Build strategic competitiveness

In the past three months, there are two things that made He Chaoxi the most happy: First, on April 14, nearly 40 network products of Sangfor Technology Co., Ltd., which he is in charge, passed the central government procurement review, and won the bid of the central government. Second, the survey report released by the authoritative market research agency Frost & Sullivan shows that Sangfor SSL VPN (a security solution technology for remote users to access sensitive company data) has jumped to the first place in the Chinese market in 2008 Bit, breaking the previous advantages of European and American manufacturers in this field.

As the CEO of Sangfor, He Chaoxi knows that these achievements should be attributed to the efforts of all employees and the adoption of the correct strategy. "An important growth strategy of Sangfor at present is to be the first in more and more frontier network market segments and realize the overall growth of the company's business." He Chaoxi said, "Choosing to cut into the market segment of WAN equipment such as Internet behavior management, The main reason is that under the condition of limited resources, the company can make the largest investment in product development in the segmented market, and it is possible to obtain the leading position in the segmented market."

Looking around the market, Sangfor found that Cisco, Juniper, Huawei 3Com and other network equipment manufacturers Having occupied most of the market share in routers, switches, and network security products, Sangfor needs to take a different path in order to avoid its edge and strive for its own growth opportunities. At the beginning of its establishment in 2001, Sangfor entered the software VPN market, and then concentrated its resources into five major market segments including SSL VPN, Internet behavior management, network application accelerator, and application publishing.

Sangfor has ushered in a period of rapid development by intensively cultivating the five market segments of the frontier network. Since 2005, Sangfor has been included in the "Deloitte Asia-Pacific High-Tech and Fast-growing 500" for four consecutive years. In 2008, despite the global economic downturn and the reduction of IT investment by enterprises, Sangfor still achieved a 70% increase in performance, with sales revenue reaching 170 million yuan. "In 2009, we will continue to launch new products and expand the development of customers in key industries. It is expected that the company's performance will increase by 60%." He Zhaoxi said.

What's the secret to Sangfor's growth? The answer is: focus on the corporate strategy of market segments and build core competitiveness from three aspects.

Strategy First: Focus on Network Segments

Management guru Michael Porter pointed out that smaller companies, with limited resources, can adopt a focused approach to serve specific customer base, providing the quality products and services they need to outperform competitors on a wider scale.

Sangfor's success proves Michael Porter's insight. In 2001, Sangfor was only a small company with a dozen people when it was established. The three founders of the company placed their market positioning in the VPN field. At that time, there were a lot of hardware VPN solutions in the domestic market, which were relatively expensive, while small and medium-sized customers preferred software VPNs. The latter are inexpensive and easy to install. Sangfor captured the needs of this market segment and devoted all resources to attack this market. In 2002, it launched IPSEC VPN, and in 2004, it set foot in SSL VPN, and launched the world's first SSL/IPSEC two-in-one VPN. Sangfor achieved the first place in the national software VPN market.

He Chaoxi said: "Competing with network equipment manufacturers larger than us, our strategy is to effectively segment the market, invest more resources than competitors in the segmented market segment, and gain a leading edge. It is also important to expand the market scope quickly after the first, otherwise you may face the danger of being marginalized or invaded by the first echelon of other relevant market segments, so taking the initiative to expand the results is the only way to maintain the first.”

In 2003, Sangfor learned the customer's demand for bandwidth resource management from the feedback from customers, and invested in the development of online behavior management products. In 2005, it launched the first professional Internet behavior management device in China, and at the end of 2006, it launched the first domestic WAN acceleration device. Sangfor follows the principle of "connection-management-optimization" to enhance the value of bandwidth, and combines its product lines into an overall solution to serve small and medium-sized customers and large customers in key industries.

In the third quarter of 2008, Sangfor's various product lines achieved nearly 80% sales growth. Among them, the newly launched WAN acceleration products have the fastest growth rate, reaching 214.4%, the online behavior management products have increased by 84.1% over the same period of last year, and the growth rates of SSL VPN and IPSEC VPN have also reached 79.9% and 58.6% respectively.

"The starting point of Sangfor's strategic positioning is the customer base and the value provided to customers. From the initial positioning as small and medium-sized enterprises customers, to today covering industry market customers, the products we provide are all based on a concept to help customers improve The value of bandwidth improves customer experience." He Chaoxi said, "Users working in different places, the traditional way is to rent expensive private lines, now you can use the Internet to establish virtual private lines, the cost will be greatly reduced. For example, some companies rent 10 megabytes of bandwidth resources. , now with the development, the bandwidth capacity is not enough, to upgrade to 20M, it will cost tens of thousands of yuan to rent new bandwidth to meet the demand. However, using Sangfor's WAN acceleration equipment, it can increase 3-4 times the bandwidth load."

