Author Wang Yi
Produce a digital newspaper
When people think of Huawei, most of the labels they think of are made in China, chips, HarmonyOS, Huawei Cloud and so on.
Since its establishment in 1987, it entered the Fortune Global 500 for the first time with the ranking of 397th in 2010, becoming the only Fortune Global 500 company that has not been listed. By 2021, it has become the 44th Fortune Global 500 company and a giant that has been admired by China and even the world. The rapid rise of Huawei has attracted worldwide attention.
From the standpoint of reality, Huawei is indeed a successful enterprise. But when it was first established, it was just a small company in a dilapidated factory building in Shekou, Shenzhen, with a registered capital of only 21,000 yuan, and its main business was telecom equipment trade.
For more than 30 years, Huawei, like other enterprises, has been lost on the road of digital transformation; Different from other enterprises, in the current digital age, Huawei is no longer the enterprise that is struggling to walk on the road of digital transformation, but has turned into a "guide" on the road of digital transformation.
In 2018, Huawei followed the pace of the times and upgraded the company’s mission vision to "bring the digital world to everyone, every family and every organization, and build a smart world with the Internet of Everything".
Today, Huawei Cloud has become the second largest cloud service provider in China, and has become a solid base and assistant for the digital transformation of enterprises. From 20,000 yuan to trillions of market value, from a "second-hand trafficker" to a multinational giant, from a lost person on the road of digital transformation to a guide on the road of digital transformation, this role change is driven by Huawei’s own transformative power, and it is also a perfect answer sheet handed over under its digital transformation.
In the development of Huawei, digital transformation plays a very significant role in its important development period.
In essence, Huawei is a traditional enterprise. Unlike the BATZ Internet giant, Huawei itself has no genes of the Internet, and it has explored its own digital road step by step from traditional enterprises. Practice produces true knowledge, and the practical path of successful digital transformation is always much more useful than "digital experts" on paper. The experience of Huawei’s digital transformation is worth learning and learning from all enterprises.
So, how did Huawei put the digital transformation to the ground? What is the relationship between Huawei’s success and digital transformation?
First, informatization, the establishment of a fast runway
In 1987, Ren Zhengfei and five partners jointly invested 20,000 yuan to establish Huawei. During this period, Huawei mainly adopted the following strategy in product development strategy, first acting as an agent for products of Hong Kong companies, and then gradually evolved into a centralized strategy for independent product development. In the market competition strategy, we adopt the sales strategy of continuous development and production of a single product and encircling the city from the countryside, seize the market quickly through low-cost ways, expand the market share and expand the scale of the company.
1987-1997 was a period of strategic transformation for Huawei from "trade technology" to "technology industry and trade".
In 1991, Huawei began to design its own chips based on the demand of products. In 1992, it invested tens of millions of yuan in research and development. At the end of 1993, it successfully made the first chip, namely ASIC chip for C&C08 switch.
In 1994, Huawei successfully designed more than 30 chips. Among them, the most complex chip design accommodates more than 10 million transistors, and each chip can complete 32,000 telephone users’ non-blocking calls.
In this process, Huawei’s customers and businesses are all in China. With the increase of business volume, the management system can’t keep up with the development needs. So in 1992, Huawei began to develop its own management information system to replace the traditional manual business process, thus realizing local business automation.
At the same time, Huawei recognizes that introducing mature IT products and technologies to implement IT solutions can reduce investment risks and shorten the return period of investment. The complexITy of enterprise management software makes enterprises rely on their own strength to develop, which is very uneconomical in time, personnel and financial resources, so it is necessary to adopt the strategy of "introduction and management" to implement IT solutions.
So in 1994, when the local small application software independently developed by Huawei could no longer support the business, Huawei began to build the MRPII(Manufacture Resource Plan) system, that is, the manufacturing resource plan. It is a planning and control mode of production management, which is regarded as a standard management tool because of its remarkable benefits and is widely adopted by the world manufacturing industry.
Huawei finally chose the MRPII product of Oracle in the United States through software inspection and selection. Huawei is the first enterprise in China to adopt MRPII management mode, one or two years earlier than Lenovo. Lenovo’s MRPII system and OA system were built in 1996.
