Digital transformation: The development trend of enterprises 4.0

CMC Consulting

20/10/2021

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Digital transformation is a concept born in the blooming internet era and is gradually becoming popular in recent times. Experts said that Digital transformation is an irreversible trend, if stay out, enterprises will sooner or later fail.  

What is Digital transformation?

According to the leading information technology research and consulting company Gartner: Digital Transformation is the use of digital technologies to change business models, create opportunities, revenue, and new value.

Digital transformation brings many benefits to businesses, including reducing operating costs, promoting efficiency in reaching customers, managing business resources, etc. The greatest benefit of digital transformation is to help the Board of Directors make decisions faster and more accurately, thanks to a smooth and timely reporting system; therefore, directly improving the operational efficiency and competitiveness of organizations and enterprises. By using digital technology in operations, businesses can free up labor and improve work efficiency to the maximum.

Digital transformation and digitization are different

Digital transformation and digitization are fundamentally different. However, to succeed in digital transformation, businesses must have a digitization mindset.

According to Technology Strategist and veteran analyst Dion Hinchcliffe: “Digitalization is using digital tools to automate and improve existing ways of working without actually changing the nature of the business.” And digital transformation “is a process from-moth-to-butterfly, flexibly changing from an existing way of doing things to a completely different way of doing things, in some cases completely replacing parts of the business and how it operates to get more value than a small, low-leverage business.”

The process of building and developing the Grab application can be considered as an example to help understand more about the difference between this digital transformation and digitization: Initially, Grab started as a ride-hailing service business platform. During that process, Grab collected information related to the driving habits, user needs, routes, real-time move, ... and digitized them. Digitization only helped Grab shape the overview of its business, while the business model at that time had not changed.

In the next stage of development, Grab began to conduct analysis based on the collected digitized data and provided direction for developing a new business model. Grab Express and GrabFood were born. At the same time, Grab optimizes the creating routes feature, helping to reduce the moving time - increasing profits for Grab. 

Developing a business model is a manifestation of digital transformation because by analyzing digitized data, Grab has transformed it and created a positive change for its business.

Digital transformation is the development trend of enterprises in the  Industry 4.0

Digital transformation has been and is an inevitable trend in times. Professor Ho Tu Bao from the Institute for Advanced Study in Mathematics (VIASM) said that businesses, big or small, can not say "No" to Digital transformation: "Digital transformation is an inevitable path. Enterprises must understand and have a specific strategy to pursue, with the accurate investment in digital transformation tools such as AI, data science, business analytics,...

In the industrial revolution 4.0, organizations and businesses need a digital transformation mindset for the following reasons:

  • The consumption habits of customers are changing rapidly with more and more demands for utility products and services. Meanwhile, digital transformation can analyze their behavior and come up with better customer care and outreach campaigns. On the contrary, without starting to think about digital transformation, enterprises will not be able to respond to clients' needs
  • Technology in the world is changing day by day with great potential and benefits. Therefore, businesses must constantly innovate to match the general development trend, stand firmly in the market, and create more breakthroughs.
  • Competitors are changing drastically: Exploiting digital platforms has enabled many businesses to operate their business models more efficiently - economically and with better quality. Therefore, digital transformation is a must for organizations and businesses if they do not want to be defeated by competitors.

In Vietnam, The Digital transformation process has begun, especially in finance, transportation, tourism,... industries. On June 3, 2020, Vietnamese government issued a decision approving the program National digital transformation process to 2025, efforts to build an E-government towards the Digital government. Digital transformation has been and is one of the top concerns of technology enterprises in Vietnam nowadays.

What do businesses need to do for Digital transformation?

The importance of digital transformation is undeniable in the Industry 4.0 era. However, how to build a complete and appropriate digital transformation process is still a challenge for many organizations and enterprises.

Businesses and groups can refer to the 5-step digital transformation process to shape an overview of the transformation process and method:

  1. Evaluating the current state and expectations of the enterprise: Leaders need to identify what is happening in the organization, the trends in the market. From there, choose the right direction for the business
  2. Evaluating the readiness of the enterprise for digital transformation: After having an overview of the current situation, the next step in the digital transformation process is to assess the readiness of the enterprise. This job requires the enterprise to meet two factors: people and data
  3. Reviewing the process to make the necessary changes and choose the right technology: This is an opportunity for businesses to look back on whether they are fully ready for digital transformation. The review allows the enterprise to know which technologies need to be improved? Where is the “outdated” process that needs to be changed? Which stage is not ready, and how to solve it? Then make the appropriate adjustments. Once again, decision-makers should not rely on personal intuitive inferences, but need to look at actual data to find the right direction for the business.
  4. Create an open feedback culture: Manager and employee feedback is important because, based on this feedback, leaders can make changes that optimize the effectiveness of training 
  5. Commitment to the digital transformation of the leadership and the whole business: Successful businesses in digital transformation said that creating a change in corporate culture is more difficult than technology. Therefore, leaders need to clarify that digital transformation is a central strategy of the enterprise for all employees to make them wholeheartedly and fully strive.

Digital transformation is a long journey. On this journey, enterprises need to build a specific strategy based on practical analysis and steadfastness and determination in the implementation process to achieve success. Not only that, but businesses also need to pay attention to choosing reputable partners to ensure the efficiency of the digital transformation process.

Established in 2008, CMC Consulting (Successor company of CMC Ciber) is honored to be the Gold Partner of SAP Vietnam, a leading reputable provider of consulting services and implementing business management solutions. With more than 150 leading ERP consultants and experience in successfully implementing ERP systems for many businesses in the domestic and international markets, CMC Consulting is committed to customer success by quality services and optimal price competition.

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