Digitalising SMEs’ road to success

Digital transformation is not only a trend but also a must for small- and medium-sized enterprises as Industry 4.0 sweeps across the globe – while at the same time being an ideal solution for improving their competitiveness.

digitalising smes’ road to success hinh 0

Domestic groups can compete with foreign rivals if they embrace the digital future. 

Over the past few years, Trung Hau Construction JSC has been applying digital solutions, which have helped the company’s leaders carry out their work more easily. For example, all company data is systematically and methodically managed and simultaneously stored in the company’s database, streamlining the entire operation process.

Speaking with VIR, the company’s chairman Vo Dai Khoi explained the role of automation in liberating leadership and increasing capacity for his business, which currently consists of six subsidiaries – five in Vietnam and one in Australia.

“I used to be busy answering consecutive calls and using laptops and a range of other devices for work, but during the past year, all communications and operations have been encapsulated into a single smartphone. One of the reasons for this comes from the digitalisation of the group’s operations and business activities,” Khoi said.

The digitalisation of administrative documents creates the necessary data for the next steps of digital transformation. Besides that, the installation of cameras helps leaders to monitor construction progress and ensure the quality of large-scale projects in real-time, instead of having to visit each building in person.

“Investing in technology not only contributes to increasing labour productivity, but also improving design and construction capacity, which helped the company earn customers’ trust,” Khoi said.

“Our offers for tender packages are 5 per cent lower than those of other contractors, thanks to optimising resources instead of cutting materials. As a show of the increased capacity, previously, the company needed 200 employees to complete the construction of one project. However, the figure is now a quarter of that, while the construction time is a sixth faster,” Khoi added.

Khoi said that 100 per cent of partners select Trung Hau again as an engineer-procurement-construction contractor for their expansion in Vietnam. In one example, the eight factories of Pungkook Co., Ltd. in Vietnam, Indonesia, and Myanmar were developed by Trung Hau.

The story of Trung Hau is one instance of enterprises successfully adopting the digital transformation to increase their competitiveness against both foreign and local rivals.

Double pressure

Digital transformation is no longer just a vision – it is a reality. Change is a compulsory requirement due to not only the development of technology across the globe but also the fierce competition in business and investment. Vietnam has become an ideal investment destination for new investment in recent times.

The opportunity is understandable as foreign groups, especially large-scale groups such as Canon, Samsung, Hyundai, Nokia, Toyota, and LG plan to increase localisation rates in Vietnam. Their ranks will grow thanks to the increase of overseas investment inflows, as well as the relocation of facilities from China to Vietnam. However, the majority of local groups are facing difficulties in getting selected as suppliers and partners by international corporations due to their limited management capacity.

Hoang Dinh Trong is the founder of PDCA Training Consultant Co., Ltd., a company specialising in training and advising small- and medium-sized enterprises (SMEs) under the plan-do-check-act cycle for carrying out change.

He explained VIR that SMEs lack standardisation in the operating and manufacturing stages thus face massive hurdles in controlling the effectiveness of personnel as well as the quality of products and services. As a result, their products cannot meet the demand, especially in the areas of delivery time and precision.

“The issue is exacerbated when businesses undergo fast growth in a short time. The problem is resolved only when their manufacturing systems are brought up to standard through digital transformation. It helps leaders monitor personnel, manufacturing activities, and business results with a number of applications on their mobile phones or computers,” Trong said.

 

In addition, competitive pressure will double when large foreign groups invest in Vietnam and bring out satellite suppliers to serve their operations. These suppliers have deep awareness and methodical investment in digital transformation. Thus, if local businesses, especially SMEs, neglect their digital transformation or invest haphazardly, they will lose in the long run.

“Having the right digital plan and IT infrastructure in place will not only empower SMEs to compete effectively with larger competitors, it will also enable them to become part of the supply chains of large global companies,” he said.

According to the APAC SMB Digital Maturity Index, which was jointly developed by global tech firm Cisco and global research group IDC, SMEs in Vietnam are making initial technology investments in the cloud, cybersecurity, and IT software and hardware upgrades, as a large majority of them begin their digital transformation journeys.

The APAC index, which is based on an independent survey of 1,340 respondents, looked at the digital maturity of SMEs across four business dimensions: technology adoption and application, digital transformation strategy and organisation, processes and governance, and the capability to source, manage, and retain the right talent. It showed that in Vietnam, 18 per cent of surveyed businesses invested in cloud, 12.7 per cent in security, and 10.7 per cent in upgrading IT software.

