The story of Fred Luddy, who founded ServiceNow (NYSE: NOW) 16 years ago in 2003 at age 50 as a one-man shop which compounded over 10X since its 2012 listing into a US$44 billion-market-value SaaS cloud company and ranked #1 on the 2018 Forbes Most Innovative Companies List, is highly inspiring – and also underscores the exponential ascent of the collaboration management & office automation (OA) software to become one of the most indispensable and rapid growth software category, analogous to the early- to mid-growth stage of the rise of Microsoft Office, ERP and CRM software.
From ServiceNow to Atlassian (NASDAQ: TEAM) and others such as Slack, collaboration OA software is increasingly having the same indispensable impact at work as a core fundamental platform that the FAANGs (Facebook, Amazon, Apple, Netflix and Google) had at home, while generating rapid revenue growth with attractive free cashflow margins (Atlassian 33.6% and ServiceNow 22.5%) on their highly predictable recurring-revenue subscription model in which expenses are booked up front when a new customer signs on but the associated revenue is recognized over the lifetime of the multi-year sticky usage. Their exponential potential can still be underappreciated as they expand beyond the current perception as just another niche process software. FAANG seems yesterday; enter the enterprise innovators of tomorrow in SAAS (Salesforce, Adobe, Atlassian, ServiceNow). So what would an Asian Atlassian/ServiceNow boosted by artificial intelligence look like?
“Through our OA artificial intelligence voice assistant ‘Xiao E’, users can carry out instant completion of transactions that may take one or two days to complete in the past, such as travel application/booking/approval, expense reimbursement, voucher processing; quickly search related documents; quickly build approval processes without IT involvement etc, realizing automation in the daily processing of daily trivial work to make full use of the fragmentation in time to deal with administrative affairs and improve the efficiency in the daily management process,” comments Wei Lidong 韦利东, founder and Chairman of Weaver Network 泛微网络 (SHSE 603039) which was established in March 2001 and listed in Jan 2017. Chairman Wei adds:
“If you encounter technical or product problems that you don’t understand at work, ‘Xiao E’ will give answers based on the relevant knowledge and experience accumulated by the system, and recommend which colleagues in the company are most suitable for such problems. When you are promoted or tasked to take over a new department and begin to formulate a new work plan, you can ask ‘Xiao E’ to give you a sales and operational performance overview, comparison of performance over the years, and other analysis report. Xiao E will also tell you which sales employees have good performance in winning customers, which employees you need to be concerned with their performance. ‘Xiao E’ will also tell you the diligence, the learning ability and innovation ability of each person, how they spend their work time in office, and the possible risks of each item. At the end of the meeting, ‘Xiao E’ will quickly sort out the meeting minutes and automatically assign each person’s tasks.”
“If you tell ‘Xiao E’ that you want to visit the customer on a business trip in Beijing on Monday afternoon, ‘Xiao E’ will automatically set up the day’s schedule, and whether there is a conflict, and remind the matter at the appropriate time. During the customer visit, ‘Xiao E’ will automatically identify the path and identify other customers whom you can visit along the way. When you tell ‘Xiao E’ about your specific business trip to visit a customer or supplier and the return time, and tell ‘Xiao E’ to book a flight ticket and hotel, ‘Xiao E’ immediately registered you for business trips in the OA system, inquire about the best time and most cost-effective ticket, as well as the best location and the best value-for-money hotel, and recommend to you, and automatically handles all the backend travel expense and reimbursement and integration with the finance and accounting department in invoices, payments, reconciliations, audits and other matters with intelligent financial management and control services. The cost control system integrated with the OA system will carry out the pre-existing cost control throughout the whole process. After the activity is over, the name of the activity can be directly viewed in the system to visually check various budget usages and achieve accurate financial accounting.”
This week, we highlight the under-the-radar listed Asian exponential innovator Weaver Network (https://www.weaver.com.cn) who is “China’s Atlassian/Slack”, the #1 collaboration management and office automation (OA) software innovator commanding the highest positive free cashflow margin (15.7%) and fastest total receivables period (34 days) in the entire software industry and is trading at a 28% valuation discount to Atlassian (NASDAQ: TEAM) and ServiceNow (NYSE: NOW) in terms of EV/FCF and 49-67% discount in terms of EV/Sales. Compared to Smartsheet (NASDAQ: SMAR) which has similar scale in revenue but loss-making with negative operating cashflow, Weaver trades at a 62% valuation discount in terms of EV/Sales. Weaver’s “Rule of 40” — recurring revenue growth plus free cashflow margins should exceed 40% — also ranks as the best in the entire software industry in China.
There is an increasing market demand for collaborative management software across industries and organizational size because the demand to complete work through multi-person, cross-department and multi-organization collaboration has increased. As organizations become more and more complex, information and systems are dispersed, resulting in more and more fragmented daily work. The daily work of employees needs to be switched between different platforms and systems. Many employees spend most of their daily work on different system data checks, administrative transactions, and various ineffective communication, while the effective time to create productive work is greatly reduced. There is an increasing need to coordinate resources and data in an orderly manner on a daily basis for increasingly knowledge-intensive work and establish a real-time, dynamic, and open collaborative operation system to streamline business processes, improve project workflow and management efficiency, and facilitate strategic and tactical business decisions to improve profitability.
Coupled with high employee coverage, frequency of use on a daily basis, and strong mobility attributes, collaborative management software is increasingly becoming the unified “gateway” platform for integration with multiple heterogeneous enterprise information applications (ERP/CRM/HRM/PM) through which worker interact with other business applications to improve workflow, and are increasingly having the same indispensable impact at work as a core fundamental platform that the FAANGs (Facebook, Amazon, Apple, Netflix and Google) had at home. Collaborative OA software has evolved from an app tool into a platform designed to capture and draw data from the different “silos” inside a business about how workers interact with corporate information, with different business apps, and with each other, combining and learning from them to give managers a new level of insight to make them more productive.
Weaver’s collaboration management software platform provides a unified entrance to connect the information islands of different systems and platforms to form a unified portal, unified reports, integrates different systems, and quickly mobilizes data for users. Weaver serves over 30,000 enterprises and institutions (up 3.75X from ~8,000 in 2016) across more than 30 industries through its direct sales mode with its SaaS cloud and mobile collaborative workflow & OA products that include the flagship “e-cology” for medium- to large-sized customers; “e-office” for SMEs; “e-team” lightweight SaaS for small and micro enterprises (launched in 2015; https://eteams.cn); OA artificial intelligence voice assistant “小E” (launched in Apr 2017) in which the user sends voice commands to realize various application functions of the system such as queries, scheduling, etc; and innovative functional cloud applications to organize the last-mile of paperless office such as automation of expense reimbursement, contract management, budget management, attendance management, etc.
Weaver has accumulated a wealth of industry experience and a large number of successful cases. Clients include Saint-Gobain China, LVMH China, Carrefour China, Huawei, Kweichow Moutai, China Life Insurance, PICC, SAIC Motor, Gree, Shanghai Pharmaceutical, Haidilao, AISINOCO, Yili Industrial, Shanghai M&G and over 900 listed companies, around a quarter of China’s Top 500 enterprises and over 8,000 large- and medium-sized enterprises. The number of registered companies for its “e-team” lightweight SaaS product is over 400,000, including IKEA China, iFLYTEK, Sinochem, Tung Lok Restaurant (Suzhou), Kong Fook Jewelry, with each user paying CNY1 per month (vs Atlassian’s ~US$10 per month per user for the first 10 users). Weaver has a diversified customer base and no customer accounts for more than 5% of the sales; revenue contribution from top 10 customers is below 10% of sales.