After focusing on the market segment of the network, continuously increasing investment in key areas, and establishing a strategy to continue to lead, how to achieve the success of strategy execution? Sangfor's experience is to build core competitiveness.

Three elements of core competitiveness

He Chaoxi admits that the market segments that Sangfor has entered are currently less than 1 billion yuan in domestic market value. However, with the acceleration of China's network informatization and the rapid growth of large-scale backbone enterprises' network construction, there are considerable opportunities in the future.

The growth of the SSL VPN market is one example. Frost & Sullivan, a world-renowned research institute, recently released a survey report showing that the year-on-year growth rate of China's SSL VPN market in 2008 was as high as 121.6%, mainly due to the rapid expansion of Chinese enterprises and institutions and the rapid construction of network informatization. In addition to a large number of regional network reconstructions caused by snow disasters and earthquake disasters, another growth point of China's SSL VPN market is mainly in the government industry. , The demand for informatization construction of network interconnection will further increase. Frost predicts that the growth rate of China's SSL VPN market in 2009 will be 28.1%, and in 2015, it will form a market of about 130 million US dollars.

In order to seize the opportunity of increasing capacity in frontier network segments, continuous innovation capability is the first element to build core competitiveness.

Continuous innovation "Sangfor has adopted follow-up innovations, such as online behavior management. Sangfor was the first to propose it, but some people have done it before, and what they have done is only a part of it. We have captured the overall needs of customers. Do it together. You can do better than competitors through differentiation and provide customers with a better experience.” He Zhaoxi said.

Sangfor's innovation experience is: take customer needs as the starting point to determine the direction of innovation; focus on the participation of the company's senior management, establish a sound innovation organization process, allocate resources, and ensure the development of innovation activities; incorporate innovation indicators into the performance of R&D personnel assessment, and establish an evaluation mechanism to give feedback on innovation achievements.

How to achieve customer-centric innovation? Sangfor requires the president, product manager, R&D manager, supervisor and other middle and senior management personnel to visit customers three times a month. After completing the customer visit, a special person will sort out the communication content. Then senior management, product managers, and R&D managers meet together to determine the direction of changes in customer needs.

“From the change of product functions, the improvement of product performance, to the planning of beautifying details of page style, all of them are proposed by customers and repeatedly demonstrated by the company. Sangfor SSL VPN launches at least 2~3 large-scale projects every year. The improved version will continue to improve and upgrade in terms of user functions and performance." Xu Qingmu, director of research and development of Sangfor SSL VPN product line, said that he visited high-end customers three times a month, so that he could better understand the continuous improvement needs of customers. It has laid a good data foundation for the function and performance planning of the next version of the product.

The innovation close to the customer has also received a warm response from the market. In the third quarter of 2008, Sangfor SSL VPN has jumped to the first place in the domestic market share.

In Sangfor, from the company president to the grassroots R&D personnel, including product planning managers, various product line managers, and all relevant members of the R&D, marketing, and customer service departments, they have all become the main body of product innovation. "Innovation first requires high-level participation. Innovative organizations have a position in the company. If high-level officials fully participate in innovation, all innovative resources can be guaranteed first." He Chaoxi said.

Sangfor invests 15% of its sales revenue into R&D every year, and has more than 200 R&D personnel, accounting for 40% of the company's total. In October 2008, the Sangfor R&D center moved into a new office area of 2,000 square meters. The spacious and bright new R&D center makes the information exchange between various departments of the Sangfor R&D system more smooth and provides a better hardware environment for technological innovation.

The process of product innovation mainly includes the process of demand collection. Demand comes from customers, competitors, related technologies and partners, and is coordinated by the product planning manager and the product manager of the market system. Next is the integration process of customer needs, that is, which customer needs can lead to new innovation opportunities, for which Sangfor has established clear evaluation criteria. The end of the process is to identify innovation points, followed by rapid response.

