Lianxin Yongyi: Make integration the best and make a cup of soy milk the best

Editor's note: Almost all of China's industry solution providers started out as system integrators, but now they are taboo about talking about the identity of system integrators and are trying to erase this "birthmark" and They have transformed into IT service providers. Beijing Lianxin Yongyi Technology Co., Ltd. seems to be an exception. This relatively new company established in the telecommunications industry still regards system integration as its core business. Company president Chen Jian believes that there will be no problem in system integration for another 20 to 30 years, and the further we go, the more money we can make. The reason is that system integration is the "skin", while software and services are the "hair". If the skin is gone, how will the hair be attached?

Champion Profile

Date of establishment: 2002

Revenue: 636 million yuan

Employees Quantity: 560 people

Customer groups: Beijing Unicom, Nokia and other telecommunications companies

Advantage areas: system integration and software development in the telecommunications industry

Development goals: Domestic A listed first-class professional IT service chain enterprise group

In the 6 years since its establishment, Lianxin Yongyi has been going smoothly

. In the field of IT services in China's telecommunications industry, where there are many powerful enemies, it did not have to work hard to gain a place and become one of the top 10 telecommunications IT service providers.

Speaking of which, this is not easy, because after more than 10 years of fighting, the remaining telecom IT service providers have all developed "bronze heads and iron arms." This can be seen from their revenue scale: AsiaInfo's 2008 revenue reached 175 million US dollars (about 1.25 billion yuan, 85% of which came from software and services), Nanjing Lianchuang 2.5 billion yuan, Huasheng Tiancheng 2.9 billion yuan, There are also "big guys" such as Digital China Stretch and Donghua Hechuang.

Lianxin Yongyi is a latecomer, but it relies on its unique conditions to grow rapidly in units of "100 million" every year. In 2008, it achieved sales of 630 million yuan.

However, in 2009, company president Chen Jian felt a little nervous and uneasy: the telecommunications restructuring that was once considered the most beneficial IT supplier has brought some uncertainty to the system integrator. ―China Netcom used to be its most important customer, but the integration of China Unicom and China Netcom has caused subtle changes in the situation. "Telecommunications restructuring will do more harm than good to us, and we are under great pressure." Chen Jian said frankly.

Peng Haixiang, research director of CCW Research, believes that it is generally difficult for integrators to establish stable cooperative relationships with operators. Operators are also constantly changing suppliers out of consideration for their own interests. Comparatively speaking, China Mobile and China Telecom have relatively stable cooperation with integrators, while China Unicom changes integrators more frequently. "Currently China Unicom is in this state, with integrators coming in and out frequently."

Fortunately, judging from the sales in the first five months, Lianxin Yongyi's sales performance has not been greatly affected. Sales The amount has reached 220 million yuan, which is basically the same as the same period last year. Lianxin Yongyi has not adjusted its strategic deployment on a large scale. It still sticks to system integration and expands IT services.

There is no problem if we can continue to do it for another twenty or thirty years

In Chen Jian’s view, “System integration can only be done for another twenty or three years.” There has been no problem for ten years." Because China's system integration industry is still in its primary development stage, the industry's integration level is very low and it is far from reaching large-scale production capabilities.

At present, almost all companies in China that call themselves "IT service providers" started out as system integration. But now, they are taboo about talking about the identity of system integrators, and they are trying to erase this "birthmark" and transform into IT service providers. Because in the eyes of the industry, system integrators are the companies with the least technical content. They make meager profits by helping hardware manufacturers such as IBM, HP, and Dell "move boxes" and are "unknown, unprofitable, and have no future." The "three noes" company.

Despite several years of difficult transformation, system integration still accounts for a large proportion of the total revenue of telecom system integrators: in 2008, Huasheng Tiancheng’s revenue was 2.9 billion yuan, of which system integration The integration part accounts for 66.75%; Donghua Hechuang's revenue is 1.159 billion yuan, and system integration accounts for 75.8%. Even for AsiaInfo, which has been the most successful in transformation, system integration accounted for more than 50% of its total revenue before 2006.

"We will not do anything else, we will do system integration." Lianxin Yongyi does not shy away from its identity as a system integrator. According to data provided by Lianxin Yongyi, system integration still accounted for 84% of its total revenue in 2008. "However, this proportion is gradually declining." Chen Jian said.

In Chen Jian’s view, “there will be no problem in system integration for another 20 to 30 years.” Because China's system integration industry is still in its primary development stage, the industry's integration level is very low and it is far from reaching large-scale production capabilities. According to the standards of the Ministry of Industry and Information Technology, in the system integration industry, a company with more than 300 people and more than 300 million in revenue is considered a large enterprise. This shows that the concentration level of the entire system integration industry is very low and there is still much potential.

