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Digital Transformation uses digital technology to change business models, thereby creating new opportunities and values for businesses. According to FPT, digital transformation in an enterprise's organization changes the traditional model to a digital model by applying digital technologies such as Cloud Computing and Big Data.
The trend of digital transformation has been around for a long time. Still, in the context of Covid-19, under mandatory changes such as social distancing or working from home, many businesses are forced to turn to digital transformation solutions to maintain their operations. The problem now is no longer whether to transform or die but how to transform to survive.
However, changing the business model or operating method is not a simple task. A recent Mckinsey report shows that 70% of businesses' digital transformation efforts fail to achieve their initial goals [1].
So, how to perform digital transformation effectively? How to perform digital transformation efficiently? And most importantly, how to get right on the start?
Step 1: Review the priorities of the business
According to Mr. Dao Trong Khoa, Chairman of T&M Forwardings and DTK Logistics Solutions, digital transformation is a long and arduous process, not just lasting for one or two years [2]. Therefore, to achieve sustainable and long-term value from investing business time and money, leaders need to think about the result of digital transformation, such as prioritizing increasing sales or reducing operating time.
Of course, every progress is necessary, but businesses need to choose a specific order of priority because not all issues need to be immediately digitized. The impatience to chase after-sales or immediate benefits often leads to two consequences. One is that businesses will quickly fail to solve core internal problems due to the inefficient use of time and resources. Second, when companies arbitrarily choose a platform to solve a problem quickly, the later integration of discrete platforms will be a big challenge. The amount to pay for this is sometimes much more significant than developing a platform specifically for that business.
Under the rapid change of today’s technology, leaders need to stay calm before considering the application of digital transformation. They need to find the most painful problem of the business based on understanding the process of digital transformation, business processes, and the current market landscape. In addition, customer psychology should be considered as the focus to create a suitable digital transformation roadmap because, in the end, revenue is always the goal of every business.
Step 2: Assess the readiness of the business
After a specific visualization of the digital transformation roadmap and priorities, businesses need to re-evaluate their readiness to restructure their operating processes. There are two factors under consideration:
The first factor: People
It is undeniable that people are one of the most critical factors in digital transformation. There is no divine tool that can save the life of a business when people who use it themselves do not change their minds. According to BCG, the success of digital transformation will be determined right in the mindset and vision from leadership levels to all levels of employees [3]. Therefore, cultivating a culture that values change and respects new perspectives is a significant turning point for changing the way businesses operate.
The second factor: Data
Some leaders tend to rely too much on their gut feelings and empirical observations. However, no matter how subtle observations are, it is still hard to guarantee their accuracy without a database behind them. Data is an essential asset for a business's technological transformation. However, few leaders can understand the data platform and the meaning of those numbers. Therefore, the management board needs to look to professional data analysts to examine and analyze existing data within the enterprise. In addition, leaders also need to understand the data of their strategic partners in the Enterprise's Value Chain before proceeding with digital transformation.
Step 3: Evaluate the process to make the necessary changes
The board doesn't have to be comprised entirely of technology experts, but they do need to understand what they can achieve when they combine business vision with the power of technology [4]. More specifically, after understanding the meaning of business data, leaders need to see the signs to assess the maturity of the business process. From there, businesses can know where they are and whether they are ready for digital transformation.
Management can take advantage of times when there is less production and transactions (for example, due to the Covid-19 pandemic) to restructure their processes to accommodate digital transformation. It is also an opportunity for businesses to look back to see if they have fully prepared for digital transformation, which processes or stages are not ready and addressed. Again, decision-makers should not rely on intuitive inferences but need the most specific and detailed data to find a reasonable direction for the business.
Step 4: Find out a suitable and optimal solution
Enterprises, when researching about digital transformation, are facing two options:
Build an ERP system based on business processes yourself, or
Leverage solution providers and find ways to connect them
With the first option, businesses need to build an internal department to create solutions themselves. The advantage of self-developing a management system is that companies can limit process changes to a minimum. However, this requires a significant financial amount because businesses need to build a suitable software development process. This project will also require a lot of time for business analysis and technology research. Therefore, the total cost of ownership and development time will be enormous, while specialization is not guaranteed.
Businesses can also hire other companies to develop their ERP systems. This strategy is also worth considering if the service time and cost align with the business’s goals.
With the second option, leaders need to pay special attention to planning (Step 1). Businesses need to limit the choice of situational solutions to solve immediate problems quickly. Indeed, when solutions are not improperly chosen, integrating these platforms in the proper business process can cost more money and time than the first option. Therefore, another note is that businesses will also have to quantify their processes to match solution providers to minimize the use of many individual platforms simultaneously. After all, the long-term digital transformation is an opportunity to utilize better new technologies. Skipping a platform sometimes will bring many benefits to the business later.
Step 5: Nurture commitment in the digital transformation of the leadership and the whole business
According to Jabil, 74% of businesses that succeed in digital transformation think that changes in corporate culture are more complicated than changes in technology [5].
When technology has become so pervasive, it is easy to overlook the most fundamental value: people. As introduced in Step 2, building a culture of respect, innovation, and willingness to learn is an essential factor in digital transformation.
To truly succeed in digital transformation, every enterprise employee needs to be equipped with an even foundation of technology skills. According to PWC, businesses can close the technology gap in their staff by encouraging a diverse work environment [6]. Instead of letting employees work in cramped compartments for one person or in a room reserved for only one department, the company should arrange different departments in an open space and closer to each other. This change will stimulate creativity and a spirit of learning. People can work and raise issues together, from which businesses can build a common voice. This environment not only brings work efficiency but also accelerates the process of absorbing new technology.
Conclusion
Digital transformation is a big challenge for businesses. It requires effort from management to the entire staff and a clear, consistent strategy based on a thorough, comprehensive analysis of data.
Choosing the optimal solution is often not simple. For example, managing orders and vehicles in real-time will usually require two separate platforms. But with Abivin vRoute, businesses can eliminate the hassle of system integration or a self-developed optimal platform. Abivin vRoute is a solution that gives the supply chain the ability to manage inventory based on real-time order status. This logistics optimization platform can also integrate with ERP systems and telematics equipment. The transportation management or delivery routing is optimized and integrated into a single platform.
References
[2] https://www.facebook.com/abivin.jsc/videos/663125431131850/