Huawei’s Digital Transformation in the New Normal
Tao Jingwen explains the "1-3-5" strategy on which our own digital transformation is based.
Most enterprises want digital transformation to (1) boost business results and customer satisfaction, (2) improve internal management and efficiency, and (3) develop forward-looking insights into new business models that lead to sustainable growth. Huawei has implemented a series of transformation strategies to achieve this goal.
Figure 1: Three tasks to drive digital transformation
We believe that three things need to be done to drive digital transformation. First, we should offer the best possible services to our users and customers. Since customer experience is the main driver of transformation, we need to set high standards for this. Second, our services should fit in specific business scenarios. Third, we should create robust digital platforms that can provide services for every scenario. Huawei's digital platforms serve all of its business departments. The main indicator for a platform's performance is how quickly it responds to service requests.
Huawei officially launched its digital transformation program in 2016. We proposed that digital transformation is not simply for introducing new technologies, but to help the company grow. The transformation program covers the following five aspects:
Figure 2: Five aspects of Huawei's digital transformation
First, transform mindset. A company's digital transformation should be led by its board of directors or business leaders, not just its CIO or CTO. Because transformation requires insight into issues relating to the company's future development, such as what problems we should solve for customers and how we can improve efficiency. The department responsible for digital transformation should cultivate more engineers. I think a company's digital transformation is an engineering program. There’s no "best" technology, only the technology that best fits a particular enterprise.
Second, transform organizations, including those managing digital transformation. The digital transformation of most enterprises may be managed by CIOs, but Huawei has set up a dedicated organization consisting of the heads of all business departments. Huawei has also established the Transformation Management Committee chaired by its rotating chairman.
Third, transform the culture. Many enterprises have realized the importance of the middle office, but who wants to work in the middle office? In most enterprises, IT personnel prefer jobs in the front office, because their work will be more visible in the front office than in the middle office. We need to transform our corporate culture from this perspective.
Fourth, transform methods. Huawei has proposed three lines of digital transformation: business objects, business processes, and business rules. Huawei has also developed a complete set of methods to guide its business and IT departments in transformation.
Fifth, transform models. Since most traditional enterprises are not cloud-native enterprises, they face a common problem during digital transformation: How do they migrate the systems that they've developed for decades to the cloud? Huawei, for example, needs to migrate its Enterprise Resource Planning (ERP) system to the cloud. However, the ERP system currently serves more than 1,700 enterprises worldwide and supports a sales volume of US$100 billion. Migrating such a massive business volume to the cloud is like replacing an aircraft's engine while it's in the air. The process is extremely complex. Therefore, digital transformation is not just about evaluating the relationship between existing systems and future development, it's also - and more importantly - about managing these existing systems better.
Figure 3: Accelerating digitalization in the new normal
Huawei has accelerated digitalization following the COVID-19 outbreak, while furthering its transformation progress over the past few years. We aim to maintain customer connections, customer satisfaction, and business volume like before in the new normal.
Huawei is currently facing a more complex market environment. As the pandemic is still a global threat, we cannot meet with customers, conduct transactions, or host exhibitions, so we’re unable to regularly organize promotions or sales activities like we used to.
Huawei resumed work on February 3, and since then remote office, remote training, and remote delivery have become the new normal for our operations. How do we bring the value of digital platforms into full play in the new normal?
With more than 190,000 employees around the world, Huawei relies on global collaboration to keep most of its business up and running. Without strong remote R&D and office platforms, for example, the global pandemic would have already disrupted our mobile phone business, as the majority of our testing is done in Wuhan.
During the initial outbreak, Huawei's IT and digitalization departments quickly deployed and adjusted our remote office solution to support our global R&D teams. This solution allowed them to work remotely, regardless of what they needed to do, and ensured the continuation of not just our R&D activities, but also our general daily operations worldwide.
The number of global conferences hosted on our WeLink remote office platform increased multiple times during the pandemic. Despite this, not a single service interruption occurred, even during peak hours with tens of thousands of concurrent conferences. Last year, Huawei also released a public version of WeLink with free-of-charge primary services and charged additional services.
The pandemic has changed the way we engage with our customers. We have moved all our physical exhibitions, including exhibition halls, online. Although this year's Mobile World Congress in Barcelona was canceled, we hosted virtual exhibitions for our customers through online platforms. They could watch all our previously planned new product launches comfortably from home, while listening to Huawei experts' explanations on cutting edge technologies and trends. They were even able to participate in online one-on-one Q&A sessions with our onsite expert teams.
During this pandemic, Huawei's travel expenses in the first quarter of 2020 dropped sharply. Despite this, through our digital platforms, our employees were able to "visit" four of our customers' CEOs and senior management across three continents in a single day, something unimaginable before the pandemic.
With digital platforms, Huawei has greatly enhanced its corporate marketing and product promotion efforts both in terms of quality and reach. In the past, customer-facing summits were held separately for different countries. Now, Huawei can hold online meetings with more than 20 countries simultaneously.
This is a pleasant surprise for our customers, providing them with unprecedented experiences. Digital transformation has also brought changes to many of our business models. In the very short period of time between the Chinese Spring Festival holiday and February, Huawei opened up our digital marketing capabilities and demonstrated our strengths in this field to customers around the world.
In addition, digital platforms have made contactless and all-online transactions possible. During the pandemic, network requirements in Italy almost doubled and our customers wanted to expand their network capacities. But there was a problem with signing contracts. Since we were unable to meet with our customers face to face, we couldn't sign the contracts. No contract means no delivery. To address this, Huawei built a customer-facing, end-to-end system for contactless order receipt and contract-signing. This system even determines transaction prices. This has protected the majority of Huawei's business transactions from being affected by the pandemic.
The global pandemic has complicated global supply chains, though. In the past, things were simple – customers placed orders and we delivered. But now smartphone production can be halted because of the low supply of a single screw. This would result in millions of phones failing to be shipped on time, causing billions in economic losses.
Given the circumstances, we needed to create a larger data repository that reflects the comprehensive relationships between supplier data and Huawei's material and asset data. By providing digital services across our supply chain, Huawei has successfully proceeded with digital procurement and digital supply management during the pandemic. Another benefit of digital platforms is that they make supply chain risk management and control even more comprehensive.
In the new normal, it's more important than ever to ensure secure and stable network operations. Online offices, remote work, and online learning have made our lives more convenient since the outbreak of COVID-19, but they also present many security issues. Maintaining the security and stability of our digital platforms poses a big challenge. These platforms have to stand up to external attacks, and can become unstable if users use them improperly. In addition, a surge in services can also bring challenges. We need to pay special attention to and address the security posture and stability of our digital platforms.
Enterprises must have strategic determination, stay confident, and persevere if they want to succeed in digital transformation. Top-layer design is crucial, but so is action. Instead of just talking the talk, we have to walk the walk. We must work hard to successfully transform, and when we encounter problems, we must adapt quickly.
We must stick to the generally correct direction and inspire passion across the organization. Those at the top must have vision and passion so that the broader team can follow their lead and stay dedicated.
Figure 4 Huawei's experience in digital transformation