Moreover, the launch of 3G has also brought some new opportunities for system integration. According to data from the Ministry of Industry and Information Technology, 170 billion yuan will be used for 3G infrastructure construction in 2009; the total investment in the three years from 2009 to 2011 will reach 400 billion yuan. Such large-scale investment will first bring opportunities to system integration companies.

In March 2009, Huashengtiancheng successively won large orders from China Unicom totaling approximately 250 million yuan. The projects involved included China Unicom’s 3G value-added business system, China Unicom’s multi-provincial business support system, and online Billing system pilot infrastructure project and China Unicom's multi-provincial new generation BSS (Business Support System) infrastructure project, etc.; In March 2009, ZTE Soft Innovation signed a comprehensive OSS (Operation Support System) system project with China Telecom in five northern provinces Project construction contract; and in April 2009, AsiaInfo also signed an agreement to develop new BSS for nine branches of China Unicom.

Although the profits of system integration have declined, they are not unprofitable. "If you want system integration to earn 30% to 50% profit, it is impossible, but earning 20% ??is possible." At this point, Chen Jian is very rational. Because when Liansign Yongyi entered the telecommunications industry market, the profits of system integration had gradually dropped from the highest period of 100% to 200% to 20% to 30%, which made Lianxin Yongyi give up some unrealistic illusions.

Integration is the "skin"

Service is the "hair"

In the era of thinning profits Under such circumstances, many companies have either withdrawn from the telecommunications market or made great efforts to transform into software and services. LianSignal Yongyi has its own ideas: system integration is the "skin", and software and services are the "hair". If the skin is gone, how will the hair be attached?

"Transforming into an IT service provider" is a sentence that reporters have heard most often in recent years. In the telecommunications industry, AsiaInfo is the most successful example. By 2008, system integration accounted for only 15% of AsiaInfo's total revenue, making it difficult for other system integrators to catch up; Huasheng Tiancheng has also announced a strategic transformation in recent years, focusing on software development. It has invested heavily in high-end service areas such as BI (Business Intelligence), mobile commerce, information security and BCP (Business Continuity Plan), ITMS and emergency communications.

Compared with AsiaInfo and Huashengtiancheng, as a "follower", Lianxin Yongyi does not have enough ability to develop independent products. In order to consolidate its market position, Lianxin Yongyi has chosen a different path from similar companies and positioned itself as an IT service provider based on system integration.

"The most profitable part is not the sheepskin, but the wool on the sheepskin. As long as there is a good mechanism, the 'hair' of IT services can be cultivated on the 'skin' of system integration." In the strategy planned by Chen Jian for Lianxin Yongyi, system integration is still the absolute core business. Therefore, Lianxin Yongyi did not take a big step to transform into software and services. Instead, it first completed the system integration business, and "even if it loses money, it must do system integration."

In fact, everyone knows that system integration is the "stepping stone" to penetrate into customer applications. Therefore, almost all integrators hope to be "bound" to a certain operator to the greatest extent possible and to conduct "in-depth cooperation" on a certain core application. For example, China Mobile's business support system has six shortlisted integrators: AsiaInfo, Nanjing Lianchuang, Huawei, Shenma Stretch, New World and Tuowei; China Telecom's main partners are AsiaInfo+Xinfang, Huawei+ Fufu, Dico+HP, ZTE Software and Lianchuang, etc.

Peng Haixiang analyzed that: "A single integrator will bring certain risks to operators. Problems such as non-standard and non-open interfaces make operators too dependent on integrators, so they cannot easily Change the integrator. "However, from the perspective of the integrator's interests, the more tightly they are tied to the operator, the more inseparable the operator will be from them, and the more likely they will be to sell more software and services. In terms of system integration, More "hair" grows on the "skin".

Chen Jian also summed up several experiences of "wool grows from sheepskin". First of all, doing the "skin" of system integration requires patience. At this stage, it must be hard work and strenuous work. "Sometimes, system integration is like a snowball. You have to roll it slowly, not like a bear breaking off a stick, throwing one away." Chen Jian believes that only in this way can users be trapped; secondly, by providing a variety of Personalized services provide users with in-depth and detailed services. New service businesses will be hatched only if we go deeper. For example, in 2008, Lianxin Yongyi relied on cooperation with China Telecom to penetrate its business into the fixed-line payment field; in addition, it also requires close cooperation among various departments and employees of the company and collective operations to do a good job in the project. "This It’s almost like fighting”.

Moreover, the large-scale project experience accumulated through system integration is also conducive to expanding into other industries and improving the company's ability to resist risks. At the beginning, Lianxin Yongyi's system integration only had strong advantages in the telecommunications industry. In the following years, Lianxin Yongyi relied on its network design, integration and maintenance experience in the telecommunications industry to promote its business to government departments such as transportation and education. , and also expanded to tobacco, medical and other industries.

