Delaying digital transformation may put businesses in Vietnam at risk

Delaying digital transformation may put businesses in Vietnam at risk

An RMIT business expert has warned that a slow move to digital transformation may threaten businesses in Vietnam with bankruptcy in the future, amid the ongoing disruptions caused by COVID-19.

RMIT’s Department of Management Head and Managing Smart Transformation Research Group Leader Dr Nguyen Quang Trung said that the pandemic may push Vietnamese businesses to rethink and adopt digital technology quickly to thrive in the future.

What are the main areas of digital transformation for Vietnamese businesses to consider during this challenging time? 

Digital transformation in business is vital for survival in the current period and in the near future, especially for international economic integration and Vietnam’s open economy.   

The world we are living in is changing rapidly and forcing businesses to digitally shift to meet the changing demands and expectations of their customers, employees, competitors, shareholders and other stakeholders.

The main types of digital transformation in businesses can be broken down into two areas of implementation; adopting digital technology into the current business model (such as enhancing customer experience, from purchasing decisions to after-sales), or radically changing operations and structure (such as changing revenue models based on new digital technology and big data).

Which companies do you see as the digital transformation pioneers in Vietnam? 

It may take more time to identify pioneering companies for digital transformation in Vietnam as it has only recently become urgent in this nation.

Although digital transformation has been around for more than 10 years, most of the digital transformation in local and international firms have been based on situational solutions.

The recent research that we’ve produced in collaboration with KPMG has shown that foreign-owned and large enterprises are doing well in this area, however both state-owned enterprise (SOEs) and small and medium-size enterprises (SMEs) in Vietnam are at the beginning of their digital transformation journey in terms of capacity and management. 

news-1-delaying-digital-transformation-may-put-businesses-in-vietnam-at-risk RMIT’s Department of Management Head, Dr Nguyen Quang Trung: “Vietnamese businesses should not delay and need to implement digital transformation right away.”

How will small and large businesses operate and change after the pandemic?

Research has shown that both small and large businesses are suffering heavy losses due to decreased supply and demand, so the challenges would be similar for both types but the affecting scale likely varies in different areas.

While many large firms may have the resources to adapt and navigate faster, they are facing a complex bureaucracy which may lead to a slower process. On the other hand, SMEs can deploy faster because of their smaller scale.

Even before the pandemic, SMEs in Vietnam were already facing difficulties due to weak corporate governance, high competition, low creative capacity, difficulty accessing capital, and high operating costs. 

As a result, SMEs may continue to be up against many challenges, not only now but in the future if both business and government do not have the right solutions.

How should SMEs approach a digital transformation strategy if they’re lacking direction, finance and personnel resources?

Digital transformation is a challenging and difficult process in the current context, especially for SMEs. As they draft a strategy, they should consider their industry, competitors, business scale, business priorities, corporate culture and the determination and persistence of leaders.

Here are some suggestions to help SMEs in their overall digital transformation strategy:

  1. Get clear on the reason for digital transformation. Many lessons show that what currently leads to business success may not continue to be the case in the future
  2. Embrace innovation
  3. Build up digital transformation capabilities within corporate governance, digitalisation strategy, corporate culture, technology and security, data analytics, and technology personnel
  4. Understand what’s involved in the process. For example, do not assign tasks to only one department but manage the entire project, using a ‘top-down’ approach
  5. Consider the current business model through a technological, digital and data-collection lens. For example, evaluate the current customer journey and then look for ways to apply digital technology to improve the customer experience
  6. Prioritise adapting corporate culture, company vision, risk management, goal setting, data security and digital labours
  7. Act immediately; do not put yourself in the shoes of big businesses that delayed digital transformation like Sears, Kodak, Nokia, Yahoo. The slow change in the current period will probably affect the business even more than the impact of COVID-19

What needs to be done to grow businesses? What should enterprises prioritise with digital transformation?

Digital transformation is not just a shift to a new business model, but an opportunity to significantly improve the customer experience and optimise operations.

When identifying priorities, there are generally two main factors that get considered: the importance and urgency of an issue. However businesses need to add both short-term and long-term impact factors to their priorities in the current context. 

About the expert

Prior to RMIT University, Nguyen Quang Trung worked at FPT Corporation. With a PhD degree in Management from Monash University, a Master of Arts in Economics of Development, and a Bachelor’s degree in Foreign Trade, Dr Trung’s research interests encompass smart transformation management, international business, and development economics.

Story: Thuy Le

04 February 2021

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