Platforms + User Experience Drive Huawei’s Digital Transformation
Founded in 1987, Huawei has accumulated more than 30 years of engineering and manufacturing experience. The company is committed to standards-based innovation, and remains focused on providing the world’s best communications equipment to telecommunications companies and enterprise businesses around the globe. The Huawei industry ecosystem includes millions of partners and customers, and hundreds of millions of consumers are using Huawei’s digital platforms.
• Huawei entered the consumer electronics sector in 2007. In 2017, smartphone shipments hit 153 million units, and by 2018 had grown to become the second largest mobile phone supplier in the world.
• Since 2008, Huawei has invested more than USD 57.7 million (CNY 390 billion) in R&D and obtained more than 74,000 patents.
• In 2016, the company launched a cloud service for the enterprise IT market, with the goal of providing best-practice digital transformation solutions for enterprises in every industry.
• 2018 global sales revenues are estimated to be USD 108.5 billion (CNY 731.8 billion).
• In 2018, the company ranked 72nd on the Fortune Global 500. It has approximately 180,000 employees, more than 900 branches, 14 R&D centers, 16 factories, and more than 190 central warehouses in more than 170 countries and regions.
By every measure, Huawei has achieved remarkable results; but, like many companies operating today, has overcome multiple challenges on the way to a successful digital transformation.
For Huawei, this transformation continues to present opportunities to improve our complex business environment — including services, customer segments, scenarios, global resource allocation, and localized operations.
We expect that Huawei will continue to succeed because of our forward thinking and enthusiasm for coordinating with our customers and partners across industries to better manage the complexities of digital transformation that we all face in our respective businesses.
When considering the effort necessary to undertake a digital transformation, there are two important questions:
• Why should a company undergo digital transformation?
• What is the vision or objective of this transformation?
At the moment, the world is focused on Artificial Intelligence (AI), big data, cloud computing, and the Internet of Things (IoT). Is the deployment of these technologies reason enough to pursue digital transformation? Huawei’s view is that digital transformation should arise from a company’s core business goals and be concentrated on delivering the highest possible customer experience; and only from this starting point can such an undertaking be properly managed.
Truth be told, Huawei itself was not always so holistic in its approach to digital transformation. When the company first formulated a transformation plan in 2016, the goal was simply to use advanced digital technologies and platforms to enhance business processes, lead the implementation of ROADS (Real-time, On-demand, All-online, DIY, Social) experiences, and establish new ICT industry benchmarks.
By the end of 2017 Huawei’s vision and mission had evolved. The company is now committed to bringing digital transformation to every person, home, and organization to create a fully connected, intelligent world.
Before Huawei can expect to digitalize the industry and society-at-large, the company understands that we must first transform ourselves into a fully connected, smart enterprise — and to achieve this, we have decided to prioritize our own digital transformation for the next five years.
By accomplishing ‘Digital First’ — to become fully connected and smart — Huawei hopes to create new industry benchmarks for efficiency, effectiveness, and customer satisfaction.
Let’s revisit the question, “Why should an enterprise undergo digital transformation?”
First and foremost, the fourth industrial revolution is upon us, and digital production using data processing tools such as ICT platforms, software, and services is becoming a common practice across all businesses.
With the expectation that profound changes will impact every aspect of society, digitalization is spawning new business opportunities and revenue sources.
As we look through the rear-view mirror at the third industrial revolution, we see that enterprises eliminated production bottlenecks by introducing automated manufacturing by using robotic assembly lines. Factory automation by itself was, however, insufficient to overcome ‘Baumol’s cost disease.’
According to the Baumol effect, the salaries of workers whose jobs cannot be automated will rise despite the lack of productivity gains. What this means is that the operating costs for ‘non-progressive’ departments grow while improvements in efficiency remain flat.
Huawei CEO Ren Zhengfei understood this when he visualized the company’s future operating model as three employees doing the work of five, and receiving the pay of four.
Zhengfei’s model is difficult to achieve because enterprises inherently involve departments such as human resources, services, and finance for whom the addition of new machines does not translate to improved efficiency.
Low operational efficiency and high operating costs are the business challenges of our time; and so far, advancements in robotics and other forms of mechanical automation have been unable to solve operational bottlenecks throughout the organization. But digital technology in the form of shared data pools will eventually solve these problems and allow enterprises to simultaneously optimize products, experiences, and costs.
In the rising digital era, enterprises will deliver quality products, excellent experiences, and low costs by using intelligent machines and service platforms to carry out digital transformation.
The modernization of traditional industries is far easier said than done. Among the many obstacles that exist in legacy IT systems are proprietary hardware and software interfaces that created isolated data sources and closed application silos that are difficult to overcome.
Data silos impede sharing and mining within each legacy system, and over time even the most carefully engineered business processes become increasingly complex and inefficient.