With the community and compellingness exponential edge, Weaver’s business model generates stable and recurring annual subscription revenue, achieving a 118% and 76% absolute increase in sales and net profit in the recent three years and generates decent profitability with net margin of 11.4%, positive free cashflow margin of 15.7%, ROE (= Net Profit/ Equity) 15.8%, ROA of 7.1%, propelling a 510% increase in market value from its IPO price of CNY 14.90 in Jan 2017 to US$1.4bn On 29 March 2019, Weaver announced its FY2018 in which sales increased 42.5% yoy to CNY 1bn yen, net profit rose 31.6% yoy to CNY 114.487m, operating cashflow increased 27.6% to CNY 200m and free cashflow rose 25.6% to CNY 158m. Balance sheet is relatively healthy with zero debt and CNY 796m (US$118.6m; of which CNY 210m was raised during its Jan 2017 IPO) net cash which is around 8% of market cap. FY2018 overall accounts receivables period is 29 days and total receivables period is 34 days, possibly the best in the entire software industry in China.
The increasingly complex enterprise architecture require higher and higher professional technical requirements for collaborative OA software platform. Weaver’s collaborative office cloud-based open technology platform with API as the core ensures integration and interoperability between internal and external third-party software services such as SAP, Oracle, UFIDA/Yonyou, Ctrip Business Travel etc. The design and development of each subsystem is highly modular, and the functional modules can be freely combined, plug-and-played according to user requirements, and can be changed and expanded according to demand. Adding new module functions quickly and cost-effectively improves product usability and flexibility, enable users and implementation teams to quickly and easily deploy applications through visual configuration, eliminating the cost and time of code development, while fully responding to the customer’s organizational structures, process system changes, and distributed deployment needs of group companies and off-site offices. Weaver’s collaborative software platform is also integrated into Alibaba’s DingTalk 钉钉 enterprise communication & collaboration platform. Weaver’s e-team has partnered with Tencent “Enterprise WeChat” to build a mobile office ecosystem.
Weaver also invested CNY 50m in 2018 to increase its stake in Shanghai Xiuyan Network Technology 亘岩网络科技 (https://www.qiyuesuo.com) to 25% from 16% (first invested CNY 9m in Oct 2016) and to integrate its “Contract Lock 契约锁” SaaS product into its cloud platform, which is a DocuSign (NASDAQ: DOCU)-type product that automates business agreements/contracts, e-signatures and seal management to ensure legal efficiency and is jointly established by authority notary office and law association. Any contract signed on the ‘Contract Lock’ is certified by the authoritative notary office and has the same legal effect as a paper contract.
In Dec 2017, Weaver invested CNY 184m for a 27.25% stake in Shanghai CA to deepen cooperation in identity certification, electronic signature, electronic seal and electronic contract management. Shanghai CA is the first domestic professional third-party electronic certification service institution obtained from the Ministry of Industry and Information Technology in 2005, and the password certification license for the electronic certification service of the National Secret Service, as well as the first in China to pass the International WebTrust certification. In Sept 2018, in partnership with Tencent, Shanghai CA and Xiuyan Network, Weaver launched e-cology 9.0 (https://www.weaver.com.cn/e9) which combines the functions of intelligent voice assistant, CA certification, and “Contract Lock”.
Weaver claims a service advantage, having built a strong internal training system and agent certification mechanism to provide timely, professional and trustworthy coordinated operation services to respond quickly to corporate customers in a 2-hour service circle covering all provinces and regions in the country. Weaver has established a system of 100 service outlets, 9 regional management centers, and cultivated more than 200 localized marketing service teams to achieve rapid response and deep cooperation with customer service requirements.
Weaver’s revenue of CNY 1bn in FY2018 is estimated to be more than the combined revenue of the top five collaborative OA competitors: Beijing Huidian Technology 慧点科技 (http://www.smartdot.com); Beijing Zhiyuan Xiechuang Software 致远协创软件 (http://www.seeyon.com) which Yonyou Network (SHSE: 600588) has a 4.98% stake; Beijing Jinhe Network 金和网络 (http://www.jinher.com); Shenzhen Lanling Software 蓝凌软件 (http://www.landray.com.cn) which Alibaba DingTalk is a strategic investor; and Thunisoft’s Wanhu Network 万户网络 (http://www.whir.net).
Chairman Wei controls 57.33% of the shares together with his father. Weaver is one of the rare few Chinese companies in which the top 10 shareholders, representing 77.78% of the total outstanding shares, did not pledge their shares. Weaver had launched an equity incentive scheme in July 2017 with 2.8877 million restricted shares with a two-year lock-up period, accounting for the 4.33% of total share outstanding at the price of CNY 31.66. The total number of incentive targets is 196, including 8 executives (13.8% of restricted shares) and 188 key employees (86.2% of restricted shares), middle management, and core technology personnel.
Thus far, of the 68 entrepreneurs and CEOs whom we had highlighted in our weekly research brief HeartWare, around one-third are in our focused portfolio of 40 HERO Innovators, while the rest are in our broader watchlist of 200+ stocks.
We are thankful as always to be invited by John Mihaljevic, Chairman of MOI Manual of Ideas Global, to speak at the recent Asian Investing Summit 2019 that took place online on April 10-11. We are grateful to have the opportunity to share with the MOI community of investors about the distinctive value opportunity in a selected group of under-the-radar Asian SMID-cap exponential innovators who generate high profitability and positive free cashflow in solving high-value problems for their customers and society with a higher sense of purpose, as well as the learning insights from our investment mistakes as the world shifts structurally from Value 2.0 (the world where Charlie Munger nudged Warren Buffett from the Ben Graham-style of statistically cheap net-net asset plays in Value 1.0 towards Value 2.0 in qualitative investing in outstanding companies at reasonable prices) to Value 3.0 where disruptive innovation forces sweeping across industries create ever more “value trap” losers and a selected under-the-radar group of winners with exponential edge. Download the presentation slides in PDF (Link)
Our emotional labor of love over the past months in sharing openly our research ideas (to battle-test our ideas by critiques and avoid blindspots in investing) and setting up the proper regulated and transparent UCITS fund structure to protect investors’ interests has deepened our conviction for the positive change that we will make together with H.E.R.O. – and we are now in the final stage of giving birth in April 2019 to H.E.R.O., the only Asia SMID-cap tech-focused fund in the industry and guarding investors’ interests in the regulated UCITS fund structure with daily NAV & daily liquidity and no exit fees.
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“At present, collaborative management software has grown to become one of the most important management software after ERP software, and is an important means for enterprises, institutions and government agencies to realize information management. Collaborative management software differs from its predecessor, the traditional office automation software which is mainly for the application of administrative office applications such as document circulation,” comments Wei Lidong, 韦利东, founder and Chairman of Weaver Network 泛微网络 (SHSE 603039) who is “China’s Atlassian/Slack”, the #1 collaboration management and office automation (OA) software innovator.
Industry Evolution and Dynamics of Collaboration OA Software
Chairman Wei elaborates patiently on the industry evolution and dynamics of collaboration OA software: “Collaboration management refers to the breaking of the isolation between the internal affairs of the organization, integrating various resources of the organization (including people, finance, materials, processes, documents, customers), and synthesizing all aspects of organizational management (planning, coordination, operation, and control) to improve management efficiency. Collaboration management software uses ‘workflow’ as the ‘engine’, ‘knowledge document’ as the ‘container’, and ‘information portal’ as the ‘window’ to enable users to share information conveniently and quickly, work together efficiently, realize rapid and all-round information collection and information processing, and provide scientific basis for enterprise management and decision-making. Thus, collaboration management software establishes functional business modules such as process management, portal management, knowledge management, goal planning, task collaboration, human resource management, customer relationship management, project management, and integrated management. Application software products can realize process specification, knowledge sharing, information communication, event collaboration, plan execution and other functions, enable members of the organization to work together more efficiently, help the organization to improve management efficiency, and achieve rapid and comprehensive information collection and information processing for organizational management, as well as provide a scientific basis in decision making for the organization to achieve its stated goals or tasks.”
