Enterprises Must Build ‘Digital’ Mindset To Survive
The last few years have seen a digital revolution of sorts, with numerous ingenious internet innovations coming to the fore. This could well be a start of a whole new ‘digital’ world that one could never have imagined. Huawei shares its viewpoint on the rising digital phenomenon and how enterprises can ride on it:
The internet is not just mere infrastructure, but more a brand new mindset
The essence of the internet is being connected anytime, anywhere. Being an infrastructure element just like the power grid, the internet has greatly boosted social productivity and reduced cost. However, the value of the internet is far more than providing connectivity. Its impact is profound & revolutionizing, as it represents a brand new mindset, with the core being “all connected at zero distance” among people, enterprises and their customers, and business partners. Therefore, enterprises must restructure their mindset first, and their business, marketing, R&D, operation, and service models, based on the Internet rather than simply overlaying traditional models with the Internet as a tool. Among them, restructuring of mindset is of paramount importance, as action comes after that.
Infiltrating beyond value delivery into value creation, the internet is set to redefine traditional industries
Business processes, though complicated, mainly comprise value creation and value delivery. Value delivery is what we usually refer to as information flow, capital flow and logistics flow. All the three flows have been smoothed out through mushrooming e-commerce platforms. In other words, the Internet has fully infiltrated and transformed the value delivery process. The digital and physical worlds are merged and integrated, and the business chain is restructured, reducing or even eliminating many intermediate processes. Currently, the internet is starting its infiltration into value creation, especially the R&D and manufacturing fields. This infiltration is comprehensive. It has a technical dimension, as we see in the case of Tesla redefining automobiles using IT and the internet. It also implies changes in the R&D model, toward, for example, user participation and crowd sourcing. The manufacturing field is not immune to this.
After the steam engine, electricity, and IT, the internet is driving the fourth Industrial Revolution, or Industry 4.0, enabling the integration of efficient mass production with the diversity of individualized manual workshops. With the infiltration of the internet and ICT into the value creation field, the integration of the digital and physical worlds goes deeper. Transformation of traditional industries has just begun.
Through data analytics, a core competence for businesses today, the Internet will create new information monopolies and asymmetry while shattering the old ones
The Internet makes information dissemination and access impossibly easy. It breaks the traditional monopoly of knowledge and information by certain industries and enterprises, who will find it hard to grab the high value they used to enjoy. But every coin has two sides. While shattering the old one, the internet has created new monopolies and asymmetry of information at a higher level. The Internet giants collect massive user and transaction data, and leverage big data analytics to fully explore user behaviors, creating new information asymmetry and monopolies over the other enterprises and service providers. A new monopoly at a higher lever then takes shape. Information has become an asset more important than physical infrastructure. Information and data operation are and will continue to be core competencies that carry great weight.
As power in the value chain shifts toward users, users have to be fully engaged with their wisdom pooled together to build a new commanding height
With the traditional information monopoly shattered and information transparency increasing in general, users are getting more power. Enterprises must go further than just responding to and meeting customer needs. A higher-level of user-centricity is required that involves users in every business process, from requirement collection, product ideation and design, R&D, testing, production, marketing, to after-sales services. Only by leveraging users’ collective wisdom can enterprises prosper, together with customers. It is no exaggeration to say that the core of the Internet mindset is user-centricity. In designing products, delivering inspired experience and promoting brand image via word of mouth, user involvement is a must. However, this is not simply the building of online communities and user forums; it involves the transformation of management, R&D, and technological architecture.
ICT is becoming the core of enterprise competitiveness that enables disruptive innovation and redefinition of the market
In the information age, the enterprise ICT system is not just a support system to improve efficiency and reduce cost, but increasingly a customer-oriented business and production system. It is shifting the focus from “digital management and IT assets” to “digital products and data assets.” It is fair to say that ICT has become the core competency and engine that propels an enterprise’s business development and enables disruptive innovation for enterprises to redefine the market. This is true for any enterprise, be it big or small, from automobile manufacturers to hot dog stands. Irrespective of business scope and size, future enterprises must first be “high-tech” enterprises, fully leveraging ICT to upgrade and transform themselves. Otherwise, they will be left with no chance, just like riding a horse in an attempt to catch up with a high-speed train.
As we embrace the next wave of digital society, we are seeing the infiltration of the internet into value creation and a deeper integration of the digital and physical worlds. “Internet+” has become the focus of innovation in traditional industries and a starting point for their reformation towards digital.
Digital reformation: Riding a trend to win in the future information age
The digital society represents an irreversible trend. Riding on the trend to establish competitive strengths for today and the future, and embracing digital reformation by applying the internet mindset and ICT technologies, becomes an inevitable choice. Such reformation toward digital is not about just using the internet as a tool; it is far more comprehensive and profound.
