Digital Platform: Building the Foundation for the Digital World
Since its establishment in 2011, Huawei’s enterprise business has grown tenfold, with an annual compound growth rate of 40 percent. In 2018, Huawei’s enterprise business accomplished historic achievements, with global sales revenue exceeding USD 10 billion (CNY 67.2 billion), and the revenue in China alone exceeding USD 7.44 billion (CNY 50 billion). This is not only a joint achievement of all Huawei enterprise employees, but also a result of our customer and partner support. With their help, Huawei can better understand the industry, make our solutions more competitive, and deliver our products to enterprise customers more quickly, which gives us confidence in our future growth. Huawei has been investing more than 10 percent of its annual sales revenues into Research and Development (R&D) over the last 10 years. In total, our accumulated R&D investment has exceeded USD 58 billion (CNY 390 billion), laying a solid foundation for the development of leading products and solutions in China.
Huawei is not only the top player in traditional ICT in terms of enterprise products like storage equipment and switches, but we also make remarkable breakthroughs in future-oriented new ICT fields. In 2018, our cloud business revenue grew tenfold, and our Government Cloud business is now number one in the market.
With the growth of our enterprise business, Huawei has built a prosperous ecosystem with a growing number of partners. In the past year, we secured two partners worth more than USD 1.49 billion (CNY 10 billion) in scale — China National Building Material Group and Digital China.
The percentage of our partners worth more than USD 14.9 million (CNY 100 million) has increased by 67 percent, reaching nearly USD 15.6 million (CNY 105 million). In addition to revenue growth, partner capabilities are growing rapidly.
In 2018, Huawei and over 700 partners jointly released more than 900 industry-specific solutions covering transportation, electric power, campus, and smart cities. At the same time, Huawei made great progress in the cloud ecosystem.
In 2018, our cloud partners nearly doubled from more than 1,800 to over 3,500; our developers multiplied by 20; and our total online paying users is now 15 times larger.
Today, at the new starting point of more than USD 10 billion (CNY 67.2 billion), we face unprecedented opportunities as well as challenges. According to a Gartner forecast, investments in ICT hardware in China will experience rapid growth from 2019 to 2022, with an annual compound growth rate of 15 percent, before entering a slow growth period of only 2 percent. With a gloomy future ahead, how should we seek new growth?
“[Do we] focus on carving up the existing pie or making a bigger one,” Huawei rotating chairman Guo Ping asked at HUAWEI CONNECT 2016. “For Huawei, it is more important to expand the whole market than to compete for more market share.”
Today, as digital transformation sweeps across industries, there is a great opportunity for market expansion.
According to IDC reports, with increasing digitalization, new ICT expenditures are growing rapidly. Between 2017 and 2019, global ICT expenditures related to digital transformation increased by 42 percent, which brings a huge opportunity not only for Huawei, but also for our partners. This is corroborated by Gartner’s CEO survey, which says 67 percent of enterprise CEOs choose digitalization as their core strategy, and 61 percent plan to increase IT investment in 2019.
There is an explosion of digitalization and intelligence across all industries. Many traditional industries like banking, automotive, and electric power have entered the fast lane of transformation. In the future, digitalization will be the biggest opportunity for traditional industries. Successful companies from all industries are adopting the latest digital technologies and injecting vitality into traditional processes, production modes, and business models.
The future is bright, but there will be challenges along the way. According to the latest Huawei survey, the major challenges facing enterprise digital transformation include insufficient stimulus due to unclear business value, insufficient technical capabilities, and a lack of investment in new ICT systems.
• Challenge 1: Improving Service Enablement With the Limited Value of Existing Informatized Data
Currently, the digitalization of most enterprises still focuses on mining value from management data. Since 90 percent of enterprise data comes from the production system, real digitalization should not only focus on reshaping the production system, but also on digitalizing the physical world and integrating production and management data to create greater business value. The real challenge to enterprises in deep-level transformation is digitalizing the physical world.
• Challenge 2: Quickly Acquiring Talent for Digitalization During Rapid Technological Innovation
Digital transformation requires a wide range of new technologies, such as cloud, big data, the Internet of Things (IoT), and Artificial Intelligence (AI). Furthermore, enterprises often use different technologies from different suppliers, and it is extremely difficult for customers to effectively integrate these technologies. This places a high demand on engineering capabilities, so acquiring professional talent is an inevitable challenge.
