In the era of Industry 4.0, the undeniable benefits of digital transformation are increasingly influencing the development of businesses. Why is digital transformation so important today? Let’s find out with FPT Digital in the article below.
In the era of Industry 4.0, the undeniable benefits of digital transformation are increasingly influencing the development of businesses. Why is digital transformation so important today? Let’s find out with FPT Digital in the article below.
1. Save operating costs for businesses
For most Vietnamese businesses, processes are often performed manually on paper. After digitizing old contracts, the signing process has transformed through digital signatures and electronic contracts. Currently, signing contracts no longer requires lengthy procedures, direct meetings, or wasting time and resources, but happens quickly. The validity of electronic contracts is no different from paper contracts.
In summary, thanks to digital transformation, the most visible and significant value for any business is the “reduction of operating costs.” This not only saves costs by digitizing physical data into online data but also uses this online data to build digital processes that minimize effort and time while still achieving the desired outcomes.
Example:
- As of 2019, the University Medical Center in Ho Chi Minh City saved 320 million VND annually in invoice printing costs by adopting digital transformation for electronic payments instead of traditional methods. However, electronic payments accounted for only 35% of the total transactions. If fully implemented, the savings are projected to reach nearly 1 billion VND.
- Decree 119/2018/ND-CP clearly outlines the replacement of traditional invoices with electronic invoices. This is one example of digital transformation at the national level, bringing numerous benefits to both the government and businesses, including cost savings.
2. Better information management and resource utilization
Every business, whether small or large, handles a vast amount of information from internal operations or interactions with customers, partners, and ecosystems. Previously, managing these information sources was manual and extremely complex. Physical information such as documents and data often faced challenges like:
- Susceptibility to damage, fading, or loss over time or due to human error.
- Discrepancies in data between departments due to decentralized record-keeping.
- Physical documents leading to dispersed data, making data integration and information management highly complex and time-consuming.
- Inability to inventory or track what data exists, where it is located, and its current state.
Digital transformation involves creating a roadmap and implementing tools and applications to optimize business operations through the unification of information and resources. Instead of relying on scattered software and databases, resources become more centralized, enhancing efficiency. Additionally, it greatly supports the “Customer-Centric” culture being adopted by many enterprises.
3. Enhancing customer experience
According to a study by SAP, 92% of leaders believe that successful transformation strategies and measures will improve the overall customer experience. Consumer needs and expectations are constantly evolving and increasing. Customers now have numerous similar options available at affordable prices.
Practical examples:
- In the previous example, when a patient visits a clinic, they only need to provide their name and registration number for the doctor to access their previous medical history, prescribed medications (sometimes even when patients themselves can’t recall clearly). This shortens consultation times significantly, streamlines the examination process, and ensures greater accuracy. Patients undoubtedly enjoy an excellent experience when provided with efficient healthcare services.
- In the banking and finance sector: By implementing AI technology, biometrics, and the Internet of Things (IoT), banks can easily personalize loan packages for individual customers. Biometrics enable fast and precise customer identification, while combined with stored information and big data analytics, banks can effortlessly identify customers’ names, spending habits, and current financial situations. Consequently, AI technology helps suggest loan packages tailored to each customer, increasing conversion rates, cross-selling banking products, and enhancing customer satisfaction and loyalty.
Once businesses can address customer issues swiftly and deliver exceptional experiences, winning their hearts becomes much easier. Customer care campaigns that earn trust and respect are invaluable. Clearly, the benefits of digital transformation provide businesses with a significant competitive edge, enabling rapid growth and development.
4. Optimizing operational workflows within and across departments
Why is digital transformation necessary? Returning to the traditional operational model, where workflows within and across departments are performed manually or semi-manually, results in time-consuming processes. This, in turn, impacts employee efficiency and overall work effectiveness.
Practical example:
FPT is a prime example of this scenario. Before the company underwent “digitalization,” an employee preparing for a business trip had to go through numerous manual steps. Tasks included filling out forms, printing, and obtaining approvals from various departments such as the manager, finance department, and department head. Completing the process for signature and stamping often took an entire day, not to mention the hassle of running back and forth.