“Collaboration management software differs from ERP software. The idea of ERP is the balance between supply and demand. Collaboration management software pays more attention to the management of people and organizational behavior, while ERP focuses on the management of goods and finances; the purpose of collaborative management software allows information to flow efficiently, and ERP is mainly accounting for data.”
“Collaboration management software has been in China for more than ten years of development history, mainly divided into four stages:
(1) The germination stage based on the digitization of personal documents: In the 1990s, with the development of computers and the Internet, personal office software and e-mail systems began to gradually enter the daily work of the organization, marking the emergence of domestic collaborative management software. At this stage, the user’s application is mainly based on personal daily office and document processing. Management software applied to the entire organization has not yet appeared.
(2) OA 1.0, the initial stage of digital office administration: In the late 1990s, with the development of local area networks, users’ needs began to shift from simple word processing to file sharing and information distribution. In order to meet the needs of customers to improve management level, the office software has added the functions of sending and receiving text management and file management, as well as auxiliary functions such as BBS, bulletin board, business card holder, schedule, report management, book management, etc. This stage formed the prototype of collaborative management software products – OA software, marking the beginning of the collaborative management software industry. Compared with the personal document processing in the previous stage, the user application at this stage takes the document management, internal information release and administrative office as the core, and through paper-based office transaction processing to digital transformation, solves the problems of complicated circulation and long time in various links such as drafting, reviewing, signing, distribution and filing, which has improved office efficiency. The development and gradual popularization of office software has laid the foundation for the emergence and rapid development of collaborative management software.
(3) OA 2.0, growth stage based on process management: Since 2006, traditional OA software has been generally accepted within the organization. At the same time, organizational applications pay more attention to the various institutional processes within the organization, and collaborative management software begins to emerge and mature. From this stage, the organization hopes that the collaborative management software can help them automate the process of starting the internal business implementation from the initial to the completion of the process, allowing multiple departments, multiple positions, multiple link coordination to work together to accomplish one task efficiently. At this stage, the collaborative management software forms an application mode with automatic flow of information under complex conditions. The various rules and regulations and operational procedures of the organization can be implemented in an orderly manner in the actual operation under the support and constraints of the system. In addition, on the basis of document management, through the application of knowledge accumulation and sharing, knowledge management under the unified platform conditions is realized, which provides technical conditions for creating learning organizations.
(4) OA 3.0, the phase of collaborative operation management and control based on helping the organization achieve its business objectives: Since 2011, the concept of collaborative management has gradually been recognized and practiced by enterprises and organizations. Based on the outbreak of user collaborative application requirements, especially in order to achieve a goal, the demand for multi-person and multi-organization to complete work through collaboration has increased. The emergence of a new generation of collaborative management software, such as workflow engine, portal technology, knowledge management, instant messaging, etc., to achieve the development from office automation to collaborative management, marking the core of collaborative management software industry into target program management. In this phase, the system application emphasizes the specific combination of the objectives, plans and tasks of the organization management, and on the basis of the unified integrated application platform, realizes more automated, intelligent and personalized management through the personalized portal application. In this way, the processed information is pushed to the user’s desktop or smart phone, thereby implementing the standardized operation and efficiency improvement in the organization’s operational process. During this phase, the popularity, breadth (cross-department, cross-transaction, internal and external), complexity, and functional diversification of collaborative management software applications have been greatly enhanced.
“With the changes in the international economic environment, the rising cost of raw materials and human resources, many organizations have turned to internal management to be efficient and effective. This change has brought about a new round of informationization needs. Collaborative management software will play an increasingly important role in regulating organizational risk management and improving the efficiency of organizational work. Therefore, the collaborative management software industry has entered a period of rapid development, and from the perspective of potential demand, every organization has the potential application requirements for collaborative management software, regardless of size. As the collaborative management needs of users become more and more complex, users are increasingly demanding the brand reputation, service capabilities, demand grooming capabilities, and industry case success experience.”
“Collaborative management software creates value for the organization by:
(1) Standardized operation and compliance management through the management system and management process. At the same time, the manager can conveniently and intuitively track the implementation and follow-up of the system, and make judgment on the progress of the workflow tasks/projects, so as to advance or correct it in a timely manner and continuously improve management effectiveness.
(2) Establishing a unified knowledge management platform to realize knowledge and experience sharing. With the rapid rise of the knowledge economy, knowledge management has become one of the most important means of building a learning organization. Knowledge is difficult to be effectively accumulated, shared and utilized, and lost with the flow of relevant personnel, making information acquisition and application efficiency very low. Collaborative management software establishes a unified knowledge management platform for the organization to break the barriers of knowledge sharing and communication among employees, departments and each other. Employees in the organization can conveniently query and use information to realize the sharing and transmission of documents within the organization.
(3) Using its unique use of information aggregation push technology to establish a personalized information portal that automatically process and organize massive data and unstructured data (e.g. business data, work materials, rules and regulations, knowledge and experience, and specific transaction information), and to actively push and release the required effective information, and to achieve full integration and effective sharing of internal and external information.
(4) Helping managers monitor the execution of specific tasks in real-time, and accordingly adjust the original goals and performance accordingly, develop periodic work plans and establish effective task execution systems and target performance appraisal systems.
(5) Achieving effective communication and assistance across departments to promote communication and achievement of specific goals.
Entry Barriers to Collaboration OA Software
On the entry barriers to collaboration OA software, Chairman Wei comments: “One, it is project experience barrier. Collaborative management software is different from general specialized tool application software. The collaboration management software platform needs to be suited and modularized according to the customer’s unique business model and management mode in which the customer’s needs are sorted out to form an implementation plan. The software system is configured and trained to go online, which requires the long-term experience of a large number of customer practices.”
“Since the collaborative management software industry is an emerging industry, there is a difference in the needs of various industries for their collaborative management. At present, most collaboration management software vendors are limited by the lack of project experience. Product development and implementation only stay at the level of simple office affairs informationization. They lack the ability to understand and grasp the core needs of users, and the implementation and application of its products from business processes, knowledge sharing, and information aggregation are not satisfactory, detracting from the goal of significantly improving customer management and operational efficiency, resulting in low customer acceptance of most collaboration management software. Customers are increasingly inclined to choose a collaborative management software vendor that has formed a large number of customers in its industry and has typical success stories. For new entrants, customer requirements for vendor project experience constitute barriers to entry.”
“Second is operating system barriers. Multi-level distributed operation system is one of the important barriers to enter the collaborative management software industry. Collaborative management software industry customers have a wide geographical distribution, and it is difficult to achieve satisfactory user application results through simple cloud installation and training of products. This requires the software vendor to provide continuous technical services for the actual application of users for a period of time. Therefore, collaborative management software vendors need to establish and rely on a comprehensive multi-level distributed operation system to provide continuous service and technical support to customers in a timely and effective manner. There is also a significant difference in demand between customers in different industries and sizes. Therefore, on the basis of expanding the coverage area of the operation system, software vendors also need to establish a multi-level distributed operation system according to different product characteristics and customer needs. For large and medium-sized enterprises and institutions, software vendors need to respond quickly and provide on-site technical services, which requires software vendors to establish a service network layout with a certain coverage.”
“Third is brand barriers. The customers of collaborative management software include enterprises and institutions of different scales and government agencies at all levels in various industries. Once the collaborative management software is applied, it will involve all departments of the users, personnel of various positions, daily affairs, and various types of work and business processes. Generally speaking, users are loyal to excellent brands, and new entrants often lack success stories and brand awareness.”
