Small- and medium- sized enterprises (SMEs) in Viet Nam are making initial investments in cloud computing, cybersecurity and software and hardware upgrades, as a large majority of them begin their digital transformation journeys, according to the APAC SMB Digital Maturity Index (Index), released by Cisco on Thursday.

The index, developed by research firm IDC and based on an independent survey of 1,340 respondents, looked at digital maturity of SMEs across four business dimensions including technology adoption and application, digital transformation strategy and organisation, processes and governance, and the capability to source, manage and retain the right talent to enable their digital transformation.

Taking into account the four dimensions, SMEs in ASEAN, with the exception of Singapore, were classified at the “Digital Indifferent” stage of digital maturity. The stage is defined as one where companies digital efforts are often reactive to market changes, rather than driven by a proactive tactical approach.

As SMEs in Viet Nam become more digital, it is not surprising that cloud computing is the top technology they are investing in (18 per cent). This is in line with the trend of cloud computing adoption across the region as the technology allows SMEs to scale rapidly as and when required and without significant upfront capital investment in IT infrastructure.

As SMEs in Viet Nam digitalise, they are also adopting cybersecurity technologies, with 12.7 per cent of respondents listing it as one of the top three technologies they are investing in. This highlights that they are placing security front and centre of their digital transformation journey.

Having the right IT infrastructure in place is critical to meet the evolving needs of SMEs in Viet Nam and ensure long term success. The SMEs recognise this and 10.7 per cent of respondents say they are investing in IT software and hardware upgrades.

“SMEs in Viet Nam are digitalising rapidly and harnessing the power of technology to expand revenue streams and reach a wider pool of customers beyond geographical borders. With the support of the Government and corporations, SMEs will truly propel Viet Nams economy to the next stage of growth. Cisco plays a role in building a strong digital foundation in Viet Nam on multiple fronts. The Cisco Networking Academy for example has trained nearly 36,000 students in Viet Nam and supported the development of digital skills in the countrys workforce. We look forward to strengthening our partnerships with the Government and with SMEs to accelerate digitalisation in Viet Nam,” said Luong Thi Le Thuy, Managing Director, Cisco Viet Nam.

However, SMEs in Viet Nam are also facing hurdles to digital transformation. Respondents said they are being held back by the lack of digital skills and talent (17 per cent), lack of a robust IT platform to enable digital transformation (16.7 per cent) and the lack of a digital mind-set or cultural challenges in the organisation (15.7 per cent).

The survey also revealed that Government initiatives have a clear impact on SME digitalisation in Viet Nam. A majority of respondents (64 per cent) say they are aware of Government initiatives that support SMEs and have already benefitted from them. Another 30 per cent are aware but have not taken part in these programmes.

Bidhan Roy, Regional Director & General Manager of SMB Markets & Distribution, ASEAN, Cisco, added: “One of the greatest advantages of technology is that it helps small businesses scale quickly without requiring huge upfront investment in IT infrastructure. As SMEs become more digital, and their applications and data are stored in the cloud, keeping them secure will become increasingly important. Having the right cybersecurity protocol and IT infrastructure in place will not only empower SMEs to compete effectively with larger competitors, it will also enable SMEs to become part of the supply chains of large global companies.”

The Index suggests that SMEs in Viet Nam should consider digital transformation a journey to constantly access their maturity across the four dimensions, and prioritise key initiatives to address gaps. To accelerate the digital transformation journey, they should have strategic investments, embark on process automation and digitalisation and find a trusted partner.

The Index highlights that more than 60 per cent of SMEs in Asia-Pacific have started to embrace digitalisation, driven by improved internet access and growing smartphone ownership. These SMEs are redefining customer experience and expectations, disrupting sectors and in some cases creating entire new ones, while capturing investment and funding opportunities. — VNS