The output of innovation activities is linked to employee appraisal. "We assess how many differentiated advantages each department has recognized by the market and how much benefit it brings to the company. For example, how many invention patents the R&D department has are regarded as an important assessment target for the R&D department; 20% of their performance appraisals are innovation appraisal indicators, and the focus of the appraisal of grassroots R&D personnel is on product improvement and work performance improvement." He Chaoxi said, "The company has an innovation appraisal committee, which I personally lead. Evaluation is subjective. On the evaluation, small innovations are evaluated every quarter, and large innovations are evaluated and rewarded every year. Small rewards, such as suggestions on BBS, if the suggestions are accepted, a reward of 50 yuan will be issued in the same month. Innovations evaluated every year The winner will receive a 24K gold medal made of pure gold."

Sangfor has nearly 20 invention patents, and is the manufacturer with the most invention patents for VPN-related products in China. In 2007, at the invitation of the State Cryptography Administration, Sangfor participated in and formulated the national standard of IPSec VPN protocol. In December 2008, the national standard of SSL VPN jointly formulated by Sangfor, Huawei and other companies passed the acceptance of the State Cryptography Administration.

In addition to product innovation, Sangfor has also carried out marketing innovation and created a channel strategy of mutual benefit and win-win with agents. In the early days of the company's establishment, the network equipment manufacturers in the same industry widely adopted the channel sales method of pressing goods to the agents. Sangfor's market personnel learned through investigation that the agents were quite critical of this method. Commercial network equipment will become obsolete if it cannot be sold within half a year, and it will become a direct loss. However, online manufacturers generally only record sales after delivery, which inevitably forces the sales staff to press the goods to the agents, but at the same time there is a problem of receivables between the agents and the manufacturers. Such a channel strategy is not beneficial to both parties. benefit.

Sangfor proposes to turn the pressing of goods into a deposit. The agent deposits a deposit with the manufacturer in advance. According to the current market demand and orders, the agent picks up the corresponding goods. After picking up the goods on demand, the products of the channel agent are unsalable. The situation improved greatly, so this strategy was welcomed by them. For Sangfor, the inflow of funds from agents has enhanced the company's cash flow, solved the company's early financing problems, and accelerated the company's development.

Provide customers with cost-effective products. The price of IPSEC VPN, SSL VPN and other network products provided by Sangfor is lower than the price of similar products abroad, but 20% higher than that of similar products in China, which is still favored by customers. The main reason is that It achieves the same quality of foreign products at low cost.

Sangfor wants to make its own products cost less than foreign products, it must do a good job of cost control. Their approach is to reduce expenses in the part that does not produce value to customers, such as executives who must stay in budget hotels when they travel on business. At the same time, in order to achieve high quality, Sangfor is willing to spend a lot of money to improve product quality, including buying R&D equipment, building laboratories, doing marketing activities, sending products to third parties for testing, and continuing to invest in these activities that generate value for customers to ensure that product performance and quality.

At the same time, in terms of product pricing, Sangfor provides a unified standard, instead of exaggerating prices like some peers, offering large discounts to customers with strong bargaining power, and selling high prices to customers with weak bargaining power. Although the actual transaction price of Sangfor's final products is higher than that of domestic manufacturers, the transaction cost is low, showing customers a brand image of honest management and quality.

Quick response Facing the rapidly changing network market, Sangfor has developed a unique quick response capability. It includes rapid response to market changes, rapid response to customer requirements, and rapid response of employees to instructions issued by company leaders.

“At the strategic level, when we do something, we don’t do it until we have fully demonstrated it. We will do it when the demonstration is three or four points. I will adjust it after I finish it. If the plan is good, we must take action. Quickness is very important to us. Rapid response is guaranteed by a system and process.” He Chaoxi said.

In terms of quick response to customer service, Sangfor put forward: ensure that customer needs are quickly incorporated into the R&D plan; solve customer's after-sales problems on the same day; according to the size of the order, orders under 100,000 will be delivered within 2 days and within a week Delivery and implementation, the average delivery time of orders for more than 100,000 major industry customers is 1-2 weeks.

“We have learned a lesson in the quick response to customer service.” He Zhaoxi recalled, “In the early days of the company’s establishment, an employee received a call from a customer while on vacation, hoping that he would quickly deal with an after-sales problem. His answer was 'I'm on vacation, I can't help you', and the customer came to complain. Although the employee's technical level was very good, the company dismissed him after knowing the matter."

Sangconv emphasized that "with The "customer-centric" value is about empowering employees to make sound judgments when confronted with many specific situations that go beyond what the process dictates. The current process guideline is that whenever an employee receives a call from a customer, he or she can deal with it quickly, and if it is inconvenient to deal with it, it is immediately transferred to an employee who can handle it. This strongly guarantees a quick response to customers.