The Technology Behind Collaboration OA Software
On the technology behind collaboration OA software, Chairman Wei comments: “Firstly, development technology with good integration and scalability has gradually become the mainstream technology of collaborative management software. At present, the collaborative management software industry generally uses J2EE, .NET and other development frameworks and technical architecture for product and project development. With the improvement of the level of organizational information, more and more information systems and application software are used in parallel within the organization. It is urgent to require good compatibility of information products, thus avoiding the dilemma of internal or external difficulties.”
“J2EE technology is different from the technical architecture of traditional application development. J2EE technology can simplify and standardize the development and deployment of application systems. Based on J2EE technology, it can achieve the three goals of integration, availability and scalability. Compared with the traditional technology, the biggest advantage of J2EE technology is its good compatibility, which can easily support different platforms and different database environments, and thus it will become the mainstream core of the collaborative management software industry technology.”
“Secondly, SOA (service-oriented architecture) becomes the mainstream application architecture of system design. SOA is a component model that is built on different functional units (called services) of an application, linked by well-defined interfaces and protocols between these services. The interface is independent of the hardware platform, operating system and programming language that implement the service, so that various services built on the SOA architecture can interact in a unified and universal way across platforms, systems, and languages. Under the SOA architecture, collaborative management software can be quickly integrated into modular business management components based on data and business logic, and has corresponding interfaces. This clear design and simple way helps development and further expansion. Many management information systems use this architecture technology.”
“Thirdly, the innovation and upgrade of workflow engine technology will directly improve the application effect of collaborative management software. As one of the core modules of collaborative management software, the workflow engine plays a vital role in bridging and driving. The domestic collaborative management software industry application workflow engine technology is different from that of foreign countries. The development of domestic workflow engine technology is based on the full realization of the flexible change of organizational authority system and personnel position work, and is more in line with the management mode of domestic enterprises and institutions. Workflow engine technology is the core technology and driving engine of management information system. All work processes and information transmission can be transmitted based on the workflow engine. The innovation and upgrade will directly improve the application effect of the information system.”
“Fourthly, system integration technology is an important application area of the industry. With the continuous improvement of the level of domestic informationization, various enterprises and institutions currently faced multiple sets of information systems in parallel but isolated from each other, which restricts further improvement of their informationization efficiency. With the further popularization and more and more intensive deployment of information systems, it is necessary to use system integration technology to break this situation, thus establishing the interaction and transmission of data information between management software such as collaborative management software, financial software and ERP software. At present, this technology is gradually forming a unified standard. In the future, in addition to establishing a corresponding universal interface itself, an interface configuration platform for visual configuration will be established, thereby accelerating the flexibility of system integration.”
Weaver’s Business Model
On Weaver’s business model, Chairman Wei shares: “Different from the general professional application software, the collaborative management software industry has obvious characteristics of diversified user requirements, product, consulting, implementation, and service. On the basis of the standardized software sales model, leading collaborative management software vendors like Weaver provide users with a complete set of personalized solutions, covering multiple aspects of management consulting, product implementation, after-sales service, etc. In this model, the vendor priced the solution based on the product components, the number of user licenses, and the value of the multi-level value-added services actually provided. The revenue and gross profit are at a high level. The standard product + personalized service model not only maintains the advantages of rapid expansion and scale sales under the product software sales model, but also satisfies the individual needs of customers through consulting, implementation and technical services, mainly for large and medium-sized organizations.”
“In recent years, with the rise of the SaaS cloud computing model in the software industry, a small number of collaborative management software vendors including Weaver have proactively developed and launched collaborative office software services based on the SaaS model according to the actual usage of the user, and the fixed operation and maintenance service fee is charged on an annual basis. Weaver’s sales from software and technical service contribute 63.5% and 34.3% of FY2018 sales respectively with a GP margin of 97%. Sales growth of software is +32.5% yoy, while technical Service grew +63.1% yoy. Third-party software, hardware, network, communication and other infrastructure and system software are used as the necessary environment for application software development. Since the collaborative management software is not the application software used in a specific industry, the downstream industry is very extensive. Weaver’s revenue from third-party products contribute 0.9% of sales with a GP margin of 38.6%.”
Weaver’s Competitors & Partnership with Alibaba DingTalk & Tencent Enterprise WeChat
On Weaver’s competitors, especially the common misconception that Alibaba’s DingTalk and Tencent Enterprise WeChat are also entering into the collaboration OA space to compete with Weaver, Chairman Wei comments: “One of our main domestic competitor is Taiji Computer’s (SZSE: 002368) 91%-owned Beijing Huidian Technology 慧点科技 (http://www.smartdot.com). Huidian was established in 1998. Its main products include: group-type enterprise collaborative management and control platform and office products, integrated management system, knowledge management system, project management system, human resources subsystem, contract management system, legal affairs management system, capital cost management and control system, expense reimbursement management system, resolution supervision management system, conference management system and communication system. Other competitors include Beijing Zhiyuan Xiechuang Software 致远协创软件 (http://www.seeyon.com) which Yonyou Network (SHSE: 600588) has a 4.98% stake; Beijing Jinhe Network 金和网络 (http://www.jinher.com); Shenzhen Lanling Software 蓝凌软件 (http://www.landray.com.cn) which Alibaba DingTalk is a strategic investor; and Thunisoft’s Wanhu Network 万户网络 (http://www.whir.net).
“Alibaba’s DingTalk 钉钉 enterprise communication & collaboration platform and Tencent’s IM-based enterprise WeChat service are our partners and not competitors. Weaver’s collaborative software platform is integrated as the backend support platform providing backend deep application services into Alibaba’s front-end DingTalk, realizing the real-time interaction of daily business information. The integrated product allows users to perform personnel management, process approval and other functions on DingTalk.”
“Similarly, Weaver has also launched an integration platform with WeChat. Through the integration of products, customers can see the micro-push content on the WeChat interface and achieve rapid approval and tracking. Alibaba and Tencent are mainly focused on portal-level mobile front-end applications, with the goal to maximize traffic, rather than directly charging customers to realize revenue. For instance, corporate users use DingTalk to manage their booking and reimbursement of hotels, airline tickets, train tickets and the benefits are realized at the backend through user consumption of Alibaba’s affiliated services. DingTalk is still loss-making. Therefore, their function distribution is also biased towards standardized and lightweight applications. Weaver is a professional collaborative management software vendor, and our products and solutions solve the in-depth application of inter-organizations collaboration. Tencent’s enterprise WeChat service is still far from collaborative management software in terms of document management and workflow. DingTalk lacks depth and modular customization for large and medium-sized businesses.”
Weaver’s Lego-Like Collaboration Platform & Its Seven Engines
When asked to elaborate on Weaver’s collaboration platform and its “seven engines”, Chairman Wei said: “If we abstract an organization, there are seven basic elements in any enterprise and unit: human elements, process elements, knowledge elements, customer resource elements, project event elements, material elements, and assets. These seven elements are not isolated and must be strongly related to each other, and these elements are transferred between various departments within the organization. As a leader of a company or unit, the information requirements must also be all-round information acquisition. The boss will certainly pay attention to want to know the situation of an employee in the company: What is the completion of all tasks of the person in his own business? What is the knowledge contribution and accumulation of the person in the company? What is the customer or supplier that the person is responsible for in the company? What is the situation of the person in charge of the project? What is the process of the person involved in the initiation and approval of the company? What is the cost of the person’s internal expenses and the benefits to the company?”
“So how can we effectively address such ubiquitous key management needs? The traditional solution is to present a solution from the perspective of ‘one-dimensional single-thread’ of information. This is bound to build a customer management system, build a document management system, build a personnel management system to manage the process, build a process management system. Although these systems can solve some problems for enterprises in a short period of time, the key issue is that these factors to be managed within the enterprise are strongly related to each other, and it is necessary to manage the customers, to manage the personnel, to record the traces of the company’s work in order to fully evaluate the performance of an employee.”