The country’s global innovation index is constantly increasing and is currently leading the group of average-developing countries. According to the National Digital Transformation Strategy, by 2025, around 50 per cent of Vietnam’s SMEs will shift to digital platforms and develop at least 80,000 digital technology businesses.

Hoang Dinh Trong told VIR, “Vietnamese businesses are aware of the importance of digital transformation and have made initial investment. However, their transformation has only just begun – many companies are still in the planning stage. In general, it takes businesses at least two years to restructure operations and production activities, thus the next three to five years are the most exciting ones to watch, as increased investments by SMEs in digital transformation will truly propel Asia-Pacific economies to the next stage of growth.”

Dealing with the issues

During this digital transformation race, SMEs are also facing hurdles as they reach for the finish line. Respondents of the above survey said they are being held back by the lack of digital skills and talent (17 per cent), lack of a robust IT platform to enable digital transformation (16.7 per cent), and the lack of a digital mindset or cultural challenges in the organisation (15.7 per cent).

According to statistics revealed by FPT director-general Nguyen Khoa at the FPT Techday 2019 held in November, the proportion of Vietnamese businesses that have not yet adopted digital transformation is about 1.5 times higher than the global average. The biggest problem for businesses is that they did not know where to start with the process.

Along with such factors, according to Khoi, another barrier for domestic businesses is the wrong mindset and lack of determination in leaders. If they are not aware of the importance of technology and do not know how to build a systematic and methodical business, their hard-earned digital transformation basis will become worthless.

With the experience of advising and training thousands of CEOs, Trong said that the failure of the digitalisation progress comes from applying the wrong methods, rather than a lack of capital or experience.

Last but not least, SMEs also need to pay attention to training human resources because technology is a powerful tool, and humans will be in charge of the operation.

“Businesses in different sectors face different challenges and have unique growth prospects, which then vary from country to country. In order to succeed, it is important to understand these factors for SMEs in different sectors and countries, and the kind of technologies and solutions they can embrace to address them and thereby unlock long-term growth,” Trong said. VIR

PM commits more incentives for SMEs

PM commits more incentives for SMEs

Prime Minister Nguyen Xuan Phuc has stated that the Government will create more favourable conditions for small and medium-sized enterprises (SMEs), which now account for 90 percent of the total in the country.

Expanding the global role for Vietnam’s SMEs

Expanding the global role for Vietnam’s SMEs

Vietnam considers domestic private enterprises as an important driving force for the economy which is looking to become an integrated and modern one. 

 
 

Other News

.
Petrolimex pushes for PGBank-HDBank merger before Aug 31
Petrolimex pushes for PGBank-HDBank merger before Aug 31
BUSINESSicon  27/06/2020 

Petrolimex, which holds a 40% stake in the Petrolimex Group Commercial Bank (PGBank), sought to complete the merger between PGBank and the HCMC Development Bank before August 31, said the Vnexpress website.

Coca-Cola suspends social media advertising despite Facebook changes
Coca-Cola suspends social media advertising despite Facebook changes
BUSINESSicon  27/06/2020 

The company condemns racism and seeks more accountability from Facebook and other platforms.

Hanoi attracts US$17.6 billion for 229 projects
Hanoi attracts US$17.6 billion for 229 projects
BUSINESSicon  27/06/2020 

Hanoi is going to present investment certificates for 229 projects with a total value of US$17.6 billion and sign 38 memoranda of understanding worth a combined US$28.6 billion, according to the Tuoi Tre Online website.

Vietnam prepares to resume international flights
Vietnam prepares to resume international flights
BUSINESSicon  27/06/2020 

It is still unclear when Vietnam will reactivate international flights and reopen its market to foreign travelers, but agencies and travel firms all are making hectic preparations.

Banks’ support desired for mobile payments
Banks’ support desired for mobile payments
BUSINESSicon  26/06/2020 

New approaches, especially regarding activities of banks, are required to boost the reach of mobile money agents and expand financial inclusion in Vietnam.

Authorities get to grips with new bad debt mountain
Authorities get to grips with new bad debt mountain
BUSINESSicon  27/06/2020 

A spike in the amount of bad loans sitting in banks’ books has triggered Vietnamese authorities to seek new paths to recovery,

Debt limit to be adhered to despite bumps in road
Debt limit to be adhered to despite bumps in road
BUSINESSicon  26/06/2020 

In spite of a dent in state budget revenue and a rise in spending this year causing a big fiscal deficit, the government will be able to retain the country’s public debt situation, ensuring national financial security.