In 1995, Huawei OA system began to be built. At the end of the same year, Huawei introduced NOTES groupware system.
NOTES groupware system connects different users, especially users in different departments within the enterprise, through the network, thus improving the production efficiency. E-mail is a function of groupware, which encourages users to communicate and coordinate activities with each other. All users who enter the groupware system can communicate with each other in a timely and interactive manner, and transmit various messages, such as sound, graphics and video images.
In 1996, as the earliest user of ORACLE MRPII software in China, Huawei launched version R10.6, selected 13 core and basic functional modules, and realized "financial and business integration".
According to the independence of MRPII application system business, Huawei’s MRPII application system is divided into seven application environments: Huawei running environment (HW-CRP), Xinhua running environment (NHW-CRP), ring communication running environment (GT_CRP), Hong Kong Huawei running environment (HKHW-CRP), Huawei communication running environment (MBC-CRP) and Huawei testing environment (HW-CRP).
Huawei’s implementation of MRPII is very effective. At the initial stage of introduction, MRPII method has been applied in departmental business. For example, in the production planning management, according to the principle of MRPII, rolling backward and material demand analysis methods have been adopted, and good results have been achieved. The turnover rate of production inventory has increased from 2 to 3 times in the past year to 5 times.
With the comprehensive application and practice of MRPII timely production and process optimization, the production cycle of exchange equipment has been reduced from one month in the past to half a month.
In 1996, Huawei established the intranet and central database, and formed many new working methods on the basis of it. Advanced information technology makes Huawei’s operation more efficient. Employees and departments can communicate and exchange needed goods by visiting each other’s databases, web pages and bulletin boards.
It is more convenient to collect, archive and manage information, and it is very fast to retrieve and consult. The flow of information in an organization has become very rich, accurate and timely through the internal Internet.Convenient information collection and dissemination has improved Huawei’s organizational innovation and responsiveness, and the middle layer has been cut, which makes it possible to flatten the organization.
Through the first stage of information construction, Huawei’s business development bid farewell to inefficient manual work and established an information fast runway. The advantages of management informatization have laid the foundation for Huawei’s future electronic process management and full integration with IT.
Second, IPD went online and headed for "customer-centric"
In 1997, Huawei’s sales revenue was 4.1 billion yuan, ranking among the top 10 in China’s top 100 electronic companies, with more than 5,600 employees.
Some hidden problems are gradually exposed.
"When I first started my business, I was actually alone, and then some people kept coming in. There were no rules at all. For example, if I say, "How much salary do you get?", it’s settled. Of course, it will benefit some people and hurt some people. With the growing size of the company, it is necessary to draft a lot of documents to standardize the company, but I have no ability to draft documents. Personally, I am engaged in technical work in the army and have never been engaged in management work. However, we have to move forward, so we have drafted many documents, but we feel that these documents are not standardized, which is not conducive to Huawei’s growth into a big company. " Ren Zhengfei said.
In terms of R&D, Huawei didn’t have a mature R&D process and decision-making mechanism at that time, which led the marketing department to promise customers’ needs at random, and the R&D department was in a hurry to cope with it, and the products made were repeatedly revised. At one time, the company’s product version number was more than 1,000, which was chaotic in management and extremely inefficient.
One set of data is that Huawei invests 10% of its sales in product research and development every year, but the waste ratio of research and development expenses and product development cycle are more than twice the best level in the industry. Although Huawei’s sales have increased year after year, its gross profit margin has decreased year by year, and its per capita benefit is only 1/3 to 1/6 of that of Cisco and IBM.
Huawei awarded the "Golden Raspberry Award" to the R&D department and product line at the annual summary meeting of 10,000 people one year. Many products that were designed by R&D but not recognized by the market and directly turned into dead materials in the warehouse were sent to the R&D department leaders and product line directors in the form of "certificates".
At that time, many "innovative products" were blindly innovative from the source, and the product development process was to repeatedly do one thing at a low level, but it could not be done well at once. No matter the function, performance, product quality or product launch cycle, the developed products can not meet the requirements of customers. This has caused a lot of investment waste to the company, and the failed products have also greatly hit the R&D morale. Behind the seemingly prosperous, Huawei is beset with internal crises.