Reforming mindset: Build a new business mindset around the core of “all connected at zero distance”: When the internet becomes omnipresent, it becomes an underlying business mindset too. Enterprises have to embrace the internet as an intrinsic mindset. Then they rebuild the external formalities like business, marketing, and service models around “all connected at zero distance.” Reformation of internal systems should then follow, to reengineer the management, R&D, and operation models. Enterprise, in such a way, will be redefined culturally, organizationally and process-wise.
Mindset change is a very painful choice, but a must for industries and enterprises in transition. When a new time dawns, the life-or-death question is not whether to change or not, but how fast you can change.
Reforming business: Cloud service is the future, and by default how enterprises are run in the information age; embrace disruptions in the business model and transition toward cloud service and create a new telco-scale business: Cloud service is a new business model and business mindset. While it differs with enterprises, ranging from products, after-sales services, online information services, online games, to e-commerce and e-banking services, its core boils down to user and data operation at a higher level, instead of just product operation itself. Without cloud services, enterprises lack foundation for such operations.
Cloud services’ importance as the foundation for future business is well illustrated by the example of Nike. This trend creates a great strategic opportunity for the telecom industry, as the ICT infrastructure required for enterprise cloud services would become a basic cloud offering itself. When we look at the past history from 1900 to 1930, we see enterprises relinquishing their own power generators and using electricity from power plants, as well as the beginnings of IT deployment through primitive systems such as punchers and tabulators.
For the next 30 years, we expect to see history repeat itself, as enterprises back out of their own data centers and opt for purchased ICT cloud services. With cloud computing-based business model transformation, enterprise ICT will be moved to the public cloud, which represents a market of similar magnitude to the telecom market, a strategic business opportunity worth trillions of dollars to the industry.
Reforming operations: Internetized operation to deliver “all online” and “on demand” services in an automatic and intelligent way, shifting focus from internal control to external services: As mentioned before, power is shifting toward users irreversibly, with the internet’s all-connected and zero-distance features shattering time and space limits as well as asymmetrical information distribution. Internetized operation becomes a must for enterprises. By doing so, they allow users to obtain services on demand, giving users their most desired freedom, freedom of choice. To support on-demand services, online operation is an indispensable foundation.
What we are talking about here is not simply online interface to interact with users, but user-oriented online operation to drive all of an enterprise’s internal processes online, with automation and intelligence built on that.In other words, reforming operations is not simply providing online customer service and sales; it is reforming all processes to meet customers’ on-demand requirements, with the focus shifting from internal management and control to external customer services.
Reforming ICT infrastructure: Build DC-centric ICT infrastructure to fully explore the value of information & data, the so-called “digital oil”: For enterprises and telcos, ICT infrastructure is the foundation that supports their business transformation and digital reformation. In the information age, information & data analytics and monetization become core competences for any enterprise.
To explore the value of enterprise data, the so-called digital oil, data mining and governance are key. With big data analytics, enterprises are endowed with new intelligence and wisdom to gain customer insight, conduct accurate product development and marketing, ensure informed management and decisions, and realize energy saving. In the future, all business activities will be digitized. Data centers (DCs) will become the core of ICT infrastructure or the “switching center in the digital age.” It is the place where information is stored, processed, and exchanged; it is also the hub where services are being handled and transactions being made. Thus, building DC-centric ICT infrastructure becomes a necessity in the information age.
Reforming technologies: Redefine IT and network architectures with software-defined, scale-out computing models, setting the trend for the next wave of technology revolution: Driving behind the success of business innovation is the force of technological innovation. It is with these two wings that the internet is set to fly high. According to the new Moore’s Law from Turing Award-winner Jim Gray, the volume of data traffic generated every 18 months now equals that for all of human history.
Facing such a huge amount of information and data traffic, which could surge suddenly and unpredictably, ICT infrastructure must be more agile and scalable, which renders the traditional hardware-based architecture and pre-planned construction model outdated. To support business development into the future, brand new technological architectures that allow for agility and scalability are needed. This is exactly where software-defined and scale-out computing models come in, which are becoming the new normal. Software definition refers not only to the IT domain, such as software-defined storage and software-defined DC, but also to the network domain, including software-defined networking (SDN) and network function virtualization (NFV). It realizes more flexible architectures via software, on the basis of programmable hardware.
As for the scale-out computing model, it is permeating everywhere, from underlying multi-core chips to distributed storage, from parallel computing to fully distributed network architecture. Different from the scale-up model, which is confined by material and processing constraints, scale-out allows for huge capacity and low cost. Software-defined and scale-out computing models are transforming traditional IT and network architectures, setting the trend for the next wave of technology revolution.
The information society is coming at an unstoppable pace. No industries and enterprises can be outside of it. To ride on this trend, enterprises must embrace an internet mindset and advanced ICT technologies & solutions for digital reforming to build leading advantages into the future. The future belongs not only to internet companies based on the virtual world, but also to those deeply rooted in the physical world. Huawei will continue to focus on the pipe strategy surrounding ICT infrastructure, and develop our SoftCOM strategy, which integrates the latest ICT ideas and technologies. We will continue to work hand-in-hand with our partners to help realize digital reforming of traditional industries, pushing the information society to new heights.
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