Blogs

HOW DO SMALL AND MEDIUM ENTERPRISES (SMEs) 'GET RESISTANCE' IN THE TIME OF COVID?
20-Jun-2021

HOW DO SMALL AND MEDIUM ENTERPRISES (SMEs) 'GET RESISTANCE' IN THE TIME OF COVID?

1.What is Digital Transformation?

One of the comprehensive directions for businesses is "Digital Transformation" - understood as the integration of digital technologies into all areas of an enterprise, taking advantage of technologies to fundamentally change how it operates, its business model, and delivers new value to its customers, and accelerates business operations. Digital transformation is also a change in the culture of businesses, requiring businesses to constantly change, try new things and freely accept failures. Experts have commented that digital transformation in the spread of the industrial revolution 4.0 is no longer an option but has become an inevitable development trend so that businesses can stand ahead of the times, improve competitiveness, production efficiency, participate in the global value chain, accelerate and develop.

2. Impact of Digital Transformation

So how does “Digital Transformation” affect the global economy? Digital transformation is a new concept, but the results achieved by the application of digital technology in businesses are very encouraging and necessary in the current 4.0 technology era and Covid pandemic. This has been proven through practice: Reports of large market research companies such as Gartner, IDC... all show that digital transformation brings a lot of benefits to all aspects of the company's operations: from executive management to research, business... The most recognizable benefits of digital transformation for businesses are cutting operating costs, reaching more customers in the long term, leaders making decisions faster and more accurately thanks to a timely and transparent reporting system, and optimizing employee productivity... These things help increase operational efficiency and competitiveness of organizations and enterprises. According to market research and analysis experts, the five ultimate goals that digital transformation businesses aim for include: Speeding to market; Strengthening competitive position in the market; Driving revenue growth; Increasing employee productivity; Expanding your ability to attract and retain customers. In the past, old-fashioned technologies were only accessible to large companies with a lot of strong economic potential. Therefore they are always leading the market, at least by a few steps. But now, whether small companies or new startups can access technology no less than large companies. For the world market, according to Microsoft's 2017 research in Asia-Pacific region, in 2017, the impact of digital transformation on GDP is about 6%, in 2019 it is 25% and in 2021 it will be 60%. The results of McKinsey's research show that, in 2025, the impact of digital transformation on GDP of the US is about 25%, with Brazil it is 35%, and in European countries, it is about 36%. From here, it can be seen that the impact of digital transformation on GDP growth is very large.

Faced with the pressure of the Covid 19 pandemic, businesses in general and small and medium enterprises (SMEs) in particular are required to carry out the digital transformation process as soon as possible to stand firm in the domestic and international markets. Because digital transformation will help businesses manage data and remote employees while ensuring good performance, reducing operating costs, but still reaching customers in the most optimal way, and ensuring safety. This will be like "a medicine to increase the resistance of SMEs - the Covid era" and a premise for future development. Digital Transformation - Big benefits.

3. How is Vietnam's SMEs digital transformation?

In Vietnam, the process of digital transformation has begun to take place, especially in industries such as finance, transportation, tourism ... Cisco announced the report "Digital development index of small and medium-sized enterprises in the region" Asia-Pacific region", conducted on 1,340 enterprises in the region in general and 50 enterprises in Vietnam in particular, showed that up to 70% of enterprises in the region are accelerating the digitization process due to the impact of the Covid-19 pandemic, and 86% of businesses surveyed believe that digitalization will help develop resilience against crises like the Covid-19 pandemic. Accordingly, in 2020, up to 72% of small and medium enterprises (SMEs) in Vietnam are looking for ways to digitally transform to bring new products and services to the market, a significant increase compared to 32% of 2019. The report also shows that the digitalization of small and medium-sized enterprises in Vietnam can contribute from 24-30 billion USD to the gross domestic product (GDP) in 2024 and contribute to post-Covid-19 economic recovery. However, Digital transformation requires the organization to have a determination to change from the "roots", challenging habits, constantly trying new things, and learning to adapt to failure. Therefore, many organizations are struggling in the digital transformation process because they cannot give up their core values. Vietnamese enterprises in general, especially small and medium enterprises (SMEs), are still not aware of the role of digital transformation. Specifically, according to VCCI, currently, Vietnam's small and medium-sized enterprises account for about 97% of the total number of enterprises. The level of science, technology and innovation is still low, with 80% to 90% of the machines used in the industries. Vietnamese enterprises are imported, nearly 80% of which are old technologies from the 1980s and 1990s. SMEs are facing barriers in digital transformation such as lack of digital skills and human resources (17%), lack of strong enough IT platform to enable Digital transformation (16.7%), lack of digital thinking or digital culture challenges in businesses (15.7%) … Digital transformation still mainly takes place in large, multi-faceted enterprises. Some small and medium enterprises still react passively to market changes and do not make digital transformation efforts. Vietnam's small and medium enterprises lag behind both the Philippines and Indonesia in digital transformation because most do not have a strategy to apply digital technologies, are not highly proactive in responding to the market or have a digital strategy to innovate and mainly facing difficulties due to cost and technology issues. In addition, the digital transformation process in the small and medium-sized business sector also entails hot issues of information safety and security because these businesses are one of the subjects often targeted by hackers. Because technology capacity and information security have not been invested heavily. In general, the fear of ensuring network security and information safety has made these businesses falter, losing the benefits of the digitization process. According to Forrester's 2016 analysis report, of those surveyed, only 11% succeeded in digital transformation.