“Enterprise units have been looking for a way to manage the various elements of a business unit on a platform that is ‘stereo-multi-threaded’ and cooperate with each other. The ‘coordination matrix’ model of Weaver Collaborative Management Platform is designed to meet this critical need of the enterprise. The Weaver collaborative management platform (e-cology) incorporates the seven elements of the enterprise unit management process and run them on a unified platform: human element, process element, knowledge element, customer resource element, project event element, material element, and financial element. The high degree of synergy between functional modules can extract all relevant information from any information node. The Weaver Collaborative Matrix Model provides a solution for enterprise information mesh management: In the system, if a user finds an information point, all information associated with that information point is found.”
“For example: find a salesperson inside a company, then the information related to this salesperson: personal financial information (salary, benefits, costs, expenses), the customer he manages, the documents he writes, the subordinates he manages, the projects he is involved in, how he uses the company’s assets, his current work schedule and other relevant information like a web, which can be quickly extracted through the employee’s personal information.”
“Weaver designed and developed the ‘gear linkage’ software technology model to support the true collaborative management of the system within the enterprise. The key to the design of the ‘Gear Linkage’ model is that the system provides a core engine to support the various application modules of the system in which each module resembles a gear: knowledge document management module, workflow application management Module, human resource application management module, customer relationship management module, project management module, financial management module and asset management module work together. As long as one module (gear) rotates, it can drive other modules (gears) through the gear matching center which is the engine of the Weaver Collaborative Management Platform. The engine is composed of human resource management module and workflow management module, with human resources as the ‘heart’, work flow as the ‘blood pulse’. “Any enterprise is an organic whole, and it is all people-centered. The information points in the enterprise are strongly related (people, money, goods, information, external resources). The motivation of a company ultimately comes from our precious human resources, and the mechanisms related to the operation of the enterprise (various workflows) are the entire blood of our company. If the relevant business processes are not open, it is likely to lead to the loss of certain functions of the enterprise.”
“In the overall architecture design of the collaborative management application platform, Weaver adopts the idea that the functional modules (knowledge management, customer relationship management, project management, asset management, financial management, human resource management and workflow management) in the system are coordinated under the unified deployment to serve the operation of the company. When a certain module is started, other related modules can be started, and they work together to generate a powerful gear linkage utility, which greatly enhances the function of a single module and achieves synergistic effects. The gear linkage model provides a solution for integrating various business segments, enabling enterprises to manage the entire business process through a unified collaborative platform.
“Weaver’s product technology are embodied in the Weaver’s seven engines: process engine, content & knowledge management engine, portal engine, organization engine, messaging engine, modeling engine and integration engine:
(1) Process engine: The process engine runs through the processes and collaborates with each business module to drive changes in the way the enterprise is managed. The process engine realizes the electronic operation system of the whole process of business management and the transfer of data between multiple modules and multiple systems.
(2) Content & knowledge management engine: Through the construction of internal search tools, the system introduces full-text search to open up various knowledge portals and build enterprise knowledge encyclopedias. Structured files in the organization can be placed in a specified location, searched, viewed, and subscribed through the directory. For unstructured data scattered in various heterogeneous systems, the system can integrate these documents to form an internal knowledge base, and support directory classification and multi-dimensional content storage.
(3) Portal engine: The portal engine can open up information islands of enterprise systems and integrate them into a unified portal to support unified to-do tasks, unified reporting, unified login, unified data, and then pushed and shared according to different scenarios and needs, forming a post portal to truly let the information to find people who would find them useful.
(4) Organization engine: The collaborative management system is used by the members of the organization for daily work and forms a unified center for organizing information.
(5) Messaging engine: The system’s messaging engine implements mobile application solutions for process to-do tasks, news announcements, calendar meetings, and address books through a social network application model, solving the problem of collaborative work of complex organizations whereby system users can handle work transactions anytime and anywhere through their smart phones.
(6) Modeling engine: The system realizes all-round customization from data collection to process (data flow) to report (data presentation) and customers can quickly build contract management and customer management tasks.
(7) Integration engine: The system presets a large number of interfaces and integrates with various heterogeneous systems such as SAP, Oracle, UFIDA/Yonyou, etc. Key information from heterogeneous systems can be pushed to a unified portal through rigorous access control to support leadership decision-making or management applications.
“Platformization allows the integration of OA systems and other ERP, HR, CRM systems, using the 7 major engines in process, portal, content, integration, messaging, organization, modeling to build an organization of personalized application scenarios, so that the various functional sections of OA can be as flexible as Lego bricks and available on demand.”
“Weaver’s Collaborative Management Business Data Analysis System helps enterprises’ decision makers and executive management gain access to critical information to make scientific decisions. The system helps decision makers with a real-time and intuitive understanding of the operating conditions of the organization (production, marketing, finance, personnel, etc.) and other heterogeneous systems and competitor dynamics by providing a reporting portal dashboard with powerful data support for accurate judgment and decision making.”
“At present, the organization manager pays more and more attention to the employee’s planning, work, performance appraisal, etc. Weaver has established a real-time tracking and feedback mechanism of the work plan, and improve the efficiency of the organization’s operation and management. Weaver plans to embed more and more powerful decision analysis tools and procedures into the decision analysis system, so that decision makers can extract the required data information from the different management dimensions and conduct more scientific and accurate analysis and judgment.”
Competitive Advantages of Weaver
On the competitive advantages of Weaver, Chairman Wei comments: “A company may use more than a dozen sets of office-related software at the same time. A single person may also have a relationship with 4-5 sets of software at the same time. The use of collaborative management software solves the coordination problem as a whole. The technical level requirements of the collaborative management software industry mainly emphasize the ease of use, modularity, flexibility, stability, openness, security and compatibility of software products. Weaver’s products adopt Java technology and SOA architecture for product design and development which satisfy customers’ cross-platform, heterogeneous integration, secondary development, product expansion needs and are compatible with the needs of third-party management software.”
“Weaver’s collaborative management software products adopt the modular design and development method in which each subsystem is highly modular. The function modules are freely combined, plug-and-played according to user requirements, and can be quickly changed during demand changes and expansion to cost-effectively add new module functions, which effectively improve the product’s ease of use and flexibility, while fully responding to customer organizational structure, process system changes, and distributed deployment needs of group companies and off-site offices.”
“In the customer acquisition and demand research stage, Weaver relies on our rich industry consulting experience to conduct in-depth understanding and analysis of our customers’ key issues such as organizational structure characteristics, process system, management model, management difficulties, work process execution effects, personnel affairs and internal operational norms. On the basis of summarizing the organization’s collaborative management needs, Weaver propose the overall implementation plan for organizational collaborative management. In the product implementation stage, Weaver relies on the rapid and effective implementation of the cloud service system summarized by years of service implementation experience and our implementation efficiency and success rate are high.”
“Weaver’s distinctive ‘fast implementation, long-term service’ business management model is another of our core competitive advantages. Weaver’s direct sales products usually need to meet the individual needs of different customers, and implement project management through software system parameter configuration or customized deployment. To accurately understand the diverse needs of customers, we need to respond quickly and provide on-site service at the customer’s location.”
“In the aftersales service stage, Weaver provides technical support services by means of on-site engineer services, regular inspections, telephone support, online remote services, mail services, electronic journals, customer exchanges, and targeted solutions to users in the system. Weaver assist users to solve the practical application problems and difficulties in the initial stage of the implementation and to carry out continuous application promotion within the organization, so as to quickly achieve the seamless connection between the collaborative management system and the existing business management and workflow.”
“Weaver also provide personalized technical services. During the post-product delivery process, customers often need to dynamically adjust based on the delivered system due to the changing business processes, organizational structure or functional requirements. In response to the changing needs of customers, Weaver provides personalized technical services to customers through demand assessment and solution design, so that our products can fully meet the dynamic changes of customers’ requirements for a long time and enhance customer stickiness.”
