Annual report on digital transformation highlights barriers to overcome

Representatives of the MPI's Agency for Enterprises Development at the webinar releasing digital transformation annual report 2021

The annual report 2021 is the first publication providing useful information, especially to localities and associations, on woes, challenges, and demands of businesses carrying out digital transformation.

At the webinar, Le Manh Hung, director general of the Ministry of Planning and Investment's (MPI) Agency for Enterprises Development said, there are about 870,000 operating businesses, 97 per cent of which are small- and medium-sized. Digital transformation is taking place everywhere in recent years as a natural demand of numerous enterprises to meet the changes of customers' behaviours and corporate governance.

"However, the outbreak of the COVID-19 pandemic since early-2020 has hit most enterprises seriously. Vietnam's businesses with low competitiveness are struggling with many burdens. Digital transformation is an urgent need for them to restructure operations, move to digital platforms, explore new markets, cut costs, improve performance, competitiveness, and adapt to new normal," said Hung.

"Therefore, since January 2021, the MPI issued and deployed Supporting Enterprises' Digital Transformation in 2021-2025 to boost them to change and adapt to new conditions, improve competitiveness, and help them join the global supply chains. The report is built based on a survey of 1,300 enterprises and in-depth interviews with the programme's experts to consult and build a digital transformation roadmap for every business," he said.

Daniel Fitzpatrick, director of USAID LinkSME, said that they have been working closely with the MPI since 2020 to support enterprises in accelerating digital transformation. The report analyses the demands of enterprises based on the survey and feedback of more than 1,000 enterprises on their motivation and difficulties during digital transformation. This annual report compiles survey results and offers a wealth of insight on a topic that was little known a few years ago.

Challenges during digital transformation

The survey results reflect that the cost of digital technology is a headache for up to 60.1 per cent of enterprises. This is partly due to the impact of the COVID-19 pandemic, which has reduced their revenue and reduced access to capital.

Difficulty in changing business habits and practices is the second-biggest barrier that is challenging 52.3 per cent of enterprises. Respondents said digital transformation will change employee working habits. Some of them have applied software, but their employees do not use or only haphazardly use them, so the digital transformation goals of enterprises are not achieved.

Enterprises of different sizes will encounter barriers to different degrees. Small- and micro-sized enterprises which are short on finance are struggling with costs and technology application, while medium and large-scale enterprises with better finances are struggling with changing business habits and practices. This is partly because they have more complex apparatus and processes.

Experts talking about barriers and needs for digital transformation

Need for digital transformation

According to the survey, 57 per cent of businesses starting digital transformation are looking for tools for online marketing, 53.7 per cent need solutions for internal operations. These are followed by e-transactions (43 per cent) and network and data infrastructure (39.6 per cent).

For businesses that are growing and need digital transformation to accelerate, 63.5 per cent need a solution for data analytics, intelligent reporting (AI, big data, data storage), while 60.7 per cent of the total surveyed businesses need Customer System Management (CRM) and sales channel management (omnichannel sales). The remaining two solutions include enterprise resource planning (ERP) and data security with similar needs (57.8 and 50.2 per cent).

Among businesses that pursue digital transformation to promote exports, up to 43.9 per cent need support from cross-border e-commerce platforms, such as instructions for creating and maintaining accounts, building business models, marketing and shipping; 42.3 per cent need support for cross-border transportation, warehousing and logistics solutions, and 35.5 per cent are looking for cross-border payment solutions.

The report also reviews the activities and results in the past year of implementing Supporting Enterprises' Digital Transformation in 2021-2025 of the MPI. The programme has collaborated with local and international partners to implement many activities, and receive millions of visits, with instructional materials accessed about 200,000 times. Additionally, more than 500 businesses are ready for digitalisation and about 100 businesses are receiving support with one-on-one in-depth consulting to solve their specific problems during digital transformation.