A Look Inside Huawei’s Own Digital Transformation
As industries around the world go digital with expectations of supporting sustainable business growth through transformation, the time has come for Huawei to reveal a little of the company’s own digital transformation. In the past, Huawei seldom talked about its business operations and transformation from its own perspective. The world may know that Huawei has experienced remarkably fast growth over the past 30 years, but few know how thoroughly the company has committed to the principles of digital transformation.
This commitment unfolded through several phases and, by 2016, Huawei was fully focused on improving enterprise efficiency through transformation. At the same time, in the face of fast growth, Huawei also considered how to shift from a centralized governance model to a demand-driven supply model that enables organizations at the company’s frontlines to have more responsibilities and authority. In making these changes, Huawei will continue to follow the ROADS experience-driven philosophy; improve internal efficiency and productivity; make transactions between customers, partners, and Huawei more convenient and safer; and improve customer satisfaction.
In recent years, Huawei’s business and IT expansion have been carried out by focusing on three guiding principles: To improve user experience, to increase business operating efficiency, and to build a lightweight IT architecture. As such, Huawei has explored many options in the company’s widely varying business domains — ranging from R&D to sales and delivery — and achieved impressive and fruitful results. We want to share our practices for digital transformation with customers and partners in the hope that enterprises in all industries can gain inspiration from the effort and resources applied by our dedicated teams of IT professionals. This article describes what Huawei has done in the past, what we are doing during digital transformation, and what we want to do in the future. We hope that the sharing of Huawei’s transformation practices can provide reference points for you, and we welcome in-depth discussions and research with all industry players.
Huawei is among the world’s best examples of the power of digital transformation. This is a global enterprise. Its sales revenue in 2016 reached all-time highs of USD 78.6 billion, ranking No. 83 in the Fortune Global 500. In partnership with telecom carriers, Huawei has built over 1,500 networks, helping over one-third of the world’s population connect to the Internet, and Huawei sells hundreds of millions of mobile phones every year. Huawei operates in more than 170 countries and regions around the world, with a total workforce of approximately 180,000 employees. Around the globe, Huawei has more than 900 branches, 15 R&D centers, 36 joint innovation centers, and millions of partners, including more than 60,000 suppliers.
How does Huawei operate in such a large and complex organizational structure? Over the past 30 years, Huawei has continuously implemented business transformation as well as process and IT implementation. These efforts have paid off again and again: Huawei has seen stable development, rapid growth, expansion from China to the world, and diversification from a single business to multiple businesses. In this process, Huawei has not encountered big bottlenecks or obstacles in the operations of the entire company.
Today, many people are talking about the future of intelligent systems, which pose new challenges for IT planning. Like any enterprise, we are asking what goals Huawei should strive for in business and IT transformation. Huawei believes that migration to cloud and service-oriented operations are only means to achieve goals; the actual goal of transformation is to ensure internal and external compliance, promote business development, and support the company’s efficient operations. To put it simply, the goal is to generate more revenue and profits while improving capabilities and efficiency. Surely this goal applies to the digital transformation of all enterprises.
What role does IT and other technology play in this transformation? What is the relationship between technology and business? Huawei believes that technologies must align with the business goals of the company, and drive and enable business transformation. Ultimately, business is the prime driving force of transformation.
Currently, Huawei operates businesses around the world, and business complexity and uncertainty are increasing. If all business processes are managed using a centralized management model, it is impossible to meet future development requirements. In the future, the management model should be like this: Elite team-centric operations supported by big platforms. That is, frontline personnel must be authorized to efficiently make decisions. In this distributed management model, the entire company’s management architecture, operating processes, and IT construction will change.
As such, Huawei’s transformation needs to be streamlined based on the strategic business goals. First, we need to transform Huawei’s business model into one driven by user experience. In the past, Huawei’s IT teams passively responded to the requirements of business departments by providing function-oriented IT systems that linked a series of business processes. Frontline personnel had to find the processes first and then locate the corresponding IT functions. As a result, personnel usually needed to open more than 10 IT systems to complete a single task. In the future, Huawei needs to build service-oriented platforms driven by user experience and based on business scenarios to quickly respond to the requirements of frontline users in multiple business scenarios. To make such service-oriented platforms a reality, Huawei must have unified cloud- and service-oriented IT systems. This is the vision of Huawei for the overall architecture of future business transformation.
At the same time, we need to provide a ROADS experience for users. Huawei has been noted for product innovations, and customers know Huawei primarily in terms of the company’s products. In the future, this corporate image will expand, as Huawei becomes an enabler for ICT transformation of enterprises, providing technical services and ICT transformation support to all types of industry customers. This includes helping telecom carriers to provide ROADS experience-driven services to their users.
To achieve these goals, Huawei first needs to apply the ROADS principles and technologies to its company’s own business platforms. This is the services target of Huawei’s IT department going forward. We will stay clearly focused on this goal to achieve success in transformation. As mentioned earlier, the purpose of digitalization is to solve business problems, and I personally endorse this principle in the strongest terms. The first priority of the IT department should be to overcome challenges in user experience and business development.
