Turning digital transformation challenges into business development opportunities

The 4.0 industrial revolution and the Covid-19 pandemic have posed significant challenges for businesses undergoing digital transformation. Let’s analyze 4 difficulties and effective solutions for businesses in the article below with FPT Digital.

1. Where are Vietnamese businesses on the digital transformation roadmap?

Digital transformation has become a frequently mentioned keyword, widely regarded as an essential trend for the sustainable development of businesses today.

Vietnam is recognized as one of the nations taking timely action in establishing and shaping legal frameworks as well as strategies to realize digital transformation for its economy. This is reflected in the relatively high growth rate of Vietnam’s digital economy.

2. 4 challenges in digital transformation for Vietnamese businesses

During surveys conducted with Vietnamese businesses across various sizes and industries within the economy, FPT Digital analyzed four major groups of challenges or nine specific criteria representing barriers to digital transformation, as illustrated in Figure 1 below:

2.1. Financial challenges for enterprises

The cost of digital transformation remains a significant concern for enterprises. This financial challenge makes it difficult to measure the benefits of digital transformation accurately in the short term.

For large enterprises, replacing existing assets entirely can be quite expensive. Piecemeal upgrades may not achieve lasting impact and could lead to future maintenance issues. Conversely, smaller organizations are less likely to encounter this problem.

This is likely the main reason why large-scale enterprises identify financial limitations as the most significant barrier to their digital transformation efforts (~65%). This percentage is also the highest compared to ~62% for medium-sized enterprises and ~55% for small and micro-enterprises.

Solution:

• Leaders must possess a clear vision and direction for digital transformation, as well as an understanding of the risks involved in inaction. This is a crucial factor in ensuring the sustained and improved operational efficiency of the company.
• Additionally, leaders may need to develop a medium- or long-term plan. This plan should include multiple phases to balance and mitigate financial budget constraints faced by the company.

2.2. Challenges in Changing Organizational Culture

Digital transformation often requires a complete shift in daily work habits for both employees and leadership within an organization. This change may involve redefining roles, restructuring departments, or realigning the corporate culture in a new direction.

Medium-sized and large enterprises, with their complex structures, processes, and established norms, often find it more challenging to adapt to changes in habits and business methods compared to smaller and micro-enterprises.

Survey results, as shown in Figure 1, align with this observation, highlighting organizational culture barriers at 60%, 42%, and 29% for medium, large, and small/micro enterprises, respectively.
Solution:

For the digital transformation process to succeed, the organization’s mindset must also undergo a corresponding shift. Enterprises should actively promote awareness of digital transformation through communication campaigns, provide rewards, and conduct training programs for employees and management levels.

Image 2: Organizational culture in digital transformation

2.3. Challenges in Digital Transformation Capabilities and Resources

For many businesses that have yet to gain experience or access to new technologies, digital transformation remains a distant goal. A report in Europe reveals that 77% of companies consider the lack of digital resources and skills as the biggest barrier to their digital transformation process (5).

In Vietnam, survey results show that the most commonly cited challenge among businesses is the lack of internal human resources for implementing digital transformation, with approximately 60% of companies identifying this issue. This is followed by insufficient infrastructure (~50%) and a lack of information and knowledge about digital technologies (~42%).

Solution:

• Companies should prioritize organizing advanced training programs for employees in relevant departments, especially for units and individuals directly involved in the digital transformation process.
• Additionally, businesses may consider recruiting new personnel with digital skills to adapt to changes and expand their organizational skill sets. Leaders should also develop strong digital management skills to meet the demands of future digital strategies effectively.

2.4. Challenges in Digital transformation solutions

The abundance and variety of digital solutions available today can create difficulties for businesses in determining the most suitable approach for their current situation, goals, and organizational development directions. In other words, business leaders often lack sufficient information to develop a comprehensive, long-term, and tailored digital transformation roadmap.

Solution:

• To address these challenges, businesses often opt for integrated solutions based on advice from solution providers. However, this approach may not yield the desired results due to a lack of objectivity and alignment with the organization’s needs. Companies should carefully select consulting partners.
• The chosen consultant should be independent in developing digital transformation roadmaps and solutions to ensure unbiased assessments of the business’s strengths and weaknesses. Furthermore, they should possess relevant expertise to propose digital transformation strategies aligned with the company’s development goals.
• Additionally, businesses should actively research and learn from successful digital transformation case studies both globally and in Vietnam. This can serve as a valuable reference point and an additional factor for making informed decisions.

3. Planning Digital Transformation to Turn Challenges into Opportunities

To tackle the issues of digital transformation, business leaders need a detailed strategy outlining the scope, phases, and steps to be implemented, along with appropriate budgets and resources. Developing a digital transformation roadmap is a crucial step that can determine whether a company’s overall transformation journey succeeds or fails.

A simpler option for businesses is to leverage the Comprehensive Digital Transformation Roadmap Consulting Service from FPT Digital. This service provides strategies tailored to the company’s plans and orientation.

Digital transformation is a must-have strategy for businesses to keep pace with the ever-changing market while enhancing competitive advantages. It’s essential to address the challenges highlighted above to ensure a successful digital transformation for your organization.

Don’t hesitate to contact FPT Digital for any inquiries, consultation services, or further insights into digital transformation!

References:

1. Google, Temasek, Bain & Company. 2021. E-conomy Sea 2016 – 2021
2. We are social & Kepios. 2022 Digital Vietnam
3. Vinasa. 2020 Vietnam Digital Transformation Day
4. Ministry of Planning & Investment. 2021 Annual Report on Enterprise Digital Transformation
5. Capgemini. The Digital Talent Gap report