Digital Transformation in China. Application practice

Listening to colleagues from other countries is always interesting: different experiences, different challenges, but so much in common! The editors of Global CIO portal organized a conversation with three IT executives from China: Zhang Jianhua, Lu Yang and Zhou Shengzhe, who agreed to answer a few questions and share their experience in digitalization, application of AI and use of big data.

The Chinese colleagues study at the School of IT Management of the RANE&PA under the DBA (Doctor of Business Administration) program. This is the highest, next level of business education after MBA. The School of IT Management has been training Chinese IT managers since 2018. The Global CIO editorial team would like to thank the School of IT Management at RANEPA for their help in preparing and organizing this interview.

Zhang Jianhua is a representative of Jun Xin IT company. The firm supplies IT solutions and services, and participates in the government's Internet + and Big Data programs. Lu Yang is one of the managers and founders of Smart Technologies in the automotive industry. It is a subsidiary firm of a large corporation. Founded in 2021, it deals with the full life cycle of automotive products, from product development to after-sales service. The company where Zhou Shengzhe works is engaged in asset management. This partnership of experts was formed in 2014, operating both in and outside of China.

We asked our colleagues the questions that are on the minds of CIOs around the world. You can watch the full interview at the link, and below are the key quotes from the speakers.

What are your companies' top digitalization priorities?

"We are conducting a full-scale digitalization of our products; it permeates all business processes of our company," says Zhang Jianhua. At Jun Xin, digitalization is mainly product-oriented.

The company's digitalization is going in two directions, notes Lu Yang. One is application digitalization. The second is big data. "Traditional ways of working create limitations in our operations. That's why we are digitalizing, using an order-to-delivery model. We have a challenge in front of us: we need to keep our own production, keep it going and go digital," he explains and gives an example.

It usually happens that the same customer appears in both the sales and after-sales service systems. It is the same legal entity, but the system sees it as two different customers. The company is moving to a different state of affairs: each customer is assigned a unique identification number, and you can see the entire history of interaction with him, from sales to service. "To the customer, we offer better service as a result, and we optimize processes for ourselves," Lu Yang emphasizes.

The company where Zhou Shengzhe works also has two areas of digitalization. One is to increase the company's efficiency. The second is its efficiency. "When it comes to the company's internal systems, we are creating new management models in order to eliminate the human factor as much as possible. We are trying to meet the market's expectations to the greatest extent possible," says Zhou Shengzhe.

Separate small applications are used to communicate between departments within the company. "Inovne we use a digital twin of a person, our manager, which gives customers new experiences and opportunities to interact with our company in a new way. We ourselves gain a multi-channel understanding of the customer and begin to better understand their diverse needs," says Zhou Shengzhe.

There are two types of doubles: a virtual copy of an employee and a fully virtual person. Each customer can choose a tutor of his or her choice. The goal is to increase the market understanding of our clients and investors.

Lu Yang spoke about a specific project that the department he manages is working on. It is the creation of a single platform to integrate all the company's business processes. "Previously in the company, the estimates for the IT department were a mystery: it was unclear where the money went. And it was difficult to find numerical criteria, metrics by which to evaluate the effectiveness of the IT department.

Our new platform will allow all IT work to be viewed as services for other departments. The time of delivery, the speed of service delivery is our main metric. We are also creating a system for evaluating our services. I am confident that we will be able to significantly reduce our company's costs by implementing this system," says Lu Yan.

The common platform is still in the process of development, explains Lu Yang. "We are collecting the needs of each department, collecting the requirements of the finance department for each department's estimates. At the end of the year, when the inventory is taken, we will see what effect our system has had." How the IT department will be paid for its services is still being negotiated with other departments.

The digital platform is also being developed at Jun Xin.According to Zhang Jianhua, both Chinese and Western concepts, including DAMA, were used in its development. "By combining the two traditions, we made our own data processing and analysis product," he says. - Our system can be applied to the energy industry, manufacturing and services. This data management system includes quality management and the creation of a digital asset."

Is AI going mainstream in your companies' daily digital lives? If yes, how exactly.

Gian Xin applies AI starting from the entrance hall: facial recognition when entering the workplace. Another routine task is creating minutes from meetings, meetings. "We also entrust the creation of simple codes in software development to AI," says Zhang Jianhua. - The main trend of using AI is in the development of new software. Here we use both robot developers and other methods. When we create code, we use analytical elements, and that too with the help of AI".

Lu Yang believes that Smart Technologies is similar to Jun Xin in terms of using AI. Here, too, they use AI in both code creation and typologies. They also apply AI in unmanned driving systems and in the internal tooling of the car itself.

"We have an analog of your Alice inside the car that can respond to requests to close the window, turn on music and the like. It can, by learning the driver's habits, adjust the temperature in the cabin and make other custom settings," says Lu Yang. - What's more," he continues, "we're working on making our auto companion a good buddy of the driver. It would tell jokes, for example, if the driver is sad and silent for a long time, so that we can just chat with him. But the main thing is, of course, unmanned driving. Our cars provide such comfort that you can let go of the pedals and the steering wheel, the car itself moves according to sensors, and can avoid obstacles. Of course, this is only possible on a really big data set," emphasizes Lu Yang. - That is why the platform where we collect, aggregate, and process all this data is constantly being enriched.

"Smart Technologies has been making cars since 2021. "We are gradually making them smarter and smarter. Our car won a competition where three hundred thousand similar cars in China participated," Lu Yang said.

Zhou Shengzhe's story about the application of artificial intelligence concerned quite different tasks. "In our financial sector, the boundary between reality and virtuality has long been erased. We use AI to analyze market trends," he said. - We have a financial product in which human involvement is almost completely eliminated. We try to provide science-based, maximum-savings solutions for our customers. Manual analysis of comparable amounts of information in real time is almost unrealizable anymore."