After FPT digitized its workflows, handling such tasks became significantly easier. With just “a few clicks” on a website or mobile phone, everything could be completed in a matter of minutes.
This digitization of processes allowed FPT employees to focus more on their core responsibilities. Administrative departments were able to handle more requests quickly and efficiently, while leaders could manage tasks from anywhere. Moreover, the entire process was conducted online, ensuring seamless execution.
When internal and cross-departmental operations become efficient, productivity is optimized, enabling organizations to streamline their structure. This streamlining of organizational structure is a crucial factor in assessing a company’s flexibility.
5. Bring business flexibility
The agility of a business lies not only in its ability to adapt to changes in the surrounding environment but also in its capacity to seize opportunities, understand risks, and predict potential threats.
Examples:
- Example 1: The recent Covid-19 pandemic serves as a prime example of the ability to adapt to the surrounding environment. Businesses that had already digitized their data and processes were able to quickly adapt to “Work From Home” arrangements. The pandemic had minimal impact on their production and business operations.
- Example 2: Recalling the earlier story, digital transformation provided Netflix with an opportunity to enhance its competitiveness. However, it is important to note that digital transformation first allowed Netflix to flexibly explore new directions and address customer needs effectively.
6. Enhancing transparency and efficiency in enterprise management systems
Digital transformation also enables businesses to maximize employee productivity. Tasks with low added value can be automated, saving costs for the business, while managers can easily evaluate each employee’s performance through timely reports.
Example:
What should a CEO do if they receive a complaint about an underperforming salesperson who still receives the same benefits as other employees? Easy, right? The CEO can handle it step-by-step through their subordinates. But what if the company has many layers of management? Sounds complicated, doesn’t it?
Just kidding, that’s an issue of the past. With digital transformation, everything can be resolved “in no time.” Managers can effortlessly and proactively retrieve enterprise information.
This includes everything from individual employee sales reports, workforce fluctuations, and customer interest profiles… All this is available through enterprise management software. Obviously, this is a significant benefit of digital transformation that businesses cannot afford to overlook.
7. Improve employee and company-wide productivity
Applying digital technologies and effectively utilizing data helps each employee in the company minimize wasted time and focus on tasks that yield higher efficiency.
Practical example
- Example 1: Previously, café staff had to go from table to table to take orders and manually deliver them to the kitchen. Changes in customer orders made this process even more complicated. Now, with digital transformation, menus are entered online and updated in real-time, allowing quick modifications or deletions of orders. In the past, 2 staff members were needed to serve a 100m² café, but now, only 1 staff member is sufficient.
- Example 2: Previously, café owners had to visit the café daily or weekly to update revenue and expenses. With sales management software, business owners can now track sales in real-time. Inventory and available ingredients in the café are also clear and well-managed.
- Example 3: Implementing a Data Lake transformation helps companies improve the productivity of financial staff by saving time spent on report processing. Previously, a financial employee would spend an average of 1 hour daily processing reports; now, it only takes 10 minutes. For a company with 1,000 employees, this translates to saving 4,000 work hours per month.
8. Increasing Opportunities and Enhancing Competitiveness
According to HBR, 84% of executives stated that new business opportunities arise when their companies engage in digital transformation. Digital transformation helps businesses stay abreast of technological advancements, creating differentiation to compete with industry peers.
Illustrative Example:
In 1997, Netflix was founded with a simple mission: renting DVDs. Ten years later, the company transitioned to an online movie streaming service. Over the next 15 years, Netflix became a global leader in the industry, serving over 100 million customers worldwide, including Vietnam.
The shift to online movie streaming from DVDs exemplifies the digitization of content and the digitalization of distribution processes. This transformation established a new distribution channel, enhancing the company’s competitiveness. While many DVD distributors of the same era have vanished, Netflix continues to thrive and grow stronger.
| Shifting numbers helps Netflix lead the online movie market
Example 2:
Kodak’s story is the complete opposite of Netflix’s in Example 1. Kodak invented the digital camera as early as 1975. By 1976, they still dominated the U.S. market, accounting for 85% of camera sales. However, Kodak feared that this new digital product would erode their advantages and directly compete with their existing film and photo development products. Ultimately, while Kodak hesitated, competitors acted. Competitors launched digital cameras, leaving Kodak unprepared for the shift. By 2012, Kodak had officially declared bankruptcy.
