Vietnam hopes for 2021 surge in digital transformation

Digital transformation in businesses

Vietnam’s National Digital Transformation Program was launched in 2020 on three pillars - digital government, digital economy and digital society. According to Cisco Systems, Inc., an American multinational technology conglomerate, the digitization of small and medium-sized enterprises (SMEs) in Vietnam could contribute US$24-30 billion to the GDP by 2024. However, Vietnamese enterprises still import nearly 80 percent of their machinery that uses old technology from the 1980s and 1990s, and most SMEs still face many barriers to digital transformation.

In addition, most companies lack a strategy to apply digital technology and are slow to respond to market changes, explaining why Vietnam’s SMEs are behind the Philippines and Indonesia in digital transformation.

Digital transformation provides development opportunities for businesses

According to a survey by the Vietnam Software and IT Services Association (VINASA), only about 15 percent of domestic enterprises are taking steps towards full digital transformation. Most small and medium-sized enterprises face difficulties raising investment capital. According to Nguyen Viet Long, a digital transformation consultant, the transformation process of Vietnamese enterprises is hampered by lack of coordination between business owners and employees, high investment costs, poor information technology infrastructure and shortage of skilled human resources.

Support programs for enterprises

Nguyen Thi Le Quyen from the Enterprise Development Agency under the Ministry of Planning and Investment said the business community should take advantage of the agency’s support program for digital transformation in the 2021- 2025 period, approved by the ministry in January 2021. The program aims to support digital transformation in enterprises through integration and application of digital technologies to improve production and business activity efficiency and competitive advantages. The program's activities focus on building digital tools, digital platforms and digital transformation databases for businesses.

Ho Duc Hung, Deputy General Director of the Misa Joint Stock Company, said that in order to speed up digital transformation, businesses must adopt drastic measures, such as committing to cut down paperwork to 20 percent and shift the rest to digitalization.

Vu Tuan Anh, Deputy Director of the SME Restructuring-Digital Transformation Company Limited (DR. SME), emphasized that in order to achieve success, business owners and CEOs must take a hands-on approach, approve resources and most importantly orchestrate digital transformation. They need to set up a digital transformation board consisting of independent consultants to supplement capacity and knowledge that enterprises are missing and ensure the project is successful. Businesses need to quickly develop their digital transformation capacity, especially in terms of human resources, processes and data.

Despite limited finances, human resources, infrastructure, network connections and policies for digital transformation, small businesses have many advantages in their digital transformation journeys, especially flexibility and adaptation. Therefore, they need to study the business models, processes of large firms and apply them flexibly and creatively to suit their size.

Enterprises need to focus on the supply chains in strategies, implementation and operations of digital transformation, integrating with both customers and with suppliers.