Obviously, the technology-centered approach can no longer be used, and it needs to be transformed into a customer-centered strategic positioning. How to make this increasingly large team achieve efficient cooperation is a difficult problem for Ren Zhengfei.
In 1998, Ren Zhengfei filled his pocket with $50,000 and embarked on a flight to the United States. This was later regarded as a great step for Huawei’s digitalization. In the United States, Ren Zhengfei found his own he is my brother-IBM. At that time, Louis Guo Shina had just completed drastic reforms and saved the huge IBM from the quagmire.
IBM’s path is obviously the template for Ren Zhengfei’s trip.At that time, Ren Zhengfei made up his mind that no matter how much time, money and energy he spent, Huawei should learn this set of things.
In the same year, on August 29th, 50 IBM consultants in suits and ties entered Huawei. Vowed to complete a series of major management reform projects within five years, such as integrated product development reform (IPD), integrated supply chain service reform (ISC), integrated financial service reform (IFS), and lead-to-return marketing reform (LTC).
Taking IPD as the breakthrough point, Huawei applied Product Data Management (PDM), which effectively integrated the company’s professional tools. Manage the final data generated by these tools, so that all product-related information and data can flow effectively throughout the company.
Practice has proved that through the introduction of IPD,On the one hand, the research and development cycle of Huawei products is shortened by half, and the failure rate is reduced by more than 95%; On the other hand, due to the full implementation of this standardized, digital and global asynchronous collaborative product development process and management system.
Third, create an "end-to-end" and globalize the layout of the delivery process
In 2002, shortly after the bursting of the Internet bubble, the global telecommunications market was in a state of decline. The domestic market share of Huawei’s mainstream products has exceeded 40%. For a customer, when choosing a supplier, one monopoly will not be allowed, because one monopoly is very unfavorable for risk prevention in the supply chain and business negotiations, and will be kidnapped by suppliers.
Therefore, Huawei’s growth in the traditional domestic market is weak.
The 2G wireless communication market that Huawei is eager to break through is firmly controlled by powerful international giants such as Ericsson and Nokia, and Huawei has encountered a "ceiling" of growth.
Although Huawei took the lead in developing 3G products among domestic manufacturers, due to various reasons such as shrinking investment, immature industrial chain and unclear 3G standards, domestic 3G licenses have been delayed. After waiting for 3 years, it was the listing of PHS.
This backward PHS wireless technology, with an average annual equipment market scale of about 20 billion yuan, has been built for four years. Together with the supporting mobile phone terminal market (about 20 billion yuan per year), it has expanded Huawei’s largest domestic competitors UT Starcom and ZTE, and they have used their profits to tackle 3G problems and promote overseas markets, and the gap with Huawei has gradually narrowed.
At the same time, important internal executives of Huawei "left" and took away more than 600 R&D backbones. Harbor Network Co., Ltd., which was formed by them, also entered the ranks of Huawei competitors.
In 2002, Huawei’s IPD management reform entered the deep water period, and the pain of reform intensified, but the financial results did not show. This year, Huawei experienced negative growth in history for the first time.
To make matters worse, at this time, Huawei had just occupied the beachhead position of "Asia, Africa and Latin America" in overseas markets, and international rival Cisco began to accuse Huawei of infringing its intellectual property rights in an attempt to stop Huawei’s overseas progress.
In front of Huawei, there is only one way to go, and that is to vigorously expand overseas markets.
Ren Zhengfei once admitted that if Huawei does not make its products cover the whole world as soon as possible, it will be a waste of investment and a loss of opportunities. He believes that we can’t wait until there is no problem before attacking, but we should be familiar with the market, win the market, and train and bring up cadres in the fight of overseas markets. If we can’t build an international team within three to five years, once the China market is saturated, Huawei will do nothing.
Since 2005, Huawei has sounded the charge for developed markets and strategic customers.