To support business transformation in efficient and versatile ways, IT architecture requires three changes.
Many CIOs have faced the disappointment of upgrading IT facilities at great expense only to find that their traditional closed architectures leave IT systems unable to interoperate or share information; the upgraded systems therefore fail to meet the increasingly diversified requirements of business departments. Huawei faced the same challenge. Like everyone else, our previous approach was vertical streamlining and then horizontal streamlining. However, the result was that the IT systems were too complex for business departments to use. These were high-speed systems, but users described them as slow because IT took a long time to respond to business needs.
For example, Huawei’s mobile phone business has grown rapidly around the world, but supporting this growth with new IT facilities took 6 to 9 months or even years. To set up a mobile phone store in, say, Ghana to take advantage of an immediate business opportunity, the IT systems could not meet the requirement.
The primary reason for upgrading the traditional closed IT architecture to an open one is for rapid response to business needs.
In the past, Huawei’s IT departments did not pay much attention to user experience. When developing an IT application, few IT R&D engineers knew how many people would use the software and who the users were. The engineers did not operate the system themselves, either. In most cases, the IT team would develop an application to meet the requirement of a single business department. The result was that the IT system had a large amount of junk information.
Even though all of Huawei’s IT application systems served business processes and functioned well, user experience was unsatisfactory. This problem came up often, and one basic example was when I applied for a local mobile phone number during my work in Germany. The service functions of the telecom carrier were perfect, but my personal experience was poor, because all the service information was in German, but I did not speak German.
Enterprise CIOs who look at the way their users work will see many examples of this issue and, as with me, will look for good answers to this question: What problems do I really need to address for the business groups I serve?
This is the goal for Huawei going forward because our current IT system is an internal system that does not connect well enough with external networks. For example, when a partner wants to participate in a Huawei project, how can they connect with us to obtain the latest project information? For an innovative technology company that wants to become a Huawei supplier, where can they show their products to Huawei? How do our customers learn about our latest product introductions?
We know we are not alone in dealing with these issues. Like us, other enterprises need real-time service systems connected to users for online, real-time, automatic handling of end-to-end business processes. As Huawei CEO Ren Zhengfei puts it, all transformations and IT constructions must be aligned with business needs to make business operations easier, faster, and more efficient.
Implementing the three changes described here is quite a challenge! First, the IT architecture needs to be layered and deeply decoupled in an experience-driven, service-based manner. For example, the IT system must automatically identify users and display appropriate portals for different users, access devices, access locations, access modes, and access scenarios. The IT system can then provide information to users rather than requiring that users search for information. Based on user identification, the system should provide the best business processes, business operations, required information, and useful support at the appropriate times.
When Huawei committed to implementing these changes, we gave ourselves until 2019 to complete the transformation in all business domains. At the halfway point of our three-year plan, we are on track and confident in the success of this transformation.
Even before our latest transformation plan, Huawei explored many IT upgrades for departments that included R&D, sales, manufacturing, delivery, and logistics. These explorations have proved extremely fruitful, as the following examples show.
R&D is Huawei’s largest sector, accounting for almost half of Huawei’s 180,000 employees. Huawei’s IT department has decoupled the processes, tools, data, and compilation environments used for product development to provide services such as a test cloud, compilation cloud, and developer community. These services cover the entire R&D process and greatly reduce the time needed to move software and hardware from R&D to production.
To commission a new mobile phone, for example, developers used to take several months for tasks ranging from applying for test equipment to setting up an IT environment. Using the new test cloud service, the environment preparation time is now reduced to a few days. Similarly, when compiling the operating system for mobile phones, the process for each model used to be isolated, so the large number of models took hours to finish. Now, a common compilation platform completes the entire process in minutes.
Huawei’s sales managers used to have difficulties getting a clear view of frontline activities and, if problems arose, the causes were often unclear. In recent years, thanks to digital sales, Huawei has unified online and offline management to thoroughly support sales teams’ operations. For example, sales managers at all levels can use mobile phones to view the real-time activities of more than 200 subsidiaries in more than 170 countries and regions. These efforts have gradually but effectively improved the operational capabilities and efficiency of sales teams.
Huawei’s delivery service includes a lot of activities, which used to require that delivery personnel open more than 20 IT systems. Now, Huawei has a service delivery platform that integrates all the necessary activities into a single portal that covers resource management, outsourcing management, site acceptance, goods reception, technical support, and personnel management. This business-oriented portal greatly improves delivery efficiency. In addition, Huawei built a delivery command center in Xi’an, China, where managers can view the progress of global delivery projects and implementation status of each site on a large-screen display. With this operations support, we achieve efficient field-delivery services with online, real-time, visualized management.
In Huawei’s global-manufacturing operations and command center, the company has integrated global suppliers’ status information and market requirements in a service-oriented manner. We build a real-time decision-making system around each business scenario to achieve quality forecasting. For example, if quality issues are found during product testing, quality warnings can be fed into the manufacturing process in a timely way. Through Big Data analytics, material lots can be managed and controlled efficiently.