Segmented business scenarios lack real-time service connectivity. The result at Huawei was a lack of ‘awareness’ on the part of the IT system for both corporate management and the user experience. The company had built thousands of applications that were function-centric, rather than user-centric. For example, employees traveling out of the office had to complete five or six different workflows, and staff members of the delivery department were subject to 26 different IT systems and nearly 40 different hurdles every single day. Huawei has learned that the same phenomenon is occurring in most businesses. Have our internal technology departments really been working to streamline business processes and serve users?
When businesses discuss digital transformation, the discussion often begins with a focus on technology. However, based on years of experience, Huawei has determined that the transformation solution requires a combination of technology and business that simultaneously align business fundamentals and create value for customers and users.
Digital transformation is a two-line V-model. The Customer-Business-Architecture (CBA) line is focused on the customer as the driver of business and architectural improvements. The AI + Big data + Cloud (ABC) line is focused on unified cloud platforms as the foundation for deployed solutions.
Technical capabilities are secondary. Enterprises must first identify who their customers are and what they need; then, second, determine whether their staff and organizations are suitably prepared to carry out a digital transformation.
Only after the assessment of customer and staff requirements should enterprises begin to consider the particular digital technologies to solve corresponding problems.
In today’s world, as long as a business problem can be identified, the technical solutions will always be available. For Huawei, we believe that the ‘CBA + ABC’ V-model is a reliable foundation for all enterprise digital transformations.
Huawei’s plan is to establish a new industry benchmark for fully connected, intelligent systems by 2021.
Externally, Huawei wants to conduct business with customers more easily, efficiently, and securely. Internally, the company expects to further improve operational efficiency and effectiveness.
Huawei has redefined its digital transformation architecture to include five objectives:
• One-stop experiences that use digital approaches to enhance and deepen customer-facing interactions
• Scenario-based architectures that include flexible service orchestration, custom-built solutions, and support for service innovation that improves efficiency and effectiveness
• Middle-end services that are combined with cloud IT platforms
• Rapid acquisition of external service resources via multi-cloud management platforms
• Real-time service perception and operational command
So, how do we achieve this?
• One-Stop Experiences
First, we must deepen connectivity to achieve user satisfaction by building one-stop service experiences for five different types of users: enterprise customers, consumers, partners, suppliers, and Huawei employees.
Our aim is build service platforms that link our customers, end-users, partners, and development teams with the equipment and knowledge necessary to fulfill their goals with one-stop.
Take telecommunication customers for example. In the past, Huawei developed mobile applications on its own, without considering actual user experiences. But now that the barriers to entry have been lowered, our technical platforms allow us to provide content that is unique to each customer.
Huawei also provides online digital channels to push customized, multi-channel content to select customers. In addition, integrated customer data from all pre- and post-sale phases is combined with unique customer IDs and intelligent analysis to promote customer needs in real time and enable unparalleled customer service. In the future, unsurpassed user experiences will be delivered on the basis of each customer’s own usage and operating habits.
• Scenario-Based Services
Second, we need to provide flexible and fast service orchestration support for global operations based on real-world operating scenarios.
As it turns out, revising a simple service process is extremely time consuming, and meeting Zhengfei’s ‘one country, one policy’ requirement for rapid response to service changes is nearly impossible.
Huawei established a future direction for transformation that analyzed each of the company’s independent service scenarios, including their open interfaces, in order to support flexible scheduling for service personnel.
We have now built a company-wide, platform orchestration map that covers more than 200 standard service scenarios.
In this way, if a new scenario requirement is added anywhere in the world, users can subscribe to the service online and the IT department will quickly deploy the appropriate service. This changes the way IT provides services and avoids resource shortfalls. And by using standardized IT equipment services, users in different parts of the world can also gain an ‘equal distance’ access experience.
For example, to enable rapid global store openings, Huawei now provides standardized IT equipment and services to mobile phone retailers. IT application services — like invoicing and inventory platforms — have been placed in data centers in 15 different regions to ensure that response times are less than three seconds, anywhere in the world.
In addition, by standardizing on-site equipment and services, store opening times for third-party partners like Ingram, Vodafone, and Suning.com have been reduced from three-to-six months to one-to-two weeks.
• Service Platforms
Third, we need to establish a general platform for digital transformation that supports service growth. In order to better support digital transformation across all domains, Huawei has created a public IT platform that provides more than 600 services in four service categories (basic, platform, application, and security).
Imagine a solar system. To realize a central supply strategy and differentiate the platform owner’s services from third party services, we position the public platform as the sun, and then determine which services will make up the rest of the solar system. Public platform services are selected based on the user’s perspective. Service Level Agreements (SLAs) are created and users can rate services online.
In addition to the platform, we build a middle-end application for the three main customer-facing processes: service activities, transaction records, and problem resolution.
The IT department has transitioned from providing functions to offering services. After transformation, these services become building blocks that can be customized. To date, Huawei has built more than 150 application service frameworks, and plans to add more than 50 per year for the foreseeable future.
