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

.
E-wallet firms battle for slice of cashless payment pie
E-wallet firms battle for slice of cashless payment pie
BUSINESSicon  04/08/2020 

E-wallets firms are battling for a piece of the cashless payment market amid rapid growth in the context of the COVID-19 pandemic.

Corporate income tax reduction comes into effect
Corporate income tax reduction comes into effect
BUSINESSicon  04/08/2020 

Resolution 116/2020/QH14 granting a reduction of 30 per cent on corporate income tax (CIT) for eligible enterprises officially came into effect on Monday.

Big rearers win big
Big rearers win big
BUSINESSicon  04/08/2020 

Many animal husbandry enterprises are leveraging the pork supply shortage to sell at high prices, earning huge profits

VN businesses slow in preparing to enjoy preferential tariffs in EVFTA
VN businesses slow in preparing to enjoy preferential tariffs in EVFTA
BUSINESSicon  04/08/2020 

 Experts have raised concerns that Vietnamese businesses are slow in preparing conditions to enjoy preferential tariffs in the Viet Nam-EU Free Trade Agreement (EVFTA).

Probe into Tenma Vietnam’s alleged bribery underway: police official
Probe into Tenma Vietnam’s alleged bribery underway: police official
BUSINESSicon  04/08/2020 

The investigation into the Japanese-invested Tenma Vietnam company’s allegation of bribing civil servants and tax and customs officers of northern Bac Ninh province is still ongoing, according to a police official.

VN textile, electronics hardest hit in pandemic: official
VN textile, electronics hardest hit in pandemic: official
BUSINESSicon  04/08/2020 

Textile and electronics have been the two export-oriented sectors mostly impacted by the COVID-19 pandemic, an official has said.

Businesses in HCM City's central business districts are idle as demand is weak
Businesses in HCM City's central business districts are idle as demand is weak
BUSINESSicon  05/08/2020 

Many streetfront buildings in large cities that house shops that were busy in the past are idle because business activities have declined due to Covid-19.

Vietnam prepares to receive investors from Japan, the US, EU
Vietnam prepares to receive investors from Japan, the US, EU
BUSINESSicon  04/08/2020 

Japanese businesses have begun relocating factories to Vietnam, and it is expected that American and European businesses will also come soon.

VN Civil Aviation Authority's plans for new Quang Tri Airport face opposition
VN Civil Aviation Authority's plans for new Quang Tri Airport face opposition
BUSINESSicon  04/08/2020 

The Civil Aviation Authority of Vietnam (CAAV) plans to build Quang Tri Airport in Quang Tri province, but experts disagree with the idea.

Vietnam factory activity dips in July as Covid-19 impacts grow
Vietnam factory activity dips in July as Covid-19 impacts grow
BUSINESSicon  03/08/2020 

Despite a drop in output in July, firms remained confident in the 12-month outlook for production.

Enticing legal changes lure in foreign investors
Enticing legal changes lure in foreign investors
BUSINESSicon  04/08/2020 

Foreign investors are making new investments moves into Vietnam on the back of supporting policies and new rules. However, as some legal concerns remain, the development of the next steps still requires some preparation. 

Summary of new points of amended Law on Investment 2020
Summary of new points of amended Law on Investment 2020
BUSINESSicon  03/08/2020 

After more than six years in effect, the Law on Investment has been officially amended with a number of new articles to improve the country’s appeal to higher-quality foreign investment flows.

Outlining the preferential mechanisms for new PPP projects
Outlining the preferential mechanisms for new PPP projects
BUSINESSicon  04/08/2020 

Public-private investment projects play a significant role in developing infrastructure and have the potential to accelerate large-scale construction works across the country.

Vietnam economic outlook remains positive despite Covid-19 resurgence: HSBC
Vietnam economic outlook remains positive despite Covid-19 resurgence: HSBC
BUSINESSicon  03/08/2020 

HSBC economists forecast GDP expansion of 3% in 2020 for Vietnam, the only ASEAN country they expect to have positive growth this year.

Vietnamese startups bag millions of US dollars despite COVID-19 pandemic
Vietnamese startups bag millions of US dollars despite COVID-19 pandemic
BUSINESSicon  03/08/2020 

A slew of Vietnamese startups managed to secure millions of US dollars even in the midst of the rapidly escalating COVID-19 pandemic.

Capital inflows to Southeast Asian startups up 91 percent despite outbreak
Capital inflows to Southeast Asian startups up 91 percent despite outbreak
BUSINESSicon  03/08/2020 

Southeast Asian startups, especially e-commerce and fintech companies, have witnessed a significant increase in investment between April and June.

Sky-high livestock prices may breach competition law
Sky-high livestock prices may breach competition law
BUSINESSicon  03/08/2020 

Although many livestock companies could face an inspection to ensure they follow through on commitments to cut their prices, the market outlook still looks dreary in spite of the government’s call to stabilise the selling cost of live pigs.

Aligning with trade remedy principles
Aligning with trade remedy principles
BUSINESSicon  03/08/2020 

The EU-Vietnam Free Agreement (EVFTA) is a giant leap for Vietnam in international integration.

Electricity of Vietnam suggests not to extend deadline for wind farm FiT
Electricity of Vietnam suggests not to extend deadline for wind farm FiT
BUSINESSicon  03/08/2020 

In order to ensure transparency and stability in the selling price of wind power, EVN opposes the Ministry of Industry and Trade's proposal to extend the deadline on the current feed-in tariff (FiT) scheme for wind power projects

Ministry seeks to further open petroleum retail market
Ministry seeks to further open petroleum retail market
BUSINESSicon  03/08/2020 

The Ministry of Industry and Trade has called for allowing all foreign investors to further participate in the petroleum retail market.

 
 
 
Leave your comment on an article

OR QUICK LOGIN