What Is Digital Transformation?
Digital transformation, or digitalization, is the process by which enterprises integrate next-generation information and communications technologies (ICTs) across various business domains. Digital transformation involves integrating next-generation ICTs as new production factors alongside an enterprise's existing ones, sparking business innovation and restructuring. It goes beyond simply applying technologies to production; it continuously accumulates and creates digital assets that underpin an enterprise's competitiveness in the digital world, sustainably creating value for the enterprise.
Digital transformation is essentially a business transformation driven by next-generation ICTs, leading to a profound reconstruction of service, management, and business models. In this process, technology serves as the pivot, while business remains the core. The initial phase involves applying ICTs to create an all-scenario digital world where everything is sensing, everything is connected, and everything is intelligent. The subsequent phase focuses on optimizing and reshaping physical-world business operations by innovating traditional management, service, and business models to continually enhance competitiveness.
Why Do We Need Digital Transformation?
During digital transformation, the application of new technologies is not the ultimate goal; instead, it aims to enhance the competitiveness of products and services, thereby allowing enterprises to achieve a stronger competitive advantage.
Digital Economy: New Growth Engine for Economic Development
The digital economy encompasses a series of economic activities that use digital knowledge and information as key production factors, modern information networks as important carriers, and ICTs as crucial drivers for efficiency improvement and economic structure optimization. It has become a vital driver of global economic growth in the 21st century. According to the Research Report on the Development of China's Digital Economy (2023) released by the China Academy of Information and Communications Technology (CAICT), China's digital economy reached CNY50.2 trillion in 2022, a nominal year-on-year increase of 10.3%. The growth rate was significantly higher than the nominal GDP growth over the same periods for 11 consecutive years. The proportion of the digital economy in GDP was equivalent to that of the secondary industry in the national economy, reaching 41.5%.
China's digital economy development from 2017 to 2022
China attaches great importance to the huge potential of the digital economy in contributing to social development. At major conferences such as the National Cybersecurity and Informatization Work Conference and the 20th National Congress of the Communist Party of China (CPC), it has been repeatedly proposed to develop the digital economy and accelerate industry digitalization.
Digital Transformation: Proactive Choice for Adapting to Digital Economy Development
In the era of global digital economy development, digital transformation is changing the operational rules of enterprises and industries, with both native digital enterprises and traditional enterprises actively exploring this transformation.
- Native digital enterprises leverage next-generation ICTs to improve the competitiveness of their products and services, thereby achieving leapfrog development. Some digital native enterprises (such as startups and Internet enterprises) are currently challenging traditional market rules and boundaries. With more intensive capital investment, stronger customer relationships, more agile operational systems, and more customized brands, these enterprises have achieved greater advantages and dismantled the operational advantages accumulated by traditional enterprises over decades.
- Under the trend of slowing macroeconomic growth, traditional enterprises are facing fiercer market competition than ever before. The key to traditional enterprise transformation lies in leveraging next-generation ICTs to drive innovation-centric digital transformation.
How Do We Carry Out Digital Transformation?
Over the long-term ICT-based explorations, the industry has developed a range of theories, methods, practices, and model tools in strategic planning, architecture design, and construction. Building on this foundation and leveraging its own extensive industry digital transformation practices, Huawei has created a set of strategic frameworks and tactical toolkits for applying digital technologies to achieve business success. Additionally, Huawei has summarized best practices for sustainable business innovation and development.
One Corporate-Level Transformation Strategy to Position Digital Transformation as a Corporate-Level Strategy and Facilitate Global Planning
A digital transformation strategy refers to the planning and guidance of digital transformation efforts. Focused on the future, it involves making key decisions about what actions to take and avoid, in terms of business direction and overall significance. As a corporate-level strategy, digital transformation is a crucial component of the overall enterprise strategy. Guided by a strategic approach, the likelihood of successful transformation is significantly enhanced. This strategy primarily encompasses the digital transformation vision and mission, positioning and objectives, new business models, new service paradigms, new management models, and strategic initiatives for digital transformation.
Two Major Supports (Organizational Transformation and Cultural Transformation) to Stimulate Organizational Vitality and Create a Positive Transformation Atmosphere
- Support 1: organizational mechanism assurance
Digital transformation demands robust organizational support. It is essential to specify the transformation owner, define reasonable business objectives, align appraisal and incentive mechanisms, and optimize the inter-organizational collaboration processes. Ideally, a dedicated digital transformation organization should be established to coordinate business and technical departments, create a collaborative operation mechanism between the digital and physical worlds, and promote implementation of digital transformation.
- Support 2: culture climate building
Corporate culture is a key factor in the success of digital transformation. We should continually foster a culture of transformation, ignite individual vitality, and create a favorable environment for employees to embrace change.
Three Core Principles to Ensure the Entire Transformation Process Stays on Track
- Principle 1: strategy and execution coordination
During digital transformation, strategy and execution are intertwined. Strategy emphasizes a top-down approach, focusing on high-level design and breaking down enterprise strategies layer by layer to identify targets and pathways and steer the specific execution of strategies. Execution, on the other hand, adopts a bottom-up approach, encouraging grassroots-level exploration and innovation under general guidance. This involves combining new technologies with concrete business scenarios to find value realization points. By summarizing successful grassroots innovations, we can influence, revise, and decipher upper-level strategies. In conclusion, we should coordinate strategy and execution by considering the relationships between long-term and short-term, overall and partial, and macro and micro perspectives.
- Principle 2: business needs and technologies as two key drivers
Digital transformation is driven by business needs and technologies. It is essentially a business-specific upgrade that requires considering transformation objectives and pathways from business perspectives, and implementing transformation in specific business operations. Learning from external practical experience helps identify how technologies can support business changes. New technologies hold significant potential for business growth, so enterprises should make moderate forward-looking investments in exploring these technologies. Leveraging their power through ongoing exploration and learning can create tangible business value and drive sustained business transformation.