In the past, due to the rapid changes in services and the variety of scenarios, the IT department could only develop scenarios one at a time. They were constantly swimming against the tide.
Today, Huawei supports rapid service innovation by quickly arranging services according to each scenario. In the future, Enterprise Resource Planning (ERP) will become a true ‘system of record’ as only transaction results will enter the ERP system. This will reduce the burden on ERP systems, and make ERP software packages a stable back end component.
In 2018, Huawei increased its adoption of AI technology, particularly in the company’s high frequency, complex, large scale operating scenarios — turning dumb processes into intelligent ones.
An example of the efficiency of AI in support of Huawei’s administrative services, is that a staff of only 700 administrators is needed to support the access management and visa requirements for 180,000 employees in more than 170 countries. This level of success cannot be understated.
Today, there are more than 200 examples of AI applications in use at Huawei, and demand for similar services will continue well into the future. We hope that our industry partners and AI manufacturers will join with us in harnessing AI technology.
If Huawei can solve its own problems, then we can resolve issues in other companies and industries, as well as overcome the bottlenecks currently facing AI development.
All companies must guarantee security for their core information assets throughout the digital transformation period. Huawei’s real-time security services encompass policy centers, profiles, and security fences that, together, ensure a transparent and imperceptible end-user experience.
Huawei’s principle is ‘security first for core assets; efficiency first for non-core assets.’ This principle is a response to historical missteps in managing enterprise resources. Two misunderstandings have plagued enterprises when it came to managing their core assets. One was ‘protection for the sake of protection’ or ‘security for the sake of security.’ A recent example is the rejection by companies that lack experience with public clouds at the expense of slower response times and limited data sharing across the enterprise.
Another mistake is to ignore necessary data security and add excess information to public clouds — a choice that will inevitably lead to data breaches and loss of core information assets.
Huawei rebuilt its own security systems holistically by selectively granting access to information across carefully determined corporate boundaries.
Companies need security between objects and subjects that enable user-imperceptible security services, which is an important part of enterprise digital transformation.
• Multi-Cloud Management Ability
Fourth, we need to build Results-Oriented Management and Accountability (ROMA) multi-cloud management capabilities for internal and external interconnections and interoperability. Connectivity is the core foundation for accomplishing digital transformation for traditional, non-cloud enterprises. This is why Huawei has built ROMA capabilities to secure external corporate boundaries to quickly introduce existing, mature services into multi-cloud environments.
For example, Huawei has deployed a translation service to provide real-time translation across more than 60 languages for employees from more than 170 countries and regions.
ROMA supports the global integration of more than 600 service applications, Remote Desktop Connection (RDC) with 17,000 integration points, and daily data traffic of 2 billion items with more than 4 billion peaks.
Harnessing ROMA multi-cloud services to achieve internal and external interconnections and multi-cloud interoperability helps us quickly coordinate multi-cloud services and aggregate advanced productivity. It allows our cloud service platform to connect information silos, eliminate digital gaps, aggregate cloud capabilities, transform into a powerful middle-end service platform, and support rapid enterprise business development.
• Operational Command Platform
Fifth, we need to build an ‘Operation Command Platform + Cavalry’ for real-time operations. The operational command platform harnesses AI, big data, and visualization technologies to present data in an actionable way for customers and end-users.
To better prepare for the future, Huawei is revamping its entire operating system to create a real-time, intelligent command platform. The ultimate goal is the creation of a full-service, full-scenario operations center that provides service monitoring and alerts, process coordination, event scheduling, and forecasting to support our digital transformation and service development.
In the end, the transfiguration of culture, organization, and talent is paramount to enterprise digital transformation.
Building Huawei’s customer-centric corporate culture has involved two core concepts:
• First, establish a team where technology and services are integrated to resolve real-world issues.
• Second, build an efficient technology platform. For example, Huawei’s original IT teams created tools, products, and equipment that would provide thoughtful services and win satisfaction. Now that the tools and equipment have matured, IT is the business enabler that needs to win the respect of customers through continuous improvement.
Two assets will be important to enterprises in the future: First, the business enablement team, and second, the IT service platform.
Enterprises need a digital platform to support the needs for diversified business development. Huawei, for example, has four major types of business. This would be difficult to support without a universal and flexible unified service platform and a real-time command center that manages intelligent operations for service awareness.
Finally, I want to share the insights I have gained from managing Huawei’s digital transformation.
‘Digital First’ is primarily a business transition and should be led by the business division. It is a top-level project that requires firm strategic determination and decisive action once a direction is chosen. You must build a ROADS experience driven by customer and end-user needs. You need to build a two-line V-model of business and digital technology that aligns with your business while creating more value for your customers and end-users.
Aim high, but start low. Create a blueprint and a systematic design. Start by identifying the enterprise’s real problems, find breakthroughs, and resolve single issues before trying to cover all areas.
Digital transformation cannot be achieved in a single stroke. Choose a direction, keep innovating, and respond with speed and flexibility.