“In the process of providing paid long-term technical services, Weaver has deeply explored the changes and deepening of customer needs. Through the continuous upgrading of software products and the continuous expansion of functions, Weaver continuously responds to the collaborative management needs of the original customer dynamic changes and is reflected in our software. It is also convenient to grasp the information of potential target customers. Therefore, our business management model also shoulders the task of collecting customer market and potential project information, providing and reporting the above market information, and assisting the company to target and develop the market according to customer needs.”
“This business management model has greatly improved the per capita output value of our personnel, expanded the service coverage, improved the localization service level, enhanced our market share, and met the diversified needs of customers. At present, Weaver has established a system of 100 service outlets, 9 regional management centers, and cultivated more than 200 localized marketing service teams to achieve rapid response and deep cooperation with customer service requirements. Our localization level and coverage of the service network are highly competitive in the industry. After years of polishing, Weaver can control all customer resources, whether it is a new customer opportunity or an existing successful customer, and can effectively guarantee customer satisfaction. The brand essence of the management software industry is the reputation of customer satisfaction.”
“Our technical services in annual maintenance service, personalized technical service, authorized purchase of additional user licenses, and system upgrade service to continuously improve the user experience, are reflected in our technology development service income which contribute 34.3% of our revenue in FY2018 with a 97% gross margin and growing 63.1% yoy.”
“We also have specific measures to promote technological innovation. Firstly, we strengthen the feedback mechanism of all employees on market demand. We encourage our R&D tech personnel to directly contact the client users and the outside world to understand the needs of the market. We have set up a demand analysis department under the R&D center to analyze the market demand, to shorten the response cycle brought by demand to the intermediate chain of technology and product development, and to give full play to the guiding role of market demand for technology and product innovation.”
“Secondly, we established a module responsibility system for R&D personnel to enhance innovation capability and efficiency to enhance their self-thinking and innovation capabilities and to provide special innovation rewards for R&D personnel with strong innovation capabilities.”
“Fourth, we established a customer reward mechanism to stimulate customer feedback. The core of the success of collaborative management software product application is whether it can realize the diversified needs of users in business management. Therefore, we attach great importance to the feedback of users’ demand for product improvement and innovation. We regularly organize customer exchange meetings and establish channels and platforms for daily interactions between the company and our customers. We actively listens to customers’ real thoughts in the daily application process of the software, as well as comments and suggestions from users, and regularly evaluate the feedback. At the same time, awards are given for suggestions for major product improvement and innovation, thus establishing a customer reward mechanism to continuously encourage customers to provide useful feedback on product improvement.”
“Thirdly, we established an employee reward mechanism to promote the participation of all employees in product improvement and product innovation through timely and effective continuous feedback in the daily work process, whether it is the experience of using the software itself or the feedback/advice from the outside channel. For the employees who made important suggestions, the company has established a monthly reward mechanism, and once it is adopted as the company’s product development strategy, we also award special incentives to encourage and continuously promote the continuous improvement and innovation of all employees in technology and products.”
Weaver Vs Competing Collaboration OA Software With Seemingly Similar Functions & Application
When probed on explaining why there are so many collaboration software appear to have similar functions and applications as Weaver, Chairman Wei clarifies patiently: “Other competing collaboration software platform might claim similar applications and functions, but if you carefully study and use them, you can see that the entire system lacks architectural design and there are difficulties to achieve true integration and collaboration. These simple OA applications can only solve the itch in simple applications such as sending messages and transmitting documents but not the pain points.”
“For instance, take the workflow of travel expense. When traveling, it is often necessary to borrow money. When the business travel application is approved, the system will automatically trigger a loan application form. Weaver not only makes the transaction simple, digital and automatic, but also presents the information associated with the process to the processing staff, which helps the leader to fully understand the information behind the process and provide favorable guidance for the decision-making. As a leader, he or she cares mainly on two points. One is whether the cost can happen, and whether it is within the budget. Therefore, the system not only displays the expense reimbursement, but all the information that can be used for leadership decision-making, including the basis of the cost, the previous process and the cost budget feedback. When the leader opens the expense reimbursement form, he will see the expenses and judge whether the expenses can occur according to various latitudes such as people, departments, projects, customers, etc., and whether it occurs within the prescribed range. Weaver provides a humanized flow chart and detailed trace process, which can conveniently query where the process flow goes, and timely track and supervise various issues. Weaver’s powerful process report customizer provides statistics on the workflow data, and displays various management data reports in front of the leaders, so that the leaders can better control the operation of the entire enterprise.”
“Another example is that documents are available in the process to provide leadership decisions. For example, in the invoice application, the collaboration workflow is the signed contract content and the contract approval process, which will give the financial staff a clearer billing instruction.”
“For competing collaboration software, the operation of each process needs to select the next operation mode and operator, which brings great randomness to the process operation, and also brings extra workload to the user. For Weaver, the general workflow is completely automatically transferred based on the enterprise specification. Competing collaboration software might have graphical flow diagrams but you can’t view the flow of the process from the flow chart, and you can’t track the status of the process. Through Weaver’s flow diagram, users can clearly know the flow of the process, as well as the current process node. It allows process users and applicants to intuitively understand the entire process. For competing collaboration software, the process management is simply to make the process digital, and there is a lack of information collaboration between the workflow processes. It is difficult to achieve coordinated operation, and it is difficult to say that simple digitized processes can improve work efficiency. In addition, the statistical analysis function of the process data and business management data is usually not available.”
“Let’s use an example of a customer who switched from a competing collaboration software to Weaver. Anhui Jianghuai Automobile Group had more than a dozen subsidiary companies, an annual production capacity of over 600,000 vehicles and more than 28,000 employees. Jianghuai initially uses this competing collaboration software. As the number of OA users increases, the functional requirements for OA become more and more abundant, and the collaboration software products and services of Wanhu become more and more incompatible with the pace of customers. This is mainly reflected in the following points: When their online concurrent users reached 500, they found that the page access speed was lower. When there were more than 1,000 concurrent users, the page access speed was difficult to accept. The system’s downtime frequency is getting higher and higher. For the deep application of customer workflow management, the customization ability is limited. Many applications cannot meet the various individual needs of more than ten subsidiaries of Jianghuai Automobile Group. When integrating with multiple heterogeneous systems, the user interface is also inflexible, and many integrated applications cannot be implemented quickly.”
“After two years, Jianghuai Automobile Group switched to using Weaver. Jianghuai Automobile Group’s selection requirements of suppliers are relatively strict and Weaver’s collaboration software platform allows all their suppliers to implement functions according to their needs through the interface with heterogeneous systems. Thus, Weaver’s collaborative management platform can quickly build a deep collaborative process application running through the background, and the interface mode quickly realizes the integration with the financial and ERP systems.”
On Weaver’s Investments into “Contract Lock” and “Shanghai CA” to Expand Into the Electronic Signature Business
On Weaver’s investments into Xiuyan Network (“Contract Lock”) and Shanghai CA, Chairman Wei said: “In Dec 2017, Weaver invested CNY 184m for a 27.25% stake in Shanghai CA to deepen cooperation in identity certification, electronic signature, electronic seal and electronic contract management. Established in 1998, Shanghai CA is an excellent information security solution provider in China with strategic shareholders and partners that include Shanghai Municipal Government/ Shanghai SASAC and China UnionPay. In the field of electronic certification, Shanghai CA is the first domestic professional third-party electronic certification service institution obtained from the Ministry of Industry and Information Technology in 2005, and the password certification license for the electronic certification service of the National Secret Service, as well as the first in China to pass the International WebTrust certification. The electronic certification product system not only provides users with comprehensive solutions for network trust, but also develops application development integration services in the state-owned assets system, commercial password field and classified areas.”