Coronavirus: Qantas to axe 6,000 jobs due to pandemic
Coronavirus: Qantas to axe 6,000 jobs due to pandemic
BUSINESSicon  26/06/2020 

The airline says the collapse in billions of dollars of travel revenue means it has "little choice".

Bayer to pay $10.9bn to settle weedkiller cancer claims
Bayer to pay $10.9bn to settle weedkiller cancer claims
BUSINESSicon  26/06/2020 

The chemical giant is settling almost 100,000 US lawsuits from users of its popular Roundup herbicide.

Olympus quits camera business after 84 years
Olympus quits camera business after 84 years
BUSINESSicon  26/06/2020 

Once a huge camera-maker, it is looking to carve off that part of its business and focus elsewhere.

COVID-19-induced uncertainty continues to drag on emerging East Asian bonds
COVID-19-induced uncertainty continues to drag on emerging East Asian bonds
BUSINESSicon  26/06/2020 

The coronavirus (COVID-19) pandemic continues to drag on local currency bond markets in emerging East Asia, including Viet Nam, as investment sentiment globally and in the region wane and containment measures limit economic activity.

Finance ministry says public investment funds borrowed from abroad must be disbursed quicker
Finance ministry says public investment funds borrowed from abroad must be disbursed quicker
BUSINESSicon  26/06/2020 

Loans borrowed from abroad for public investment must be disbursed quicker if Vietnam is to recover economically from the impacts of the coronavirus pandemic, according to the Ministry of Finance.

VEPR urges tax policies for FDI to be revised to prevent tax avoidance and evasion
VEPR urges tax policies for FDI to be revised to prevent tax avoidance and evasion
BUSINESSicon  26/06/2020 

Vietnam needs to revise tax and land policies for foreign direct investment (FDI) companies to ensure a level playing field for businesses.

Process supervision can end licence limbo
Process supervision can end licence limbo
BUSINESSicon  26/06/2020 

Along with luring in new foreign investment inflows, one of the major tasks for the government is to tackle oversights in regards to foreign-invested projects without construction licences.

Vietnam's logistics service industry ready for opportunities from EVFTA
Vietnam's logistics service industry ready for opportunities from EVFTA
BUSINESSicon  26/06/2020 

Vietnam’s logistics service industry is preparing infrastructure and techniques to grasp opportunities from the Europe-Vietnam Free Trade Agreement (EVFTA) to attract foreign investors with a wave of factories.

Vietnam Airlines to buy more aircraft despite big losses
Vietnam Airlines to buy more aircraft despite big losses
BUSINESSicon  26/06/2020 

The national flag air carrier is still moving ahead with its plan to buy 50 narrow-body aircraft, though it has reported a loss of VND2.6 trillion in Q1.

Vietnam's footwear firms forced to lay off workers due to Covid-19
Vietnam's footwear firms forced to lay off workers due to Covid-19
BUSINESSicon  26/06/2020 

The coronavirus pandemic has left tremendous impact on Vietnam's footwear industry, with the lack of production orders and the consequent drop in exports forcing them to lay off employees. 

PM approves suspension of Bac Van Phong SEZ plan
PM approves suspension of Bac Van Phong SEZ plan
BUSINESSicon  25/06/2020 

PM Nguyen Xuan Phuc has approved the suspension of a master plan to develop the Bac Van Phong special economic zone in Khanh Hoa Province until the National Assembly agrees to pass the law on special administrative and economic zones.

Orientations put Hanoi onto investment radar
Orientations put Hanoi onto investment radar
BUSINESSicon  25/06/2020 

Amidst the global trend of investment shifts, Hanoi is betting on new orientations and solutions to increase its appeal, expecting to open opportunities for international investors to venture further afield.

EVFTA promises an enhanced Vietnam
EVFTA promises an enhanced Vietnam
FEATUREicon  25/06/2020 

The National Assembly has passed the EU-Vietnam Free Trade Agreement and the EU-Vietnam Investment Protection Agreement, ushering in a new economic, trade, and investment co-operation outlook for both Vietnam and the EU.

 
 
 
Leave your comment on an article

OR QUICK LOGIN