- Principle 3: independence and cooperation of equal importance
Successful transformation relies on the enterprise's own initiative. As such, enterprises should identify and focus on their core capabilities to improve and internalize them. For non-core capabilities, they can adopt an open-minded approach and fully leverage external resources, thereby rapidly bridging capability gaps and building a mutually beneficial and win-win ecosystem for their development.
Four Key Actions for Controlling the Key Transformation Process
- Action 1: top-level design
The top-level design of digital transformation aims to establish an overall framework and development roadmap, and serves as an essential foundation for effective global collaboration and specifies long-term goals. By deciphering strategies, we can unify ideas, objectives, messages, and actions within the organization to foster integrity, collaboration, and sustainability in digital transformation.
- Action 2: platform enablement
In the digital era, rapid external changes conflict with enterprises' internal requirements for stable operations, posing significant challenges. This is reflected in enterprise digital transformation, where business demands are rapidly changing and new technologies emerge constantly, while digital systems require stable expansion and smooth evolution. Frequent disruptions and reconstructions not only lead to additional unplanned costs, but put business operations and operational solutions at risk. Therefore, enterprises need to build a platform that supports digital transformation to continually enhance their digital capabilities and cope with these challenges.
- Action 3: ecosystem implementation
In the digital era, the simple cooperation mode between upstream and downstream partners, focused on "service provision and procurement" within a "chain connection", is evolving towards "mesh interconnection". This is a shift that can be seen throughout the industry. When it comes to building digital systems, it is increasingly impractical for enterprises to build all systems independently. Instead, they can construct digital ecosystems that bring together multiple vendors to collaborate and complement each other. With a platform-based architecture, enterprises can efficiently identify cooperative resources, establish partnerships, drive project implementation, and sustain cooperation development at low costs by leveraging the identified capabilities and roles required for digital system construction. In doing so, they can achieve key technology self-reliance, bridge capability gaps, and foster healthy service competition. This can help to create a sound ecosystem to ensure the long-term, healthy, and sustainable development of digital systems. For digital system construction, the required ecological cooperation resources typically include consulting and design services, application services, technical platform services, system integration services, operations and security services, and investment and financing services.
- Action 4: continuous iteration
In the digital era, services change rapidly and technologies are constantly updated, calling for agile iteration in digital transformation. That said, iteration does not mean overall disruption; rather, it demands continuous accumulation and inheritance to digitize, while ICT construction must ensure service sustainability in the physical world. Given this, digital construction iteration should be multi-layered, with different layers undergoing iteration and evolution at varying cycles, for example, short-cycle iteration at the function level, mid-cycle iteration at the platform capability level, and long-cycle iteration at the planning and design level. Through continuous iteration, enterprises' digital transformation continues to improve, resulting in enhanced digital capabilities.
Digital transformation methods
Huawei's Exploration and Practices on Digital Transformation
Huawei has long been committed to helping industries carry out digital transformation by leveraging its leading advantages in ICT technologies, and has accumulated a significant amount of successful experience. The following are several typical success stories.
Success Story: Airport Digital Transformation
A large airline hub aims to support its service targets of 90 million passengers, millions of tons of cargo and mail, and 600,000 aircraft take-offs and landings by 2030. The IT network infrastructure for its new terminal has to be built to high standards and requirements. To build a world-class airport with highly reliable networks that ensure the stable running of airport services, the airport adopts Huawei Smart Airport Network Solution to construct a new IT architecture. This helps to promote digital development and innovation of the industry, and serve the group's high-quality development.
Smart airport construction and development blueprint
For more details about Huawei Smart Airport Network Solution, read the Huawei Smart Airport Network Solution (eBook).
Success Story: Hospital Digital Transformation
A hospital prioritizes people and their lives above all else, and is committed to delivering convenient and high-quality healthcare services to a wider range of areas and patients through ICTs. At the beginning of 2021, the hospital teamed up with Huawei to launch the data center (DC) reconstruction project in its two campuses. Through this cooperation, the hospital built a simplified data center network (DCN) featuring high reliability, agile deployment, and intelligent O&M, providing digital and smart healthcare services for patients and improving healthcare experience. By adopting Huawei Smart Hospital Network Solution to reconstruct the DCs in its two campuses, the hospital also improves its operational efficiency and reliability to ensure good service experience.
Smart hospital construction and development blueprint
For more details about Huawei Smart Hospital Network Solution, read the Huawei Smart Hospital Network Solution (eBook).
Success Story: Urban Rail Digital Transformation
As urban rail transit enters the fully automated driving era, efficient and secure communication as well as end-to-end service bearing is required between trains and the ground. The train-to-ground wireless network carries not only production scheduling services, but also numerous non-production scheduling services. As high-bandwidth services continue to emerge, the bandwidth of urban rail train-to-ground wireless networks cannot support the service growth. In response to this challenge, a city partnered with Huawei to deploy Huawei Smart Urban Rail Integrated Data Network Solution, pioneering the innovation of Wi-Fi 6 technologies in urban rail service bearing scenarios. Based on stable bandwidth, robust environment adaptability, and highly converged IoT and precise positioning, this solution ensures real-time HD video backhaul for autonomous driving of smart urban rail and facilitates deployment in scenarios such as smart inspection and smart rolling stock depots. In this way, it fully ensures driving safety of smart urban rail and improves operational efficiency.
Smart urban rail construction and development blueprint
For more details about Huawei Smart Urban Rail Integrated Data Network Solution, read the Huawei Smart Urban Rail Integrated Data Network Solution (eBook).
- Author: Li Fengle
- Updated on: 2024-08-16
- Views: 2103
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