Expanding into other industries and "not putting eggs in one basket" is necessary for the long-term development of an enterprise, let alone any IT company that wants to go public. Most industry application solution providers in China have also gradually penetrated into other industries from their high dependence on a single customer or single industry.

With system integration as its foundation and project management as its core, Lianxin Yongyi has its own development goals. Chen Jian said: "If we make system integration and project management more detailed and complete, and at the same time establish a good operating mechanism, so that the general managers and project managers of each department are motivated to do a good job, the company will be able to maintain continuous Development. ”

IT service chaining

In the telecommunications industry, due to the management models, implementation goals and work of each operator Due to different processes, various BOSS systems are almost incomparable. Therefore, in the telecommunications industry, it is almost difficult for system integrators to realize the products they want to produce. Therefore, personalized IT services have almost become their only choice.

"Companies that purely make products have no present; companies that purely make services have no future." Lian Weizhou, CEO of Southeast Rongtong Company, China's leading financial IT service provider, said in an interview with reporters. This indeed reflects the general dilemma of Chinese IT service providers.

The same is true for the telecommunications industry. Due to the differences in management models, implementation goals, and work processes of each operator, various BOSS (Business Operation Support Systems) are almost incomparable. Therefore, it is almost difficult for system integrators in the telecommunications industry to realize the products they want to produce. Therefore, personalized IT services have almost become their only choice.

In Chen Jian’s view, IT services mainly include three major contents: traditional system integration, software development and operation and maintenance. These three businesses are complementary to each other. System integration is formed first, and application software development is carried out on this basis. After the entire system is established, operation and maintenance comes into play to ensure the normal operation of the system. Moreover, if a project is done well, it will generate new system integration and software development, and then bring new operation and maintenance services, forming a virtuous cycle.

Lianxin Yongyi’s IT services include both hardware services and software services. Chen Jian believes that breaking the boundaries between soft and hard, and providing “soft and hard” IT services will bring about a broader market space.

Chen Jian said that there are different opportunities at three different IT service levels: high, medium and low. Chen Jian gave an example: "It is impossible for Nokia to provide us with high-end enterprise services, and our support capabilities are also limited. However, Nokia wants to provide some mid- and low-level services to IBM, and IBM cannot accept them, so it will give We provide an opportunity; in addition, operators like China Unicom cannot easily leave their high-end services to foreign companies, especially application software development, which must be done by domestic companies. This is also an opportunity for us.”

Faced with the opportunity, Chen Jian proposed to work in two dimensions: "deep" and "broad". At present, the main job of Lianxin Yongyi is to grasp the depth and capture big customers. They call this "industry service customization", which is to customize services for different industries; on the other hand, it is to provide standardized chain services, such as McDonald's and KFC Same. "McDonald's, KFC and domestic fast food restaurants can make some convenient dishes, but for big meals you still have to go to professional restaurants." Chen Jian appropriately compared the relationship between "deep" and "wide".

Regarding the chain operation of IT services, Chen Jian maintains a prudent and rational attitude and does not blindly expand. Chen Jian once proposed the concept of "360-degree IT services", intending to use Lianxin Yongyi's brand to integrate IT service providers in third- and fourth-tier cities and jointly launch an IT chain service enterprise. But so far, Lianxin Yongyi has only deployed more than 100 points across the country and has not blindly expanded. "Enterprises are all about starvation, not starvation. Once they are greedy for too much, when management methods and management talents cannot keep up, there will be big problems." Chen Jian has always used this sentence to remind himself.

Project management

Is the core competitiveness

I have been working hard in telecommunications IT for 20 years For many years, Chen Jian has believed that an enterprise's project management capabilities are the core. Only when project management is done well can an enterprise be competitive. Technology and products are businesses, and what really matters in these businesses is people and management. When there are seven or eight hundred projects, the company can still manage it with people; but when the number of projects reaches 10,000, it cannot be managed by people alone, but by processes, systems and tools that support the processes. At this time, management capabilities become very important. "Project management is the company's core competitiveness. Really detailed management is the effective differentiation of different users." Chen Jian, who has been immersed in the system integration market for many years, expressed his insights.

Chen Jian believes that in any industry, whether it is system integration or operation and maintenance, it is ultimately project management. The core competitiveness of an enterprise is not a certain technology, but the familiarity with the business. And project management is the best way to get familiar with the business. Unlike the management method of product distribution, project management is quite planned, and there is no problem as long as the tasks are completed on time. The success rate of enterprise informatization using product distribution thinking is often low.

It will take a long time for Chinese companies to build brands in the IT service industry, build scale, and manage 5,000 to 10,000 people while still being profitable. Maybe 5 years is a time limit. In the future, two core factors will be needed to make IT service companies bigger. One is the core management model, for which there is no ready-made experience for reference; the other is a capital operation platform, which can obtain the funds needed for enterprise growth through listing.