Due to a younger, more technologically perceptive generation, the world is continuously going into a digital era. Likewise, digitalization has gradually changed the way businesses operate across their different areas, services, and channels, generating new growth opportunities. Statistically, 27 percent of companies think that digital transformation work should be done in order just to survive in the market and 87 percent think that most would be a great competitive advantage. Moreover, almost all enterprises are intended to make digitalization their key priority.
Why SMEs need digital transformation
As an enhanced customer experience, increased product features, and workflow optimization are primary concerns for small and medium-sized enterprises (SMEs), many SMEs seek help from new technologies.
Businesses' first aim when applying technology is production process optimization. In the age of technology, factories now are equipped with modern and intelligent production lines. Technology has step by step replaced the traditional production process by providing firms with almost absolute precision. Consequently, product quality is improved and the manufacturing process is shortened.
4.0 technology also helps SMEs improve productivity and product revenue by optimizing labor costs. Accordingly, enterprises not only save labor costs but the quantity and quality of products are also enhanced. Increased productivity, reduced costs, and growth in product sales will gradually bring SMEs to further success.
Additionally, with advantages in scientific and technological capacity, enterprises can specialize in their research fields and cooperate to reach the highest efficiency. With that operating rule, SMEs can produce more branded products and increase their brand awareness.
What's more, rising demands of customers in terms of quality of product in the 4.0 era require businesses to constantly invent new products and production processes. Same product but with different manufacturing processes, packaging designs, and brands can create a competitive environment that affirms the vitality of products and enterprises. Hence, mutual development is also guaranteed.
Another opportunity that digital transformation can bring for SMEs is the ability to collaborate with local and international businesses. In the current globalization context, countries in the world have strengthened their partnership and cooperation in science and technology. Hence, SMEs can use this as a stepping stone to effectively exploit and bring available products and services to their businesses. Enterprises can also have access to external resources such as capital, human resources, and machinery, among others.
What SMEs should avoid when digitally transforming
As vital as digital transformation is, many SME owners and managers sometimes do not fully understand how to conduct it. SME leaders are usually overly excited about a beautiful picture in the future with new advanced technologies. SMEs, however, will face a lot of obstacles when implementing digital transformation, causing many to give up. To achieve high targets, one must have access to technology and skilled manpower, which are not easy to acquire. In the short term, the workforce available is not capable, while recruiting new tech-savvy staff is time-consuming.
Next, there is another disappointment as the big goals are still far from realization after time spent adjusting to digital transformation. In this mood, SMEs may cut their investments in digitization instead of sticking to their original plans. If this happens, digital transformation will get stranded halfway. And when this gloomy situation remains, the workforce will tend to revert to the old way as if the digital revolution hasn't been executed.
With limited resources, SMEs preparing for digital transformation should carefully decide and envision their goals. Adapting new digital solutions does not necessarily mean the application of innovative technology in all processes. Only critical stages that directly affect the development of the business need to be digitized. Furthermore, to ease the transition, leaders and employees must adhere to small targets and phased implementations. Rather than setting out vague and hard-to-achieve goals, breaking them down into smaller, attainable targets in phases will entice all stakeholders to embrace digital transformation because they can be achieved one by one over time. By doing so, leaders can psych their employees up along the process and give them stronger confidence.
Moreover, SMEs should not totally count on processing technologies. In reality, certain enterprises after equipping themselves with automation tools usually become overly dependent on those tools without sparing time to review feedback and give necessary adjustments. In this case, customer experience is not guaranteed and mechanical customer service is backfired. This case illustrates the kind of half-done digitization that fails to deliver results, let alone be counter-effective.
Therefore, regardless of the tools employed and the level of automation achieved, having staff assigned for special and particular tasks like dealing with customers and analyzing data from feedback is of great importance. Works done manually combined with the help of technology will take enterprises’ success to the next level.
Some current opportunities and challenges
Enterprises are identified as the center of national innovation and play an important role in bringing technological achievements into life. Therefore, the Vietnamese government finds it is vital to support firms in finding, transferring, and updating technology. Updating breakthrough models and policies to create new opportunities for transformation activities is one of their focuses.
For science and technology to be the center of development, the state needs to have policies encouraging enterprises to invest in research, transfer, and innovate new technology. Head of the Science and Technology Department of Hanoi National University Vu Van Tich proposed that the government allow scientists to set up tech businesses in universities. Only by allowing them to own their inventions can the nation motivate scientists to continue pursuing research.
In addition, to support enterprises in technology transfer, the Director of the Technology Application and Development Department Ta Viet Dung stated that their program to seek and pass on foreign technology until the end of 2030 has currently successfully transferred 100 technologies. Furthermore, 30 advanced technologies have been decoded and mastered, serving to create many key products.
The program also built a network of 400 domestic and international technology partners as well as 8,000 foreign advanced technology profiles that suit the needs of enterprises. In the future, the National Technology Innovation Program aims to raise the number of businesses implementing technological revolution by 15 to 20 percent per year on average. Labor productivity is also predicted to increase at least from 1.5 to 2 times.
However, SMEs planning their transformation also need to be aware of the current challenges. As human demands and interests are constantly shifting, tools and products are easily outdated despite businesses' efforts to innovate. Besides, the application of technology to production requires highly skilled labor to operate and utilize modern equipment and machinery. The widening gap between unskilled and skilled workers might lead to issues of fairness and rights of workers in enterprises.
Despite some problems existing during the transformation of enterprises and the whole economy in general, Vietnam still remains a high potential market as renovations are constantly happening. With deep roots in Vietnam, Viettonkin Consulting proudly acts as a bridge connecting foreign investors and local enterprises. If you are not sure about the legal process and how to avoid risks, contact us now via our website to talk with experienced experts.
