some 30 years ago, when the Internet was still in its nascent stages, the late Gen Mishiba foresaw that the development of a networked society would make the world smaller in terms of space and time. Inspired by this future vision, he founded a company and named it Little eArth Corporation Co., Ltd.
The second letter in "Earth" was chosen for the abbreviated company name because "LAC" is pronounced in Japanese in a similar way to the English word "luck".
The LAC of today was formed through the management integration of three companies. The year 2007 marked the integration of the former LAC, founded in 1986 as a systems development company, and A&I System Co., Ltd., founded in 1987 to construct and operate core systems for financial institutions. In 2012, the former LAC and A&I System were integrated with IT Crew Co., Ltd., a subsidiary established in 2008 as a dealer of servers and network equipment, and the three companies were absorbed by LAC Holdings Co., Ltd.
In 1995, a time when the Internet was not yet in widespread use in Japan and the necessity of cybersecurity was not recognized, the former LAC started an information security business, anticipating market needs ahead of competitors. Although the security business remained in the red for some time, founder Gen Mishiba continued the business out of a strong conviction that the time would come when security would be considered necessary. The business achieved profitability after ten years, and LAC has continued to enhance its service offerings as a pioneer and leader in security services.
A&I System has a background in construction and operation of core systems for financial institutions gained mainly as a participant in development of Fuji Bank's third online system. This background has been key to LAC's ability to secure a stable customer base for systems integration services in the finance industry.
LAC provides security services, an area it pioneered in the industry, and a wide range of systems integration services as an independent IT vendor. Our strengths are highly competitive and unique services, and a solid customer base consisting mainly of large corporations.
LAC continues to evolve under a divisional structure instituted in April 2018 that unites production and sales to provide optimal solutions tailored to the specific characteristics of individual industries and regions. We will continue help our customers achieve digital transformation with a security-focused approach combining Security Solutions Services and Systems Integration Services.
The high level of added value that the SSS business brings to the market with its comprehensive security services and its high growth potential are attributable to its Japan Security Operation Center (JSOC®), one of Japan's largest security monitoring centers, and its team of security engineers who are armed with a level of expertise that is among the highest in Japan.
Although the SIS business's sales account for approximately 60% of total sales, we are focusing management resources on expanding the SSS business due to its high level of growth potential.
Business Results Trends
In 2008, the year following the management integration of the former LAC and A&I System, LAC acquired the dealer business of an IBM affiliate with the aim of expanding the scale of its business. Subsequently, initiatives were implemented to strengthen the profit structure. During that time, the SSS business has grown while the SIS business has supported earnings.
Awareness of security measures increased due to factors such as a data leak incident in 2015 at the Japan Pension Service, and the business continues to expand. In addition, there is a shortage of security engineers in the IT market, and in the mid-term management plan "TRY 2021 Stage 2", we are working to strengthen our workforce with a focus on hiring new graduates for mid- to long-term revenue growth in the security business.
Segment profit is profit before offsetting of corporate common expenses. The segment profit figures do not correspond to operating income when totaled.