In this process, Huawei actively responded to the ISC reform and played a huge role in the face of the surge in overseas business and ensuring the large-scale and low-cost supply and delivery of overseas business. ISC reform extracts the common parts of supply chain processes into shared platforms, conducts centralized management, obtains cost advantages, standardizes digital platforms, and extends integrated supply chain processes to the whole world.
After three years’ efforts, the timely delivery rate of Huawei’s supply chain has increased from 20% at the beginning of management reform to 85%, and the processing efficiency of the supply chain has increased by 35%, ranking among the most efficient enterprises in the information and communication industry worldwide.
Therefore, international customers have full confidence in the quality and innovation of Huawei’s products, which has promoted Huawei to quickly open up a new situation in the international market, and enabled Huawei’s overseas business to quickly achieve a breakthrough in which more than 75% of its sales revenue came from overseas in 2008.
In 2009, Huawei became the second largest supplier in the field of communication in the world with an innovative record of annual sales of $30 billion.
There is a passage in the famous biographer Stefan Zweig’s masterpiece "When the Stars Shine": "A real moment with world historical significance, before a shining moment of human stars appears, there will inevitably be a long time passing away unnecessarily …"
The same is true of enterprise reform. Fortunately, when people talk about Huawei now, its IT architecture changes have made it a shining star.
Fourth, IT2.0 cloud strategy, enter the cloud computing
Walk from behind the scenes to the stage.
In 2010, in order to meet the challenge of global telecom demand becoming saturated and the arrival of big data wave, Huawei actively adjusted its product development strategy and focused on investing in strategic product areas such as 5G R&D and cloud computing. At the end of 2010, Huawei launched the "Yun Fan Plan" and officially announced its entry into cloud computing.
However, after more than 20 years of development, Huawei’s product research and development has moved from following imitation to international advanced, and from international advanced to global leading. It is an essential change of the innovation model for enterprises to move from followers to leaders, which means that Huawei must explore the future direction by itself, instead of catching up with others quickly.
In addition, the business growth of Huawei operators is slow, and the business scale of enterprises is small.
As a result, Huawei has placed strategic growth opportunities in the consumer business represented by smart phones. In order to promote the growth of consumer business, Huawei formally established three BG consumer businesses: operators, enterprises and consumers in 2011, and released the strategy of "cloud management".
At the same time, Huawei set up the 2012 laboratory to conduct basic original research, set up R&D centers in many countries and cities with intensive technical talents around the world, and recruited cutting-edge scientists, mathematicians and aestheticians in various fields around the world.
In the following years, Huawei launched a series of products and solutions based on cloud computing, and its servers, storage and distributed cloud data centers have accumulated a lot of user bases. The data shows that at present, Huawei has built more than 400 data centers around the world, including 120 cloud data centers.
However, at that time, Huawei’s role in the cloud computing market has always been a solution provider and belongs to the "behind-the-scenes hero".
But this situation changed soon.
On April 17, 2018, at the 15th Global Analyst Conference with the theme of "Building a Smart World with the Internet of Everything" held in Shenzhen. Focusing on ICT infrastructure and intelligent terminals, Huawei is determined to be a pioneer in the intelligent world, fully introducing artificial intelligence technology, enhancing the competitiveness of product solutions from all levels of cloud, management and end, and providing customers with a better experience. Xu Zhijun finally mentioned that at this Huawei Connect conference, Huawei will officially release a full-stack, full-scenario artificial intelligence solution.
At this point, Huawei officially stepped forward and entered the dispute with China’s cloud computing.
According to the data recently released by IDC, the public cloud market of China’s big data platform will reach 3.37 billion yuan in 2021, with Alibaba Cloud, Amazon Cloud Technology and Huawei Cloud among the top three.
Huawei’s digital transformation is a typical example of China manufacturing rushing to China to create.
After more than 30 years of hard work, Huawei started with digital management and built a management system dominated by process optimization, constantly optimizing non-value-added processes and value-added processes. Based on this,It has realized the transformation from communication to intelligent terminals, to cloud computing, smart cars and other industrial chains. It is the first batch of enterprises in China to complete digitalization, and it is also a model for most enterprises in China to carry out digital transformation management system.
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