“In recent years, thanks to the state’s promotion and guidance of network security as a national strategy, the advantages of digital certificates in solving network trust requirements have been recognized by more and more enterprises and general application systems, and digital certificates are implemented in various general systems. Identity and electronic signatures are becoming a trend. Digital certificate can realize trusted network identity authentication, information transmission encryption and reliable electronic signature of organizations, individuals and network devices. How to realize the security, credibility and legal effectiveness of key operations of information systems has been increasingly valued by all units.”
“Weaver firmly grasps the market demand, and adheres to the goal of improving customer management efficiency. While continuously expanding the application field of collaborative management software system, we also pay attention to key operation points in system application, such as the security, credibility and legal effect of operations that include major matters approval, contract, audits, external payments, important internal notices, and external declarations.”
“According to the provisions of the Electronic Signature Law, digital certificates issued by legally established CA institutions can generate legal and valid electronic signatures. As an authoritative CA organization, Shanghai CA has the credibility and legal effect of the digital certificates issued and the resulting electronic signatures. In the field of digital certificate management systems, Shanghai CA also has complete products and solutions. Key business operational points of Weaver’s collaborative management software system can be operated safely by introducing electronic signatures.”
“Collaboration management and OA software is the natural entrance of electronic signature and integrated electronic contract business and OA vendors go deep into the internal management of the enterprise and have a deeper understanding of processes and business. Compared with pure electronic contract companies, Weaver has obvious advantage in deep integration.”
“When we invested in Shanghai CA, its 2016 operating income had increased 176.78% yoy to CNY 12.3m, a year-on-year increase of 176.78% and revenue from electronic services and certified products, such as ‘Let Us Sign 大家签’ (https://www.letusign.com), was CNY 83.9m which accounted for 68.24% of its total revenue. In 2016, the number of valid electronic certificates held nationwide reached 339 million, including 44 million institutional certificates, 2.91 million personal certificates, and 3.09 million equipment certificates. Shanghai CA has issued over 10 million digital certificates serving over 2 million companies, and the number of daily certificate verification has reached 180 million. Shanghai CA’s customers are mainly government units, financial institutions and medium and large enterprises and institutions, mainly concentrated in Shanghai and surrounding areas. We will expand the business together outside of the Shanghai area. In addition to government-led government-enterprise interconnection projects involving digital certificates, the main application areas of Shanghai CA are special business systems such as bidding systems, medical unit information systems, and financial information systems.”
“At present, the default user authentication methods of the multiple systems are mostly based on user names and passwords. Enterprises and institutions have the risk of user authentication failure due to user name and password leakage and being attacked by hackers. This will greatly increase the information security risks of enterprises and institutions. In view of the above situation, enterprises and institutions have established a more reliable and legally valid user identity authentication system based on digital certificates that can serve all application systems. Combined with Shanghai CA’s digital certificate products and solutions, Weaver can launch digital certificate certification and electronic signature solutions that seamlessly interface with Weaver’s collaborative management software systems for customers.”
“Shanghai Xiuyan Network Technology was established in 2016. Its product ‘Contract Lock’ is an integrated service platform for electronic signing and seal management jointly established by the company’s joint digital certificate certification center, the authoritative notary office and law association. Xiuyan’s electronic contracting business includes the public and private cloud electronic signature contract management platform, standardized API interface and open platform, and anti-counterfeiting printing integrated solutions. Any contract signed on the ‘Contract Lock’ is certified by the authoritative notary office and has the same legal effect as a paper contract. The ‘Contract Lock’ system platform provides a safe and effective electronic signature certification service for electronic contracts and electronic orders to ensure the authenticity and non-repudiation of the contract or signer identity, to ensure that the contract content is not falsified, and to ensure the effective implementation of contract transactions.”
“The ‘Contract Lock’ service model is as follows:
(1) The ‘Contract Lock’ SaaS platform completes the online signing of the electronic contract by providing the contract signing parties with online services such as electronic contract text management, identity authentication, and deposit certificate management.
(2) With the open platform, the ‘Contract Lock’ provides a standard API interface, and the client connects to the local business system through the ‘Contract Lock’ SaaS platform.
(3) Private cloud deployment of ‘Contract Lock’: The customer deploys the ‘Contract Lock’ software directly to the local server on the internal network.
“The government has introduced a number of measures to encourage the development of the electronic signature industry. In May 2017, the National Development and Reform Commission proposed to accelerate the construction of a credit system in the field of electronic certification services, and establish a sound joint incentive mechanism. On 12 March 2019, the Electronic Certification Service Industry Symposium held by the Information Technology and Software Service Department of the Ministry of Industry and Information Technology pointed out that it will actively promote the cross-border mutual recognition and experiment pilot of electronic signatures, and promote the deep integration of electronic certification and application. By investing in Shanghai CA and Contract Lock, Weaver has improved the integration and application of identity authentication, electronic contracts and electronic signatures.”
When asked to share on some success cases implementing Weaver’s collaboration OA software, Chairman Wei shares: “Carrefour China is one of Weaver’s clients. Shanghai Carrefour Purchasing Consulting is the headquarters of the entire procurement in China and carries out the administrative functions of most of the employees in the country in order to better provide comprehensive office related services and integrate company resources to facilitate the management and understanding of the operations with the French headquarters.”
“In order to strengthen the company’s internal management and control system, reduce the company’s operational risk, and enhance the employee collaboration mechanism, it is necessary to build a management-controlled office automation OA system covering the entire company, subsidiaries, branches and off-site offices. Weaver’s personnel management platform, process management platform, knowledge management platform, financial management platform, mobile office platform are the core of the integrated office automation OA system to rationalize and optimize existing management processes, detail responsibilities, standardize management processes, limit arbitrariness, ensure effective control, supervision and performance evaluation of each management level in each business area, prevent management loopholes, and provide approval decision support for management to improve overall work efficiency and management execution and enhance the company’s comprehensive competitiveness.”
“LVMH Group uses Weaver collaborative management and office automation OA software platform to open up information channels to manage collaborative workflow between their multiple brands such as Loewe, Givenchy, Céline and Marc Jacobs, and achieve international and efficient office work. Saint-Gobain Group uses Weaver to manage and realize the collaborative work in the Asia-Pacific region.”
“Weaver has built a collaborative management platform covering the entire group of Kweichow Moutai with over 23,000 registered users. Functional modules include official document management, portal management, business trip management, online reimbursement, conference management, schedule management, information push, information project management, address book management, and mobile office. The anti-counterfeiting portal monitors Moutai Group’s anti-counterfeiting situation and anti-infringement treatment across the country, and the anti-counterfeiting statistical report can be inquired at any time. The new product development process includes 30 information nodes, more than 300 field information, with a process flow time of 1-2 months, covering the whole process management from development application, proofing, packaging materials, sealing samples, safety assessment, intellectual property, price review, quality review, market research, and trial production, and attachments such as pictures and documents can be uploaded in the process, which is convenient for each node to view, and tracking funds with fee control involved in the process amount to tens of millions of yuan. At Moutai in the past, document management, from drafting, printing to stamping, approval, and strict approval procedures, required a lot of manpower and time. For documents that are cross-departmental or cross-regional, the transmission costs are high, the time is slow, and security cannot be guaranteed, and archiving is not easy. Through the flexible process configuration, Weave Collaborative OA system helps Moutai Group to realize electronic document management, which not only preserves the traditional document processing habits but also improves the document circulation efficiency. The Moutai business trip application system automatically triggers the travel reimbursement, combines the travel information with the travel schedule, and automatically accumulates and processes the relevant expenses.”
