Asia’s first case study of Microsoft Entra External ID: How Japan’s bearing pioneer NSK is taking on business DX

NSK, the first company to develop bearings in Japan, takes on a new challenge in the digital domain

In 1916, NSK succeeded in developing and manufacturing bearings in Japan for the first time. For over 100 years since the achievement, the company has contributed to both industrial development and environmental preservation. Bearings are essential components that enhance the reliability and efficiency of machines and equipment, while reducing energy loss. NSK’s contributions extend beyond Japan’s industry; since the 1960s, the company has expanded overseas and now supports the growth of customers worldwide through its bases in over 30 countries.

As a pioneer that has led the market, NSK now embraces the challenge of “change & go beyond” as its motto. Under the medium-term management plan (MTP2026) launched in fiscal 2022, the company is transforming its business portfolio based on this motto, aiming to continue delivering products that are chosen and trusted for the next 100 years, while fostering a corporate culture that supports this mission.

A key initiative in this effort is digital transformation (DX). In 2022, NSK established a digital transformation division HQ to drive changes in internal systems and operations. At the same time, transformation leaders were appointed within business divisions, creating a structure in which the IT and business divisions work in tandem to promote DX.

In advancing this collaborative approach to DX, a particularly important role is played by Microsoft Entra External ID. Mr. Yudai Hirayama, Senior Manager of the Digitalization Promotion Office, Industrial Machinery Business Division HQ at NSK, explains:

“We introduced Microsoft Entra External ID to drive DX centered on customer touchpoints, with the aim of digitizing customer touchpoints—such as developing customer service sites and engineering tools—and creating new businesses,” says Mr. Hirayama.

Microsoft Entra External ID is a feature within Microsoft Entra that performs authentication and access rights management (authorization) for external users, primarily customers. Positioned as the successor to Azure AD B2C, this service became generally available (GA) in May 2024. After its GA, NSK quickly decided to adopt the solution, becoming the first company in Japan to do so.

The need for customers to manage multiple IDs posed a potential obstacle to DX

A major reason NSK adopted Microsoft Entra External ID was to enhance integration with the DX initiatives led by the digital transformation division HQ and to improve customer convenience. Ms. Yuriko Makino, Group Manager of the ICT Solution Management Department, Digital Transformation Division HQ at NSK, explains:

“At the digital transformation division HQ, we promote DX by enhancing operational efficiency and enabling new ways of working, primarily through the development and operation of internal systems and the management of internal infrastructure. Among these efforts, the ICT solutions department is responsible for operating Microsoft 365 and rolling out new features internally. In January 2017, we decided to introduce Microsoft 365 company-wide as a global collaboration platform. Currently, about 18,000 employees worldwide use collaboration tools such as Microsoft Teams and Microsoft SharePoint in a unified environment managed via Microsoft Entra ID. Microsoft 365 and Microsoft Entra ID are essential foundations for our internal DX. We wanted to bring this same framework to our customers to further enhance their convenience,” says Ms. Makino.

The company-wide adoption of Microsoft 365 in 2017 has enabled unified management of employee user accounts (internal IDs) through Microsoft Entra ID. A single sign-on (SSO) environment has also been established and is used for authentication with SaaS applications and other services. In addition, the company is advancing the use of generative AI through Microsoft 365 Copilot and Azure services such as Azure OpenAI Service.

On the other hand, for customer user accounts (customer identities, or IDs), there were various IDs such as login IDs and email addresses, requiring customers to log in for each service with different IDs.

“Business division DX faced a variety of challenges, one of which was siloed customer IDs. Our customer-facing services include engineering tools that provide a one-stop solution for bearing selection, specification confirmation, and CAD data downloads, as well as the NSK Academy, where users can learn basic knowledge and handling methods for our products. However, customers had to manage and use multiple IDs to access different NSK services,” says Mr. Hirayama.

Evaluation of Microsoft Entra External ID from the perspectives of personal information management, security, and operational efficiency

The siloing of customer IDs led to increased complexity and additional man-hours in management. At NSK, each business division or team had its own methods for authenticating and managing customer IDs, making it difficult to maintain consistency of information and resulting in a reliance on the skills of each person in charge. Ms. Makino describes the challenges they actually faced:

“Because of siloing, it was difficult to organize customer IDs. Password reset processes for users also differed by system, requiring separate handling and increasing management man-hours. This made it hard to enforce governance under a unified policy, raising concerns about security. For example, even if we wanted to implement multi-factor authentication for each site or application, it required modifying apps and changing implementation methods for each system individually,” says Ms. Makino.

To address challenges such as siloed customer IDs, increased management workload, the growing complexity of security management, and difficulties in driving DX, NSK began exploring customer identity and access management (CIAM) solutions.

“Among IDaaS (identity as a service) products, we evaluated several solutions offering CIAM capabilities and ultimately adopted Microsoft Entra External ID. Our evaluation focused on factors such as improving the customer experience, providing a user interface (UI) similar to that of Microsoft Entra ID, enhancing personal information management, addressing security risks, and streamlining user administration. Microsoft Entra External ID met all these requirements,” says Mr. Hirayama.