• Challenge 3: Ensuring Seamless Interoperability of Old and New Systems to Ensure Continuous Service Development
Most enterprise investments in new ICT systems are insufficient, with only 20 percent of investments going toward new system construction, while 80 percent are used to maintain old systems, because the old systems continue to support a large number of core services. This means that the new systems must integrate with the old systems within a certain period of time, which is difficult for many CIOs.
We are living in an era of constant innovation and disruption. All industries are going digital and intelligent. All organizations are experiencing huge impacts from technological advancement and business innovation. However, the success of the past is not always a reliable guide to a prosperous future. When faced with change, each organization should reposition itself and adapt to seize historic opportunities.
Huawei is no exception. In 2011, Huawei held its first strategic enterprise business retreat in Suzhou; established the Huawei Enterprise Business Group (EBG); and announced its goal of USD 10 billion (CNY 67.2 billion) in revenue. Realizing this goal has been a milestone in our development. In 2018, we held our second strategic retreat for our Enterprise Business Group in Suzhou, announcing our new positioning and kicking off a new era for Huawei EBG.
With the dawning of an intelligent world, Huawei repositioned its enterprise business with a new guideline — Huawei is committed to building a digital China, but also the foundation of the digital world through ‘ubiquitous connectivity + digital platform + universal intelligence.’ We will cooperate with our partners and integrate various ICT to help relevant industries succeed in digital transformation.
The digital transformation of industries requires aggregating data and generating intelligence from data in order to realize digital operations. Huawei’s digital platform is the foundation of a digital world that enables data aggregation, data intelligence, and data operations.
Based on cloud technology, Huawei’s digital platform integrates new ICT, streamlines various types of data, and supports rapid development and flexible deployment of applications to enable agile service innovation. Through ubiquitous connectivity, Huawei’s digital platform also enables ‘cloud-pipe-device’ coordination and optimization, thereby integrating the physical and digital worlds.
Huawei’s digital foundation includes the following characteristics:
• Cloud-Only: Seamless Online and Offline Interoperability and Interconnection
Digital solutions must grow on the public, private, and hybrid clouds. The clouds must conform to the ‘same architecture, same API, same experience, same service, and same ecosystem’ principle in order to realize one-time development, one-time interconnection, and multi-cloud deployment for customer and partner applications and software.
• Full-Stack, All-Scenario Inclusive AI at Your Fingertips
Full-stack means providing a powerful, economical, and low-threshold application development platform for AI application developers to achieve simple, agile, and efficient AI data modeling, model training, and application development. All-scenario means universal intelligence that covers any business scenario; including the device, edge, and cloud. Huawei has talked about ‘inclusive AI’ on multiple occasions and is committed to providing affordable, easy-to-use, and reliable AI for the general public. We will collaborate with customers, industry partners, and academia to build ubiquitous AI.
• Secure and Trustworthy, Resolving Enterprises’ Security Concerns
Security is a systematic project. Huawei is willing to work with partners to build security solutions that safeguard the digital transformation of our customers. In addition, Huawei will increase investment in the security field and improve the security and resilience of our products and solutions through four measures. First, adopt AI to implement intelligent threat detection and automated threat processing. Second, use cloud Disaster Recovery (DR) to ensure service continuity, support multi-cloud management, and realize redundancy for public and private clouds. Third, leverage terminal-platform collaboration for intrusion prevention; for example, intrusions can be prevented by inspecting for unauthorized access to cameras. And fourth, leverage digital platform and connection collaboration against network attacks. After the attack source is discovered, a policy for preventing attacks is formulated and directed to the network device, for example, and no attack packets are forwarded.
It is impossible for Huawei to build the foundation for a digital world without the help of our partners. On the journey of digital transformation, Huawei will join with more partners to build a prosperous ecosystem together and help enterprises go digital.
In the era of intelligence, the key to a win-win ecosystem is that everyone can bring their own strengths and create a ‘1 + 1 > 2’ effect. To this end, Huawei will continue to enhance our platform. However, a platform without an ecosystem is doomed to perish.