“Huawei’s procurement attaches great importance to supplier relationship management to increasingly achieve joint innovation in more advanced and more valuable products and the scope and scale of cooperation between the two parties continue to get wider and deeper and grow at a high speed. By using Weaver, Huawei and its strategic suppliers have deep end-to-end two-way collaboration to explore more opportunities for cooperation, grow together and achieve a win-win situation. With Weaver, Huawei is able to build a timely, agile and reliable procurement collaboration system to achieve multi-dimensional, multi-channel and multi-form deep coordination of industry chain information, and integrate partners (customers and suppliers) into Huawei’s business quickly and efficiently through deep collaboration.”
“Haidilao Hot Pot Group establishes a unified collaborative management platform for the Group through the collaborative OA system of Weaver, and integrates multiple systems through collaborative office systems to integrate multiple HR systems (Kingdee and PeopleSoft) to achieve efficient integration and synchronization of employee work and personnel data, realizes electronic signature, and improve overall business processing efficiency.”
“Inner Mongolia Yili Industrial Group which ranks first in the Asian dairy industry and the top 8 in the global dairy industry has achieved an international layout. Weaver’s collaborative OA system covers more than 100 companies in the 33 provinces and cities of the Yili Group and connects more than 60,000 employees. Weaver’s OA also enhances the automatic approval of the entire group’s reimbursement expense and the integration with the accounting platform, especially the travel expenses, and realize the full automatic calculation of the cost standard, which greatly improves the cost efficiency. Weaver’s OA also realizes the application efficiency of administrative, personnel, office assets, meetings, and fraud prevention.”
“Weaver has built an internal and external collaboration platform for the Supor Group that integrates with SAP for dealer management. Using the collaborative OA dealer portal, Supor can let the dealers directly browse the products online, check the latest promotional price policies and special offers, and place orders directly. Dealers can track orders online and view the latest order approval results and opinions. The dealer can conduct online self-reconciliation, inquiry order information, delivery/non-shipment information, billing/unbilled information and account credit limit information, and can initiate the billing process independently. Based on the collaborative OA workflow engine and the dealer portal platform, various business data such as order, delivery, after-sales, reconciliation, etc. are all used by distributors, which is more orderly, comprehensive, real-time and accurate. if the dealer credit limit is insufficient, the system will automatically remind. The system automatically generates relevant orders with high efficiency.”
“Short-term insurance pricing is a long-term main business of China Life Insurance. However, because of the diversified data calculation conditions and local governments having their own special reasons, they did not have a unified standard. In addition to the collaborative OA applications in portal management, process management, project management, knowledge management, conference management and mobile office, Weaver helps China Life realize an automated, intelligent and efficient full budget management which greatly optimized the working methods and efficiency of employees. The short-term insurance pricing platform has won unanimous praise from customers in various departments, which greatly promoted the development of the short-term insurance pricing business.”
It started with rethinking a few questions. Question No. 1: Can the megacap tech elephants still dance? Or is this the better question: Is there an alternative and better way to capture long-term investment returns created by disruptive forces and innovation without chasing the highly popular megacap tech stocks, or falling for the “Next-Big-Thing” trap in overpaying for “growth”, or investing in the fads, me-too imitators, or even in seemingly cutting-edge technologies without the ability to monetize and generate recurring revenue with a sustainable and scalable business model? How can we distinguish between the true innovators and the swarming imitators?
Question No. 2: What if the “non-disruptive” group of reasonably decent quality companies with seemingly “cheap” valuations, a fertile hunting ground of value investors, all need to have their longer-term profitability and balance sheet asset value to be “reset” by deducting a substantial amount of deferred innovation-related expenses and investments every year, given that they are persistently behind the innovation cycle against the disruptors, just to stay “relevant” to survive and compete? Let’s say this invisible expense and deferred liability in the balance sheet that need to be charged amount to 20 to 30% of the revenue (or likely more), its inexactitude is hidden; its wildness lurks and lies in wait. Would you still think that they are still “cheap” in valuation?
Consider the déjà vu case of Kmart vs Walmart in 2000s and now Walmart vs Amazon. It is easy to forget that Kmart spent US$2 billion in 2000/01 in IT and uses the same supplier as Walmart – IBM. The tangible assets and investments are there in the balance sheet and valuations are “cheap”. Yet Kmart failed to replicate to compound value the way it did for Walmart. Now Walmart is investing billions to “catch up” and stay relevant. Key word is “relevancy” to garner valuation.
We now live in an exponential world, and as the Baupost chief and super value investor Seth Klarman warns, disruption is accelerating “exponentially” and value investing has evolved. The paradigm shift to avoid the cheap-gets-cheaper “value traps”, to keep staying curious & humble, and to keep learning & adapting, has never been more critical for value investors. We believe there is a structural break in data in the market’s multi-year appraisal (as opposed to “mean reversion” in valuation over a time period of 2-5 years) on the type of business models, the “exponential innovators”, that can survive, compete and thrive in this challenging exponential world we now live in. Tech-focused innovators with non-linear exponential growth potential are the most relevant multi-year investment trend and opportunity.
During our value investing journey in the Asian capital jungles over the decade plus, we have observed that many entrepreneurs were successful at the beginning in growing their companies to a certain size, then growth seems to suddenly stall or even reverse, and they become misguided or even corrupted along the way in what they want out of their business and life, which led to a deteriorating tailspin, defeating the buy-and-hold strategy and giving currency to the practice of trading-in-and-out of stocks. On the other hand, there exists an exclusive, under-the-radar, group of innovators who are exceptional market leaders in their respective fields with unique scalable business models run by high-integrity, honorable and far-sighted entrepreneurs with a higher purpose in solving high-value problems for their customers and society whom we call H.E.R.O. – “Honorable. Exponential. Resilient. Organization.”, the inspiration behind the H.E.R.O Innovators Fund, (surprisingly) the only Asian SMID-cap tech-focused fund in the industry.
The H.E.R.O. are governed by a greater purpose in their pursuit to contribute to the welfare of people and guided by an inner compass in choosing and focusing on what they are willing to struggle for and what pains they are willing to endure, in continuing to do their quiet inner innovation work, persevering day in and day out. There’s a tendency for us to think that to be a disruptive innovator or to do anything grand, you have to have a special gift, be someone called for. We think ultimately what really matters is the resolve — to want to do it, bring the future forward by throwing yourself into it, to give your life to that which you consider important. We aim to penetrate into the deeper order that whispers beneath the surface of tech innovations and to stand on the firmer ground of experience hard won through hearing and distilling the essence of the stories of our H.E.R.O. in overcoming their struggles and in understanding the origin of their quiet life of purpose, who opened their hearts to us that resilience and innovation is an art that can be learned, which can embolden all of us with more emotional courage and wisdom to go about our own value investing journey and daily life.
As the only Asian SMID-cap tech-focused listed equities fund in the industry, we believe we are uniquely positioned as a distinctive and alternative investment strategy for both institutional and individual investors who seek to capture long-term investment returns created by disruptive forces and innovation without herding or crowding to invest in the highly popular megacap tech stocks, and also provide capital allocation benefit to investors in building optionality in their overall investment portfolio.
The H.E.R.O. HeartWare Weekly highlights interesting tech news and listed Asian emerging tech innovators with unique and scalable wide-moat business models to keep yourself well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy in Asia as part of our thought leadership for our Asia HERO Innovators Fund to add value to our clients and the community. Hope you find the weekly report to be useful and insightful. Please give us your candid feedback and harshest criticisms so that we can improve further to serve you better. Besides the BATTSS (Baidu, Alibaba, Tencent, TSMC, Softbank, Samsung), do also tell us which Asian tech entrepreneurs & CEOs whom you admire and respect and why – we will endeavor to do up profiles of them for sharing with the community. Thank you very much and have a beautiful week ahead.
KB | firstname.lastname@example.org | WhatsApp +65 9695 1860