Huawei has businesses all over the world, and goods are delivered and shipped around the globe. It is a challenge to manage the specific flows of goods in such a huge logistics network. The establishment of a visualized logistics platform in 2014, however, has made a big difference in our ability to meet this challenge. By the end of 2016, Huawei’s overall Consistency of Inventory Accounts and Goods (CIAG) rate had significantly increased. Now we can monitor more than 100 Huawei warehouses across the world in real time and manage the inbound/outbound goods in a visualized manner, greatly improving our collaboration efficiency during the global logistics process.
Each enterprise needs to build a smooth and efficient platform to smoothly connect devices, knowledge, businesses, and teams. In 2017, Huawei’s IT team launched WeLink to address this requirement, and the App now has 170,000 users. WeLink enables users to hold meetings, use service applications, and view shared files to maintain efficient connections with others in the same team, wherever they may be located.
Enterprises want to migrate their IT capabilities to the cloud but obsess about which cloud to use: Private, hybrid, or public cloud? I believe that CIOs should ignore these terms, because every enterprise needs multiple clouds.
Take Huawei as an example. To protect our core information assets, we need to tailor the migration of core processes to the cloud based on business characteristics. We also recognize that, no matter how good our own cloud is, we will use other public cloud services. During Huawei’s business cloudification, building Huawei’s private cloud does not conflict with the use of other public cloud services. The two need to be analyzed separately.
For example, I mentioned opening a mobile phone store in Africa. If we build IT infrastructure by ourselves, the IT department needs to build the network first and then connect the IT systems to the network, which is rather time-consuming. The fastest way is to use public cloud services to support business development. After looking at the advantages, it is easy to conclude that all enterprises, large and small, can benefit from the use of multiple public cloud services. These clouds make it simple to quickly respond to business requirements, accommodate diversified and changing operations, and support rapid business expansion around the globe. Enterprise CIOs can find an amazing degree of flexibility and economy by allowing business departments to use whatever IT resources meet functional, reliability, and security specifications, whether the services are purchased or developed in-house.
Based on a global network architecture and data center layout, Huawei has deployed eight 100-millisecond business circles with a focus on business and a ROADS user experience. The goal is to respond to business requirements of all countries within 100 milliseconds. Huawei has also applied a simplified network architecture in several core data centers to reduce the number of optical fibers exponentially. In the process of constructing this global network, we have used a large number of public cloud services, including Office365, video conferencing, WeChat, and other public cloud services provided by third parties. Even though Huawei provides its own Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) resources, we still use similar services provided by other vendors to achieve fast services in some areas.
To build a multi-cloud environment, an enterprise needs to do three things:
• Implement global unified IT resource management. This capability enables cross-cloud mobilization of resources. For example, an enterprise’s multiple research centers worldwide can jointly develop a product without worrying about where the required virtual machines or services come from. At this point in our transformation, Huawei’s IT departments have established preliminary IT resource scheduling capabilities that cover physical machines and cloud platforms.
• Build a unified cross-cloud integration platform. Connect to multiple public cloud services at the application and data layers so that only one connection with the IT system is required when businesses use the cloud services.
• Protect enterprise core information assets in a multi-cloud environment. Because the security of enterprise information assets is vital, a cross-cloud security system needs to be built when the public cloud is used. A multi-cloud security management environment is a necessity for enterprises. It is better to sacrifice some response speed rather than undermine the security of core enterprise assets.
In summary, these thoughts help guide Huawei’s IT evolution and may help other enterprises:
• Thought 1: Digital transformation should be led by business departments. Business managers should know how to support business development and resolve business problems through digital transformation. As an important enabler, IT departments must work closely with business departments and build a powerful IT platform to drive and support rapid implementation of transformation.
• Thought 2: The ROADS user experience functions as both the goal of digital transformation and one of the criteria for measuring the success of transformation. Experience standards for each item involved in digital transformation should be refined and developed.
• Thought 3: Digital transformation aims to build a better-connected, multi-ecosystem platform for customers, consumers, partners, employees, and suppliers — not just internal employees.
• Thought 4: Digitalization of business objects, processes, and rules defines the approach to overall digital transformation.
• Thought 5: Each enterprise has relatively stable and fixed businesses that can pursue standardization and automation. More variable businesses can be implemented through smart and social networking operations.
The goal of Huawei’s business transformation is to generate more revenue and profits, improving capabilities and efficiency while ensuring internal and external compliance. To achieve this goal, enterprise IT must complete three changes. First, upgrade traditional siloed and closed IT architectures to a cloud-based, service-oriented open architecture. Second, shift the focus from internal process operations to ROADS user experiences. Third, shift the function of the IT system from serving internal management of the enterprise to providing real-time services that connect well to users.
— Tao Jingwen, Huawei CIO and President of the Quality, Business Process & IT Management Department