First corporate user in Japan, fully leveraging support from Microsoft

NSK began introducing Microsoft Entra External ID in June 2024, one month after its release. After about half a year of testing, full-scale operation was scheduled to begin in November of the same year, with a phased transition to authentication and authorization via Microsoft Entra External ID for newly developed applications starting in 2025.

With the implementation of Microsoft Entra External ID, customers will be able to create a new account when using NSK’s newly developed applications and, with that single account, use a variety of services provided by NSK. System administrators will also be able to manage customer ID authentication and authorization, configure security groups, and protect IDs using the same graphical user interface (GUI) as Microsoft Entra ID—just as they configure authentication and authorization for internal IDs.

Being the first company in Japan to implement Microsoft Entra External ID after its GA release, NSK faced various challenges on the path to full-scale operation. Mr. Hirayama reflects:

“We ran into system issues that hadn’t surfaced during testing and identified previously unknown bugs. Since it was a new product, manuals and troubleshooting information were often not yet published, which made it difficult to find solutions. However, whenever we faced problems, Microsoft provided support each time, helping us resolve issues one by one. It was certainly not a trouble-free process, but thanks to support from Microsoft, we were able to steadily move forward with the implementation,” says Mr. Hirayama.

Ms. Makino also notes that for system issues and bugs encountered during testing, her team fully utilized support from Microsoft by frequently consulting and submitting improvement requests via Microsoft Teams chat.

“We held regular weekly meetings with Microsoft, during which we consulted on various matters. They also set up a system that allowed us to receive timely support whenever we ran into trouble. Just having someone we could immediately reach out to provided reassurance. We’ve also submitted requests for improvement based on our actual user experience. It truly felt like we were building a new service together with Microsoft,” says Ms. Makino.

Discovering bugs in Microsoft Entra External ID and testing how users actually use the system have also brought significant benefits to Microsoft service development. In fact, the improvement requests submitted by NSK were specific and closely aligned with real user needs, so they have already been fed back to the development team at Microsoft. Microsoft has established a system in which these requests are prioritized and addressed in future version updates.

Integrating customer IDs enables DX initiatives tailored to customer needs

By implementing Microsoft Entra External ID, NSK has actually started to see a variety of benefits. Regarding one of the evaluation factors, “UI similar to that of Microsoft Entra ID,” Ms. Makino comments:

“During the evaluation phase, Azure AD B2C was also a candidate. In fact, Azure AD B2C offers the advantage of building complex authentication and authorization mechanisms using XML, but it also presents challenges, such as the need to directly write XML, which can make management cumbersome. In contrast, Microsoft Entra External ID offers the same UI as Microsoft Entra ID, enabling authentication and authorization to be implemented via a graphical user interface (GUI). Conditional access and ID protection mechanisms can also be configured for customer IDs using the same operations as when configuring them for internal IDs. In actual operations, it’s extremely convenient to be able to switch between internal IDs and customer IDs on a single administration screen. Going forward, we intend to establish a structure where the IT department can oversee the operation and management of systems and services newly introduced by business divisions. Having the same UI as Microsoft Entra ID is a major advantage for operational management,” says Ms. Makino.

They are also seeing positive results in the areas of enhancing personal information management, addressing security risks, and streamlining user administration.

“With Microsoft Entra External ID, user IDs can be unified to an email address. Previously, users had to juggle multiple usernames and passwords for logging into different sites, but now, consolidating them into an email address has eliminated data duplication and inconsistencies. Centralized management with Microsoft Entra External ID breaks down silos and makes it easier to enforce security policies,” says Ms. Makino.

Mr. Hirayama adds that regarding the most important factor, improving the customer experience, Microsoft Entra External ID has become an essential foundation for enhancing user convenience and driving DX going forward.

“Users can now log into the services provided by NSK with a single ID, which greatly enhances usability across our sites. We feel that Microsoft Entra External ID is a solution that makes it easy to implement DX initiatives tailored to each customer’s needs,” says Mr. Hirayama.

Realizing smooth integration of internal and customer IDs, with a view toward global expansion

The number of users of NSK’s service sites totals around 10,000. After the introduction of Microsoft Entra External ID, the company plans to unify customer IDs into a single common ID and offer a variety of features and services tailored to customer needs.

“We’re still in the early stages and exploring how we can expand, but since we are managing customer IDs, it's more important than ever to strengthen our data, security, and privacy management. In that regard, one major advantage of Microsoft Entra External ID is that it can be operated on the same authentication platform as Microsoft Entra ID, allowing us to promote DX while maintaining the same robust level of security as in our internal environment,” says Mr. Hirayama.

Just as Microsoft Entra External ID has enabled smooth integration between internal and customer IDs, Mr. Hirayama and Ms. Makino also maintain close daily communication using tools like Microsoft Teams to ensure smooth collaboration from their respective roles in business DX and internal DX. The fact that Microsoft Entra External ID shares the same GUI as Microsoft Entra ID makes it easier for them to align their perspectives and engage in trial-and-error together. Mr. Hirayama shares his outlook for the future as follows:

“As we expand the use of Microsoft Entra External ID, we’re also planning to roll it out globally. By bringing IT and business closer together and leveraging digital technology, we will work to ‘change & go beyond’ in both our operations and business,” says Mr. Hirayama.

Microsoft will continue to support NSK in its ongoing endeavors.