Story: TU ANH

Some companies spend millions of dollars on cutting-edge technologies only to fail in their transformation journeys because of unprepared employees.

Vietnam’s economy has shifted rapidly in recent years thanks to digital transformation. Areas at the forefront of this trend are e-commerce, tourism, digital content, and fintech. The 2019 e-Conomy SEA report found that Vietnam’s digital economy reached USD 12 billion that year, contributing 5% of the total GDP, four times higher than in 2015. It is expected to contribute 30% of the total GDP by 2030, making it an important driver to sustain Vietnam’s fastest growth in the region.

Digital transformation is more than just hardware, software, or technology application. It requires a transformation of operational models, business strategies, and people. Given its importance, digital transformation should be carried out both rapidly and cautiously, since many challenges to this process remain in Vietnam.

A lack of digital workers

According to Le Hung Cuong, Deputy Director of FPT Digital, a survey showed that only 40% of businesses have the ICT capability to maintain and make use of their digital systems. Even big corporations that prioritize digital transformation face this issue. Vietnam is currently in desperate need of not only IT engineers but also those with digital skills. Overall, the industry is forecasted to lack one million digital workers by 2030.

Nguyen Thuy Duong, Chairwoman of EY Consulting, shared some tragicomic stories from her work as a consultant in business digital transformation. For example, the leadership of a top Vietnamese financial company was willing to take out a loan of millions of dollars for the latest software. However, it sat unused because subordinates did not know how to use it and did not even like it!

Many employees find the new technology and increasing workload overwhelming. Without training on the importance of how data collection will improve both their work and income, they only see that they have more work to do. “Paying millions of dollars for machinery is useless if employees are unprepared,” remarked EY Consulting’s Chairwoman, Ms. Thuy Duong.

For Hoang Trung Thien Vuong, co-founder and CMO of the business management platform, the biggest challenge in Vietnam lies in a workforce lacking both digital skills and knowledge. Many Vietnamese businesses employ traditional or older workers who are not used to digital technologies, making digital transformation time-consuming and resource-intensive for training and support.

Mr. Vuong believes that digital transformation also presents a new demand for a generation of citizen developers – those who are not IT engineers but can still create applications for business purposes. The need to build applications that serve specific business requirements is growing, but the limited number of professional developers can’t cater to the daily user demand for adjustments. Thus, citizen developers will harness the power of technology to create many automatic or working applications without overly depending on IT staff.

The legal framework hinders digital transformation

In addition to workforce problems, the next big barrier to digital transformation in Vietnam is a gap between laws and reality. This is becoming an increasingly serious issue for state businesses or organizations.

Citizen developers will be able to create many automatic or working applications without overly depending on IT staff

According to Ms. Thuy Duong, many organizations are afraid of transformation, despite their eagerness, due to the legal system. Digital transformation is ineffective if businesses follow legal procedures. The bidding procedure, for example, discourages businesses because it is too complicated to acquire equipment and may even take years. By the time a purchase order is approved, that equipment has become obsolete and is no longer supported by suppliers, creating a vicious circle. “The legal framework must be more open so that leaders are not afraid of errors. Only then can digital transformation in state organizations truly be effective,” said Ms. Thuy Duong.

Each organization has its own Achilles’ heel, whether it be a state-owned, private, small or medium enterprise. EY Consulting’s chairwoman believes that while digital transformation is the current trend, businesses should not overuse this concept. They should gauge their capabilities and identify their goals to have a specific implementation roadmap.

Staying patient on the journey

Despite its urgency, digital transformation requires a patient approach. Ms. Thuy Duong has dealt with cases where the top management of a big company strongly promoted digital transformation at any cost after just one meeting with partner businesses and governmental leaders. Rushing into transformation without a comprehensive perspective and thorough preparation can cause businesses to lose money and even fail due to multiple factors ranging from infrastructure to workforce.

Instead of pursuing empty achievements, EY Consulting’s chairwoman stressed the importance of “cutting your coat according to your cloth” and focusing on each business’s existing needs and capabilities.

According to the Asian Development Bank's 2022 report, Vietnam ranked 63rd out of 113 global economies with the best digital environment and business support systems.

Hasty digital transformation can create risks. According to IBM statistics, impulsive transformation increases the risk of a data breach by 72% and the risk of cyberattacks and threats to high-value assets by 65%.

At a 2022 conference, Do Viet Thang, Deputy Director of the Information Technology and Cyber Security Center of the Government Committee on Cipher, highlighted the potential risks that come with careless transformation as businesses may forgo necessary security measures.

Having participated in information security assessments for several digital transformation initiatives in Vietnam, Mr. Thang shared an anecdote of an online meeting solution that was urgently developed for use during the COVID-19 pandemic. His team uncovered several flaws two days before the first online meeting. To ensure that the conference went ahead as planned, developers had to deploy the entire department to monitor the meeting to prevent and respond to any incidents.

As more business, production, and information processes go digital, fraudsters will have more opportunities to target enterprises. Simultaneously, digital transformation expands the number of new network access points, such as cloud computing, social networks, and mobile devices. These elements will further diversify threats.