The example Zhou Shengzhe gave was about analyzing companies that are going public or have already gone public. Such an organization regularly publishes its financial reports in the public domain. This data is usually lagging behind: it is available for the last quarter at best. To solve this problem, their analysis programs have been purchased from financial analysis institutes. They allow you to fill in the time gap based on historical information, can forecast and create a model of a particular company's performance. So one factor is the fixed state of affairs, and the second is a forecast based on the model.

"We have so many tools for reading, collecting financial data at different levels: industry level, at the level of individual corporations, intra-corporate flows. We analyze all the information available for collection - both negative and positive - from all possible sources," explains Zhong Shengzhe. - The application of AI and big data has made our work much easier and added many new tools. Forecasting at the level of industries, corporations and smaller units is a value that is important to our clients. It helps them select the most risk-appropriate investments."

Does China have a problem with the shortage of qualified IT personnel, and if so, how is it solved?

Answering the question about ways to solve the personnel problem, Zhang Jianhua emphasized that all countries have such problems. He believes that the problem lies in the structure of these human resources: there are not enough highly qualified specialists, including in AI and big data. That's why Zhang Xin and other Chinese firms are attracting foreigners. "But in China itself, schools and universities are training IT specialists in huge numbers in both traditional areas and new ones. There is additional professional training, various courses, including online. These latter are cheap and available to almost everyone who wants to learn," emphasizes Zhang Jianhui.

Lu Yang divides IT specialists into basic-level employees and highly qualified ones. The highly qualified, he believes, are divided into IT specialists themselves and cross-disciplinary specialists who are able to apply IT tools and approaches in business activities. There are already enough mature courses in China that are quite capable of providing enough basic-level specialists, Lu Yang believes. "I have people working with me quite successfully who have acquired the necessary knowledge in three, and six-month courses," he says, and continues: "There are also courses for interdisciplinary specialists, I study in such a place myself. This is our famous Hongdong University. Translated, it means 'hybrid, mixed'. Because it mixes knowledge from different fields, changes psychology and even people's behavior, and creates new business models."

As an example, Lu Yang cites Beika, a company that operates in the real estate market. It ensures that projects are managed in such a way that at every stage, starting with the design of the building, all participants make a profit. For this purpose, an AI-based system is used. Its application ensures that no one suffers losses, no one is cheated. "It is fair and profitable," Lu Yang seriously emphasizes.

Zhou Shengzhe has a rather peculiar opinion on the staffing problem in IT. The trend towards digitalization leads to the fact that people of different specialties have to digitize their profession, he believes. At the same time, digitalization in a company can be divided into two stages. One is the digitalization of activities and business processes, and the second is the commercialization of digital services. The application of IT frees up some employees, and this alleviates the shortage of personnel in the market. So the application of IT enriches the labor market in general and the market of IT specialists in particular, believes Zhou Shengzhe.

Silicon Valley used to be the center of attraction for IT specialists from all over the world, including Chinese. Now they have a choice: go to the US or stay at home, notes Zhou Shengzhe. "We not only invite foreign specialists to China, but also create conditions that are interesting for our talents. For example, before, when inviting a specialist from another Chinese city, you had to think about transportation costs, travel expenses. Now, with the development of the high-speed road network, this can simply be neglected. In general, the exact physical location of an IT specialist is no longer important. He can work from anywhere. This also makes it possible to compensate for the shortage of IT specialists. To meet the challenges of digitalization, we expect an influx of personnel from related industries. And we predict that the number of people employed in the IT industry will grow and grow in the near future," explains the Chinese executive.

Professional development plans

If people are ready to invest time, effort and money in their training, it means that they see a perspective in it and have certain ambitions. So what are the personal plans of Chinese IT managers for the next few years?

"I will strengthen my management skills in IT and implement AI, big data and the internet in my company. Technology is changing fast, you have to keep up with it. To benefit the company and customers, I need to constantly grow and update myself," says Zhang Jianhua.

Zhou Shengzhe has a similar position. He believes that: "The next five years will be important not only for us personally, but also for the world as a whole. In five years, there will be heaven-and-earth-turning changes. So I clearly understand that I need to plan my own growth and keep up with these changes. My level should allow me to fully realize my social responsibility and create added value for the company and its customers. The whole digital transformation that we are going through now has to be green, eco-friendly, sustainable.

Lu Yang's plans are more concrete. "The fact that I came here to Russia for a DBA is a step forward and raising my own level. Plus it is my studies at Hongdong University. I am constantly putting the knowledge I have gained into practice, making the necessary reforms in our company. And it will be good if I achieve material prosperity in the course of all this. I have a similar experience: when I worked at Nio, we increased the company's turnover from 10 million to 1 trillion yuan. The company where I work now is at pre-IPO level, preparing to go public, and has a turnover of 13 million yuan. Like Nio's company, we are trying to reach the billion level. In time, I would also like to start my own business, but in the meantime, I am accumulating theoretical and practical knowledge."

Conclusion

The Chinese economy continues to move forward and set significant, large-scale, interesting tasks for IT specialists. Chinese colleagues use a lot of international terms and abbreviations in their speech, they speak calmly about attracting foreign specialists to their country, but they clearly see great potential in the development of national companies, and they associate their future with them. These companies operate in a highly competitive market, which objectively generates a high demand for IT methods, IT tools, and also reduces costs and increases efficiency growth. Chinese colleagues are moving forward quickly, and it makes sense to learn as much as possible about their projects, their methods of work, and their approaches.