Standing on the role of a business manager, have you ever wondered: What makes some digital businesses successful and prosperous while so many others "lose breath" in the race of digital transformation?

4. How to make Digital Transformation?

In the context of the last 2 years when the Covid-19 pandemic broke out, it brought challenges as well as great opportunities for Vietnamese SMEs, accelerating the digital transformation process. The impact that the Covid-19 epidemic is bringing to the digital economy is equal to 5-7 years combined.

To accelerate the process of business digitization, it is necessary to have a clear, correct and practical strategy. Here are 7 steps "Digital Transformation for SMEs" suggested by Ms. Patricia Yim - Managing Director, IBM Southeast Asia:

1.Find a platform: Choosing the right platform can play an important role in your digital transformation journey. In the digital age, there are many options for businesses to consider. Focus on the areas where the business is doing best. Once the purpose is clear, build a foundation around that purpose. Securing the customer is the focus. With unique data, expertise and experience in the business field, the right platform is how businesses answer questions about market requirements.

2.Building a data-driven platform: Digital transformation involves carefully managed data to serve the business's operations and differentiate it in the competitive market. This is critical to how businesses view, evaluate and use data. All efforts need to be focused on building the data platform and managing the core development strategy and business processes. Select and enrich data to meet specific business needs, functions, and requirements. Prioritize the role of sustainable data governance. And big data optimization is needed for fully efficient digital transformation.

3.Build for Change: Build scale, speed, and flexibility for every business, starting with the foundation. It is necessary to make a habit of adapting to the constant changes of both the market and the industry. Align the technology platform to fit the business structure. Link any changes to the old system with a new vision of the future state of the business, using open source multi-cloud or hybrid cloud as a stepping stone.

4. Design intelligent workflows: For long-term success, businesses need to incorporate artificial intelligence and human intelligence into their customer engagement workflows. Customers today expect to engage in personalized modes of communication. These methods are founded on empathy and harmony with the context. If you succeed in building an automated, intelligent, and efficient strategic workflow, it will continuously learn and support the decisions of your employees.

5.Fast: To start the digital transformation journey, businesses need to do it quickly. Work with purpose and break internal boundaries to satisfy customers. Strategic flexibility will be the foundation for cultural transformation, new ways of working, and exponential growth. Bring together flexible teams that cross organizational boundaries to share ideas and information, with one goal in mind to respond to customer needs quickly.

6.Empowering employees: The key to promoting digital transformation lies in the human resources of the enterprise. Continuously improve the skills of existing human resources and recruit new, curious and creative employees. Give employees the tools to grow with business needs. Leverage artificial intelligence to identify skills gaps, design personalized learning programs, and assign each person to new roles and opportunities. Reward your employees' curiosity and experimental thinking to create a sense of change from this very important business resource.

7.Improve security: Find the sweet spot between uncompromising customer experience and trusted transactions. Cybersecurity is important for trust and is a measure of the longevity of a business platform. Artificial intelligence can take network security to a new level, defaulting to the ability to proactively ensure digital security for businesses instead of being defensive, and ensure strong authenticity of transactions while not limiting customer participation.

Digital Transformation - Increasing SMEs resistance is a "Hot" topic at the moment and is likely to accelerate more and more in the future. Therefore, Vietnamese businesses need to find their direction of "transformation-digital transformation" as quickly and as possible to be able to stand on the 4.0 technology train of the era and create a special immune system against Covid-19.

    © Copyright Sharework, 2018. All Rights Reserved.