To address the three major challenges of digital transformation, Huawei will enhance the construction of the solution ecosystem, the investment and financing ecosystem, and the talent ecosystem. Together with our traditional sales and service partners, Huawei will provide end-to-end service capabilities such as integration, consulting, application, and operational services. We will help our customers reach new heights by providing better support and a bigger platform.
• Reaching New Heights
Big dreams help us reach new heights. There is a saying in the industry that third-class companies develop products, second-class companies build a brand, and first-class enterprises formulate industry standards and sell ‘the rules of the game.’
Companies that develop standards and rules always grow rapidly and become the most powerful in the end. We know that the power of a single company is always limited. We insist on working with ecosystem partners to jointly create industry standards and define industry rules. This is the basis for successful digital transformation.
For example, in the smart city field, Huawei cooperates closely with ecosystem partners to promote the maturity of smart city standards through a large number of project practices and applications, including initiating IEEE international standards and promoting the implementation of the smart city digital platform.
Huawei also builds APIs for applications and creates physical models, data models, and device access standards based on IoT capabilities. In addition, Huawei has established the Smart City Industry Ecosystem Research Group with its partners. In China, Huawei has been actively involved in the formulation of national standards for smart cities. So far, we have completed the creation of more than 30 standards to promote the development of smart cities in China.
• A Bigger Platform
In 2017, Huawei released the OpenLab plan. So far, we have established Open Labs in 14 cities globally, creating a platform for connecting the entire world. Through the OpenLabs, Huawei and our partners can jointly innovate in places closest to customers and where integration and verification activities are supported. In the past two years, more and more of our partners from China have stepped onto the world stage.
Consider Yanbu in Saudi Arabia. The city is not only the third largest oil refining base in the world, but also a pioneer in government digitalization, playing a role like that of Shenzhen in China’s reform. During the Yanbu project, both Huawei and our partner ReSafety sent dedicated personnel on site. As a result, it took only six months from solution design to system rollout. In other ongoing smart city projects in Italy and Ukraine, Huawei and ReSafety have also made significant progress in terms of the joint IOC solution, achieving a ‘1 + 1 > 2’ effect.
• Better Support
Huawei will invest more in solution incubation, smart marketing, solution replication, and partner incentives to provide better support for partners and help them transform.
• Solution incubation and smart marketing: Huawei built the Marketplace platform to exhibit solutions. Partners display their applications on the Marketplace to provide customers with easy access to the latest solutions. This will drive the development of the whole industry chain. Currently, there are more than 1,000 solutions on the platform, and the cycle of joint solution pre-integration has been shortened by 3-6 months. In 2019, Huawei will enhance the AI capabilities of the platform by introducing new functions, such as partner capability profiling to support more accurate service matching.
• Solution-oriented replication: The ‘Huawei + A to B model’ will be strengthened. Huawei will encourage both solution development through joint innovation, and traditional partners to strengthen the sale of competitive solutions. In 2018, Huawei replicated more than 300 projects. In 2019, Huawei will focus on nearly 120 leading solutions and hopes to replicate more than 500 projects. Huawei will increase incentives and set up dedicated support teams for solutions and partners with high replication rates.
• Partner incentives: Huawei will provide USD 17.8 million (CNY 120 million) for partner enablement training and help partners improve solution capabilities. Special incentives of USD 66.9 million (CNY 450 million) will also be earmarked to encourage partners to prioritize cloud and solution sales. Huawei hopes to increase the number of solution partners to more than 2,000 over the next three years through continuous investment. At the same time, there will be more financial support for partners. In 2019, Huawei will provide more than USD 2.23 billion (CNY 15 billion) in capital and USD 1.93 billion (CNY 13 billion) in credit for partner financing in order to help them grow quickly.
More than 2,000 years ago, the ancient Greek mathematician and philosopher Archimedes remarked, “Give me a firm spot on which to stand, and I shall move the earth.” Today, we are marching into an intelligent era; leveraging digital technologies as well as open and win-win ecosystems. Huawei will team up with global partners to build an intelligent world and help more customers achieve business success.