Digital Transformation for SMEs - Opportunities and Challenges

Digital transformation is not just a technical trend; it has become a determining factor for the survival and development of businesses in the 21st century.

Digital transformation changes the way businesses produce, operate, and compete. As a general trend, businesses in all sectors and industries need to update their knowledge, build strategies, and roadmap digital transformation to leverage opportunities as well as face challenges.

1. What is Digital Transformation?

Digital transformation is the change, and innovation in work methods, production, etc., of businesses, organizations, and individuals through new applications, tools, and technologies.

At the enterprise level, digital transformation is the integration of digital solutions into core activities. This process profoundly changes how businesses operate, and creates new business processes, customer experiences, and organizational culture, while innovating new methods to meet market change expectations.

Some examples of digital transformation by industry:

Industry	Example
Retail	Using CRM applications to track customer information, purchase history, and previous interactions. Using customer data to generate personalized product recommendations based on previous shopping behavior and individual preferences.
Tourism	Using chatbots to provide 24/7 customer support, answer questions, provide information about itineraries, and help resolve other travel-related issues. Developing booking and search applications to help travelers easily find information about hotels, accommodations, flights, and tourist activities.
Healthcare	Allowing patients to schedule appointments online and conduct screenings via video on the web. Using online check-in services so that guests do not have to register in person
Education	Using e-books, online learning platforms to provide materials and lectures to students. Using software to track students' progress, create online quizzes, provide instant feedback

2. Opportunities from digital transformation

Understanding and effectively implementing digital transformation can create numerous competitive advantages for businesses.

2.1. Enhancing Work Efficiency

By applying digital transformation technologies, workers can reduce repetitive manual tasks. This means they can focus more on specialized tasks, improving labor productivity.

Additionally, real-time data from work reports can provide objective analysis and conclusions about workforce efficiency, rather than relying solely on subjective assessments by managers as in traditional HR management.

2.2. Cost Optimization

Through collected and synchronized data, businesses can:

Evaluate reasonable costs, wasteful expenses, etc., for each stage of the process to develop cost-effective strategies and action plans.
Optimize personnel costs by eliminating unnecessary steps and personnel in operations.
Optimize marketing effectiveness: Digital transformation helps optimize marketing and advertising strategies, ensuring accurate targeting and budget optimization.
Enhance customer service: Digital solutions improve customer service, reduce issue resolution time, and build trust.
Digital technology helps manage resources effectively by tracking and managing assets, materials, and resources, thus reducing waste and optimizing usage.
Automation of tasks: Automating repetitive tasks saves time, resources, and reduces errors.

2.3. Flexible Operations System, Strengthening Departmental Integration

In traditional processes, businesses may be affected by individual operators, training instructions, or data management. However, after data is digitized, the turnover of personnel and data transfer time will be shortened.

All tasks will not solely depend on individuals in those positions, minimizing risks for businesses in both operational management and HR management.

Moreover, by applying technology, departments within businesses can share information, collaborate, and interact more effectively.

2.4. Mastering and Utilizing Data for Accurate Decision-Making

By integrating technology into processes and activities, digital transformation allows businesses to collect data from various sources, including customer data, business process data, and external business transactions.

From this business data, reports can be generated, and evaluation indices used to understand aspects such as:

Actual business operations
Consumer behavior, service usage, customer understanding
Updating business quality assessments

To systematize and synchronize data from various departments, businesses need to develop suitable digital transformation pathways.

3. Challenges of Digital Transformation for Businesses

However, the process of digital transformation is not without its challenges, particularly for Small and Medium Enterprises (SMEs).

The most significant challenge for SMEs is resource limitation. Most SMEs lack or have insufficient personnel with the skills and knowledge of digital transformation. Moreover, the leadership often doesn't prioritize digitalization in their business operations, relying on traditional strategies, leading to declining efficiency and productivity.

Furthermore, the abundance of digital transformation solutions in the market confuses many businesses during the selection and implementation process. Most businesses are unsure where to start and how to choose suitable digital transformation solution providers. Some solutions lack integration with external systems and cannot inherit previous data, posing difficulties for businesses during the digitalization process.

The "cost" factor in implementing digital transformation is also a top concern for many SMEs. Businesses have to invest significantly in technology and infrastructure, training personnel, and risk management, leading to overall costs exceeding the allowed budget.

Digital transformation in businesses requires effort, perseverance, and continuous improvement over a long period. However, avoiding being left behind or phased out due to digital transformation is an essential issue.