Creating new business models through digital technology

November 24, 2022 | 03:07 pm GMT+7

Vietnam’s digital economy is forecast to reach 50 billion USD by 2025, according to the e-Conomy Southeast Asia report 2021. However, not many enterprises think about digital transformation because of limited resources, although the application of digital technology for commercial and service processes will facilitate their business development.


Although Vietnamese enterprises have made more moves in digital transformation, this process is considered to be insufficient. Many businesses have just digitised a small part of their operations but have misunderstood that they have successfully conducted digital transformation and even confused digitalisation with digital transformation. According to a survey by the Vietnam Confederation of Trade and Industry (VCCI), most enterprises are interested in and wish to implement digital transformation regardless of scale, but the implementation still faces many difficulties and challenges.

However, only 36.1% of consumer businesses and 40% of supply businesses have heard about digital transformation, but do not know how to start. 23.8% of consumer businesses and 24% of supply businesses know about digital transformation but lack the financial and human resources to implement it.

The survey also showed that the biggest challenges businesses have been facing in digital technology applications are the lack of methods, human resources and information about digital technology. Even 90% of surveyed enterprises showed that digital transformation has yet to be successful and they are going in the wrong direction because most of them just focus on smart solutions, while digital transformation needs to go through three steps including digitalisation, connectivity and smart.

Another barrier that causes businesses to “falter” in digital transformation is the high cost of investment and technology application, while enterprises have yet to master core technologies in addition to asynchronous digital infrastructure and challenges from enterprises’ awareness.

However, the good news is that in another survey on 400 enterprises by the VCCI, the majority of businesses have begun to realise and apply digital technology to stages such as internal management, purchasing, logistics, production, marketing, sales and payment. These include activities using e-commerce, social networks, electronic payments, and software, regarding remote human resource management, documents and warehouse management, and others.

The Marketing Manager of Zoho Vietnam Company (a unit specialising in providing digital transformation solutions), Le Duy Khang, said that digital transformation is an inevitable trend in the current context. Therefore, besides support programmes, businesses need to be proactive and make more efforts. But the fragmentation between different software and between different divisions is a problem that hinders the digitisation speed of enterprises.

A unified platform where all activities take place smoothly is exactly what businesses need to operate sustainably in the market. Therefore, the Government also needs to build solutions to support human resource development, allow access to information based on existing digital solutions, and make transparent regulations on personal and business data management. In particular, it is necessary to develop specific rules and regulations to promote paperless business and provide financial support for enterprises applying digital technology, to create new business models.

Digital transformation to create a new business model, is one of the three main digital transformation orientations of enterprises, to change the operation from traditional methods to completely new methods in the digital environment.

The formation of a new business model can be considered as the later stage of digital transformation, when businesses can analyse and take advantage of arising data, creating breakthrough business models which can change consumer behaviour to bring about new revenue sources.

For example, the boom of online business models such as Grab, Bee, Shopee, and Tiki has completely changed the way of interaction, bringing new experiences to customers with more convenience and reasonable costs.

Deputy Director of the Enterprise Development Foundation (under VCCI) Le Thi Thu Thuy, said that the COVID-19 pandemic has not only brought negative impacts on the health of people and businesses but also changed the habits of consumers, as well as production and business methods. This is the time for businesses to realise the superiority of the digital economy and set more urgent requirements in the process of digital transformation regarding business models.

This will help Vietnamese enterprises, especially small and medium-sized enterprises, to seek a more flexible business model, while reducing costs and optimising resources, to overcome difficulties and recover after the pandemic. The VCCI’s Vietnamese Business Annual Report showed that up to 89% of businesses are aware of the important role and impact of the industrial revolution 4.0, on the operation modes of enterprises.

In the current context, digital transformation is an inevitable process for all businesses regardless of their size. The mission of enterprises is to innovate business models and establish a governance model based on digital technology, towards creative, sustainable and inclusive development goals.

Therefore, the digital transformation of business models is considered the highest transformation step of an enterprise, which can help create breakthrough changes in operation. This is also a factor for enterprises to survive in the digital era, limiting the risk of being eliminated from the market.

On the other hand, digital transformation of business models also brings many benefits to businesses, as it creates leading advantages, increases the experience and easily approaches customers anywhere. Digital transformation can fail when it is done in the wrong way, but without digital transformation, enterprises will be left behind.

The Government approved the National Digital Transformation Programme until 2025, with a vision to 2030, to promote the development of digital government, digital economy, and digital society, and forming Vietnamese digital enterprises with the ability to integrate into the global market. In particular, the programme sets the target that the digital economy will account for 20% of the country’s GDP by 2025 and 30% of the country’s GDP by 2030.