Digital transformation in Vietnam – an inevitable development solution for businesses in the 4.0 era

The digital transformation wave is taking place strongly in all economic and social fields and has become one of the top concerns of many businesses in Vietnam. Under the impact of the COVID-19 pandemic, digital transformation is an objective need and a survival solution for businesses to maintain and develop. 

What is digital transformation?

Digital Transformation is the full integration of digital technologies into all areas of a business to change the way it operates, its business model, and bring new values to customers.

For Vietnam, digital transformation can be understood as the process of changing from a traditional business model to a digital business by applying new technologies such as Big Data, Internet of Things (IoT), cloud computing, etc. to change the way of operating, leading, working processes, and corporate culture.

Digital transformation is the process of applying digital technology advances to business models.

What benefits does digital transformation bring to businesses?

According to reports from two market research companies Gartner and International Data Corporation IDC, digital transformation brings many benefits to every aspect of business operations.

Narrow the gap between departments 

When applying digital transformation, information between departments and divisions in the enterprise is connected to a unified technology system platform, ensuring internal and external communication. This will help problems arising in the enterprise to be resolved as soon as they occur, helping to prevent business operations from being blocked.

Increase transparency and efficiency in governance systems 

By participating in the digital transformation process, business leaders will be able to proactively and easily monitor business activities such as: employees recording sales, personnel fluctuations, customers learning about products displayed on business management software, etc. This will help reduce delays, allowing leaders to manage the business more effectively and transparently than the traditional model.

Cut costs and optimize employee productivity

Thanks to digital transformation, simple and low-value tasks such as searching for information, entering data, making reports, etc., can be performed automatically without the business having to pay employees. Therefore, employees will have more time to improve their expertise and skills, and perform other important tasks that bring more economic value. In addition, businesses can also increase revenue and save on operating costs.

Improve competitiveness

Digital transformation management and operation solutions will help businesses operate efficiently, accurately and with quality. At the same time, digital transformation allows businesses to access detailed information about historical customer data (including quantity and level of interaction, preferences, trends, etc.), thereby being able to accurately and quickly provide the services that customers are looking for, expand the customer network, and improve competitiveness with other businesses.

Digital transformation helps businesses improve business efficiency and competitiveness.

Current status of digital transformation in enterprises in Vietnam

According to the report of the Department of Business Registration Management, by the end of 2021, the whole country had about 870 thousand operating enterprises. The scale of production and business establishments in Vietnam is mainly small and medium (accounting for over 94%), the rest are large-scale enterprises. According to the Vietnam Federation of Commerce and Industry (VCCI), although accounting for a significant proportion in quantity, small and medium enterprises have low levels of science, technology and innovation. Specifically, 80% to 90% of machinery used are imported, nearly 80% are old technologies from the 1980s - 1990s. 

SMEs in Vietnam are also facing many barriers in the digital transformation process such as lack of skills and human resources (17%), lack of a strong enough information technology platform to enable digital transformation (16.7%), lack of mindset or challenges in digital culture in businesses (15.7%), etc. 

However, the report also pointed out some positive figures as small and medium enterprises in Vietnam are gradually focusing on developing cloud technology (18%), network security (12.7%), upgrading software and hardware for digital transformation (10.7%). 

Up to now, many Vietnamese businesses have caught up with the world's digital transformation trend, some examples include: many companies use AI-powered chatbots to answer simple customer questions on the website, BIDV has successfully deployed the BIDV Smart Banking online registration system to help customers easily open accounts without having to go to the counter, Vinamilk has applied the Agile model and developed software to bring products to customers, Viettel Post designed the unified multi-channel sales management software ViettelSale to serve shop owners who need to manage business chains, etc.

Recently, the Vietnamese Government has also issued many Resolutions and programs related to digital transformation, creating favorable conditions for Vietnam to proactively exploit the opportunities brought about by the technological revolution.

Chatbot software is used by many businesses to improve customer experience.

Difficulties for businesses in the digital transformation process 

Challenges businesses in Vietnam face when transforming digitally.

Financial difficulties 

Digital transformation projects often require a lot of investment costs, while the financial capacity of businesses, especially small and medium enterprises, is quite limited. The cost of implementing digital transformation not only includes the cost of investing in digital technologies, but may also incur additional costs such as: costs of changing processes, training personnel to adapt to new processes, costs of investing in information technology infrastructure, costs of building systems, etc.

Difficulty in changing organizational culture 

Digital transformation can lead to a complete change in the habits and working methods of employees and leaders. This means there will be changes in roles, departments, or restructuring the organization and corporate culture in a new direction. For small businesses, this is not too difficult, but for medium and large businesses with complex organizational structures, this is a worrying barrier. 

Difficulties in implementation capacity

Businesses that do not have much experience in applying and exploiting technology often face many difficulties in deciding how to implement digital transformation and choosing solutions. Digital transformation is meaningless if it is only in the plan without the right human resources to implement it. This process requires employees to have knowledge and experience in both business and technology, and to be trusted by the leadership. The larger the business, the more difficult and complicated it will be to train and foster new skills for employees to keep up with the changes.

Difficulties in digital transformation solutions

Currently, digital transformation solutions in the domestic and foreign markets are very diverse and abundant. However, determining which solution is suitable for the conditions and needs of the business is not a simple matter. Most businesses decide to choose to buy solutions through consulting with technology solution providers and sometimes they are not really objective and suitable for the business model. 

Faced with these difficulties and challenges, there is a need for agencies and organizations to support businesses in the digital transformation process, providing objective assessments of the advantages and disadvantages of technological solutions, helping businesses have enough information to make their choices. 

Recognizing the importance and inevitability of digital transformation for the development of businesses, FundGo has coordinated with many associations, agencies, and organizations to increase digital transformation coverage to businesses in Can Tho in particular and the Mekong Delta in general. 

FundGo representatives participate in events with the vision of promoting digital transformation in the region and across the country.

Through events and programs that FundGo participates in and co-organizes, businesses will be introduced to how to apply new technology as well as basic steps to conduct digital transformation such as: building strategies, evaluating existing resources (current status, human resources, finance, etc.), to choose the technology and implementation method suitable for the scale and field of operation.

In the coming time, the Fund will strengthen connections with domestic and foreign e-commerce organizations and financial associations to update new trends and solutions, disseminate knowledge, and help projects and businesses confidently implement digital transformation.