Accelerating digital transformation to benefit SMEs

February 22, 2023 - 09:36
Actual cases of digital transformation in Việt Nam and the world are the best inspiration for SMEs to boost the process.
A worker operates equipment at a plant of R Technical Research Vietnam Company in Hoà Bình Province that specialises in producing optical lenses. VNS Photo Ly Ly Cao

By Ly Ly Cao

HÀ NỘI — While digital transformation and Industry 4.0 are having a greater impact on the growth of enterprises, many small and medium-sized enterprises (SMEs) are still struggling to get started.

The Annual Report on Enterprise Digital Transformation 2022 of the Enterprise Development Agency, under the Ministry of Planning and Investment (MPI), and the US Agency for International Development (USAID), showed positive signs in the readiness of the digital transformation of SMEs in 2022, with some already applying technology in production processes.

However, the report also pointed out that nearly half of enterprises used digital technology or digital reform but had since discontinued using it. Trịnh Thị Hương, deputy director of the Enterprise Development Agency, stated this during a webinar titled "Sharing international experiences on digital transformation and Industry 4.0” on February 20 in Hà Nội.

She also said that many businesses still did not understand how to transform digitally and create a roadmap to best service their operations, with only 2.2 per cent of businesses having mastered technology and digital solutions.

"Since they cannot ensure the success of the transformation, it is natural for businesses to be hesitant as the process often consumes large capital," she said.

With the rapid advancement of intelligent technology and the internet, digitalisation had become a necessity for cost reduction and increased competitiveness, so businesses would have no option but to find ways to start the process.

Wolfgang Wiegel, a consultant of Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ), suggested three levels of transformation. The first level, which is also the lowest, is the analysis phase. At this phase, companies need to recognise the need for change from SWOT analysis, competitive pressure, high costs, and notable gaps.

The second level is innovation priority, including new technology, new business models, and new processes.

And the highest level is digital integration, aiming for operational excellence, customer focus, data-based strategies, and better sustainability.

Wiegel also proposed six important factors to accelerate digital transformation towards Industry 4.0, which are strategy and innovation, customer decisions, robotic process automation, organisation, technology, and big data.

Meanwhile, Ngô Việt Hải, deputy general manager of Advantech Vietnam Technology, said companies should first look at weaknesses that can hinder their development. "Once they realise that, they will care less about how much money they make from the investment and more about solving problems," he said. Then, he added, find the right advisors.

Hải gave an example of enabling digital transformation in the gasoline business of Petrolimex.

"Petrolimex initially sought us out merely to develop automatic stations and warehouse. Then, we advised them to gather data and use it to inform future decisions in order to enhance both company’s production efficiency and customer experiences,” Hải explained.

Petrolimex now has 3,100 automatic stations using electronic payment.

Gradually expanding the technology's application and digital reform in production and business processes would help companies find out the results of their investments, Hải added.

SMEs also receive support from the Government in the process of digital transformation.

Since early 2021, MPI has proactively issued the programme to support businesses in their digital transformation for the 2021–2025 period.

The programme had intensively supported more than 100 SMEs to improve business strategies and enhance production capacity by applying a digital transformation roadmap, traceability solutions, and e-commerce, Hương said.

Tarek Hassan, head of the Digital Transformation Centre Vietnam, a project funded by GIZ, said: “In the framework of the project, we have created the Industry 4.0 programme to support and accelerate the double transformation of the business, which is digital transformation and sustainable growth.”

He believes the efforts will boost Vietnamese businesses' competitiveness and their ability to grow significantly in the digital era. VNS