From these two examples, it is clear that digital transformation is a significant opportunity for businesses that are ready to embrace change and implement a well-planned digital transformation strategy.
9. Increase Profits (Digital Transformation Leads to Better Profitability)
According to a report by SAP published in Las Vegas:
- 80% of organizations that completed digital transformation reported increased profits.
- 85% stated that digital transformation helped them gain market share.
- On average, leaders expect 23% higher revenue growth compared to competitors.
(Source: SAP Center for Business Insights and Oxford Economics)
Obviously, the goal of digital transformation to improve profitability is entirely realistic. However, achieving success in digital transformation remains a challenge.
Why is that? Simply because digital transformation creates many business opportunities and allows businesses to reach more customers at lower costs. Take convenience stores for example, instead of only selling products directly in-store, they can now offer additional services like personal shopping, online purchases, and home delivery. Revenue is likely to increase significantly, while display costs decrease since products are digitized and do not require extensive in-store showcasing. When revenue increases and costs decrease, profit margins are sure to rise considerably.
Real-world case studies after applying digital transformation:
According to Ms. Đào Thúy Hà, Deputy General Director of Traphaco Joint Stock Company, Traphaco’s revenue in 2020 grew by 12%, and in the first half of 2021, it increased by 22%. This is a notable success achieved by Traphaco on its digital transformation journey.
Thanks to digital transformation, FPT also reported over 30% profit growth, as shared by Mr. Trương Gia Bình, Chairman of the Board of Directors.
10. Contributing to building a better corporate culture
Digital transformation goes hand in hand with cultural transformation. In reality, they are like two sides of the same coin, interdependent for growth and survival. One recognizable benefit of digital transformation is fostering a positive organizational culture. Investing in digital transformation means the business is striving to build a culture that encourages innovation.
This enables employees to be more open to changes in organizational structure and operational processes. They are not afraid of challenges, willing to experiment with new initiatives and ideas, and bold in voicing their thoughts. When every individual embodies this spirit, the organization remains dynamic, continuously evolving, and constantly learning and embracing new opportunities, ready to face any challenge.
Example:
In a statement, Mr. Lê Quang Vũ – CEO of Blue C shared that updating daily tasks on Basecamp (a project management platform) before the start of the workday has made employees more accountable for their work and significantly reduced missed deadlines. This practice has contributed to building a culture of autonomy within the company.
11. Trends and current state of digital transformation in Vietnam
According to the survey results on “The current state of digital transformation in enterprises amid the COVID-19 pandemic,” Vietnamese businesses have begun recognizing and adopting digital technologies in various stages of their production and business processes.
The survey also highlights the high expectations among the majority of Vietnamese enterprises regarding the digital transformation process. Up to 98% of businesses expect significant changes in their production and business activities after implementing digital transformation.
The trend of digital transformation has been progressing rapidly, especially in sectors such as finance, tourism, and transportation. Among these, cloud computing, work management systems, IoT, robotics, and virtual conferencing are the most widely utilized tools.
In addition, with the “National Digital Transformation Program,” the Government and its entire administrative apparatus are making significant efforts to build an e-Government, aiming for a future digital Government.
Not only businesses but also individuals and the state need to embrace digital transformation. Read the article “Why Digital Transformation is Necessary” to better understand the role of digital technology in the 4.0 era.
Given the benefits of digital transformation highlighted above, it can be reaffirmed that digital transformation has become an inevitable trend for enterprises today seeking rapid, robust, and sustainable development in the age of technology 4.0. However, successfully implementing digital transformation remains a challenge. FPT Digital recommends that companies and organizations consult experts to develop a digital transformation roadmap tailored to their specific characteristics.
Change or die? The benefits of digital transformation are crystal clear—the decision now lies with you.
