China Unicom Shanghai's Digital Transformation Journey

Shen Ke, vice president, China Unicom, Shanghai branch, spoke about his company's digital transformation, which included creating cloud-based services and developing APIs, during the Huawei Connect 2016 conference last year.

I'd like to thank Huawei for giving me this opportunity to share with you what China Unicom Shanghai has done to drive digital transformation and contribute to ecosystem building. I'd like to take a more micro approach and talk about how a telecom carrier leverages the cloud to integrate its technologies with the entire ecosystem and creates a new business model. Basically, I'll elaborate on these two points today.

As we all know, the telecom industry has undergone many challenges and difficulties in recent years. And there are several reasons behind this.

First, the distance between us and our customers is widening as a new generation of consumers emerges. They come with new consumption characteristics and have a high demand for connectivity. These consumers expect different things from us carriers. So, this is the challenge in the B2C market: We have lost some connection with customers.

In the B2B market, businesses today need far more than traditional voice and data services to support their growth. Rather, they need more integrated ICT solutions and digital products and solutions. If we stick to the old operation model and product architecture, it will be difficult for us to meet enterprise requirements rapidly. That means we will fail to meet customer expectations by responding slowly.

Many startups have emerged in recent years as the Chinese government is encouraging mass entrepreneurship and innovation. Despite the support from the government, these startups also face intensifying competition. Another major challenge concerns how we can help them survive while supporting the government's initiative. To adapt to the changes in the B2B and B2C markets and respond to the Chinese government's call for mass entrepreneurship and innovation, carriers must innovate their business models and technologies.

Facing these changes, Shanghai Unicom decided to embark on the journey of digital transformation. We approach digital transformation from two dimensions. Externally, we aim to become a promoter and enabler of digital transformation. Internally, we stay customer-centered and digitize operations, services, networks, and architectures. Our ultimate goal is to realize digital operations and create a cloud-based digital ecosystem. The key is to build a new platform that opens up capabilities. This platform needs to help us realize cloud-based digital operations and become a truly digital carrier, thus supporting mass entrepreneurship and innovation.

In particular, we built an open cloud platform to accelerate our digital operations. The moderator mentioned that most of you are representatives from carriers, so I assume that you all agree that when carriers talk about platforms, they mean front-end and back-end platforms. Production systems such as OSS and BSS are typically back-end platforms, while front-end platforms are usually customer or consumer facing. In fact, there is a huge gap between the front-end and the back-end. By gap, I mean the many siloed services and products and a lot of manual labor needed at both the front-end and the back-end. And this gap is what distances us from customers, making it difficult to respond to B2B customers' requirements. So we thought maybe we could build an intermediate platform to connect the front-end and the back-end.

And that's exactly what we did -- we built an open capability system. We cloudified the entire back-end at the bottom layer, including the operation network and the IT system. Based on this, we built an intermediate capability exposure platform. With this open capability platform, we managed to overcome the difficulty of implementing different technologies through the application programming interfaces (APIs). In this way, the front-end operation system is interconnected and can thus quickly activate the back-end capabilities to realize new product orchestration and service response. The intermediate system allows us to remove the barriers that existed in the IT and OSS systems, which is a major breakthrough.

Over the past few years, the open capability platform has interconnected 22 internal systems and platforms at Shanghai Unicom. We identified a total of 200 atomic capacities and integrated them into 200 APIs that were later integrated into 83 scenario-based capabilities.

Up to now, more than 30 partners have registered on Shanghai Unicom's open capability platform. Thanks to the easy and uniform access to the capabilities, our APIs are invoked about 40 million times each month and the number is growing by 20% each month. Unified orchestration and capability access have also reduced the time to market (TTM) of our products from years to less than a week.

I would like to illustrate this with the exciting partnership between us and the Bank of Shanghai. Leveraging this platform, we launched a credit card co-branded by Shanghai Unicom and Bank of China. And we have helped the bank issue more than 20,000 credit cards though the platform's online channels. In addition to the Bank of Shanghai, we are working with many other partners to fully tap into the potential of this platform.

Digital ecosystem in action
That was a brief introduction of the open capability platform we have built. Next, I'll focus on how Shanghai Unicom has used this platform to create a new digital ecosystem. Our digital ecosystem strategy can be summarized into building a "2+N" open capability platform. "Two" here refers to the two major portals: "smart WO e-commerce" and "Wochuang space."

Through these two intermediate platforms, we open up capabilities to external parties. The smart WO e-commerce is a B2B online platform. That is to say, we sell services to enterprise customers on this platform which supports 24/7 self-service online order. And we have put all open capabilities in the Wochuang space. Enterprises and individuals can access our API capabilities though this platform after registration. When they create new products in this space, they can sell them on the smart WO e-commerce platform after approval.

This platform allows Shanghai Unicom to sell products to enterprise customers, and individual developers can also sell their newly developed products on the platform. We have developed numerous new types of applications (this refers to the "N") on these two portals. For example, we have launched the "wooffice" app for enterprises, developed the "knittle" app for Vanke, and launched Bank of Shanghai and China Unicom co-branded credit cards. We also have a complete portfolio of smart park solutions. This is how we have been able to open up capabilities.

We have been promoting the smart WO e-commerce and Wochuang space as two brands and we officially announced the smart WO e-commerce platform on June 30 of this (2016) year. We have moved all our services to this online platform on which we are able to deliver many real-time channel services. In addition to traditional voice and broadband products, many integrated ICT applications and many third-party industry applications are also available on this platform.

The Wochuang space integrates more than 200 telecom capabilities that can be grouped into five categories. Partners can access these capabilities after a simple registration process and can develop their new telecom products quickly.

By leveraging these two platforms, Shanghai Unicom has developed a comprehensive solution -- the smart park solution. The underlying ICT architecture has been successfully avoided by using the open capability platform. And the top layer applications are uniformly built using our APIs.

This smart park solution has already been deployed in Shanghai Unicom's production system and various applications are currently being produced. Thanks to the open capability platform, Shanghai Unicom has managed to speed up our response to customer requests and has explored many new cooperation models. For example, we explored cooperation opportunities relating to big data capabilities through the platform, which has contributed more than CNY10 million to our annual revenue. In the future, China Unicom Ltd. (NYSE: CHU) Shanghai will focus more on exploring new production and cooperation models based on this open capability platform.

— Mike Robuck, Editor, Telco Transformation