Digital Strategy

Digital transformation of state-owned enterprises: in need of a different roadmap

The digital transformation process in Vietnam is taking place in a strong way, especially among state-owned agencies and enterprises.

The Prime Minister issued Decision No. 749/QD-TTg on June 3, 2020 approving the “National Digital Transformation Program to 2025, oriented to 2030”. In particular, Vietnam aims to be among the top 50 countries in e-Government development (EGDI). The key objectives of this program include three pillars: Digital Government, Digital Economy and Digital Society. It can be said that with the outstanding leadership of the Government, state-owned enterprises are also strongly conducting digital transformation activities such as Vietnam Electricity (EVN), Petro Vietnam (PVN), Vietnam National Coal and Mineral Industries Group (TKV), post and telecommunications group (VNPT),… In the scope of this article, we cover some specific elements of digital transformation in the management model between state-owned corporations and private economic corporations.

National digital transformation Infrastructure and Applications

The Government has approved the cloud computing platform as the infrastructure of the next generation for the next 10 years to develop digital government, digital economy and digital society. Not only that, the fields of services, trade, and electronic payments have developed strongly along with the process of investment at banks and intermediaries. The Ministry of Information and Communications has launched the “Make in Vietnam” movement for businesses to build an application ecosystem that provides customers with a convenient & expanded experience with artificial intelligence platforms, automation, virtual assistants,… Most corporations and state-owned enterprises benefit from these programs and the support of the managing units. The process of digitizing papers, building paperless offices, applying many digital technologies and solutions to carry out the process of online work, transactions, online contracts, electronic signatures,… strongly applied, especially when this process has proven effective during the period of quarantine due to the Covid-19 epidemic in the past 02 years.

State-owned corporations and enterprises have many advantages in the process of digital application because the application of IT in these units has been going on for several years, the technology platform and processes, regulations and procedures are clear, so the application of digitalization or digital technologies is quick, convenient and easy to put into implementation. Not only that, these units are also equipped with good solutions in infrastructure, safety and security, staff are equipped with high standards, so the excellent operating experience is a plus point in the digitization process of employees and enterprises with State capital.

Besides, some corporations such as EVN, VNPT,… also quickly offer many applications of excellent customer experience, helping people access many convenient and fast utilities and especially promote the process of performing online operations, online payments, combining with commercial banks and intermediaries to support customers during the covid pandemic.

The organization and apparatus of management and operation of technology and information technology is a distinct advantage of state-owned enterprises and organizations compared to private ones. Most of these units have IT apparatus with a high level of human resources, understanding both industry, culture as well as technology. Not only that, the implementation, upgrading and continuous application of new technologies at state-owned enterprises have created a solid foundation of new apparatus, operation and investment and effective operation control.

Difficulties to overcome when building a digital transformation roadmap

Legal corridors, regulations, and management methods are the first factor in the major difference between state-owned corporations and private economic corporations. In the context that the Vietnamese government is accelerating the process of guidance and performing the leading role, this factor is supporting many corporations and enterprises with State capital in shortening the gap in digital transformation speed with private units. However, this process still has many difficulties in building a roadmap, especially in building new business models or implementing business model ecosystems.

With the strictness in controlling the investment process, the result is slow decision-making time, many procedures, so the construction of digital initiatives under the fast-growing “Agile” model or the construction of new investment ecosystems for testing becomes difficult because there is no legal corridor for this process. Most of the current digital solutions and initiatives are focusing on solutions according to the model of detailed analysis of pros and cons, thereby building the overall design and detailed design according to the “waterfall” model. This factor partly explains the digital transformation in state-owned enterprises that are still focusing heavily on the process of digitizing operations and building some customer experience platforms.

Enterprise architecture and technology-oriented architecture is an orientation that state-owned enterprises & organizations have difficulty time implementing. With a very large scale, complex model and development orientation, the construction of architectural models accordingly as well as annual adjustments should be made right from the early stages of the application of fixed assets in enterprises. However, this construction also encounters obstacles in the legal corridor in terms of processes, regulations as well as mechanisms on changing and applying organizational models, business models, data models, operating models,… It is this lack of architecture that leads to the not fully optimizing the advantages in the process of application to practical digital transformation operation.

Illustration

Developing an index assessment set and appropriate level of digital maturity for corporations and state-owned enterprises is also a factor to focus on. The Ministry of Information and Communications has also issued a set of evaluation indicators for corporations, corporations and small and medium-sized enterprises (SMEs). However, for each corporation, enterprise, the application also needs to be implemented according to its own specific characteristics. Not only that, the construction of index sets for member units and evaluation of emulation scores, the detailed maturity level of each unit corresponds to the general architecture of the group, the corporation is also a factor to consider when implementing.

To summarize

State-owned corporations and enterprises, although they have many advantages in terms of scale, orientation as well as advanced IT organization and operation apparatus, but with challenges in regulations, legal corridors and organizational scale as well as specific characteristics in production, business, operation and administration lead to the development of a digital transformation roadmap that needs to be followed by a suitable “unique path”. The combination of alliances between corporations, state-owned enterprises and strategic consultancy units, digital transformation consultancy and the ability to build and apply long-term IT implementation will support these units to build the most suitable roadmap, bringing practical effect and soon achieving the government’s orientated results in the National Digital Transformation Program to 2025, orientation to 2030.

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