As Vietnam is a rapidly developing country with a young and tech-savvy population, this makes it an ideal market for digital transformation. From a Finance Manager’s perspective, digital transformation is an opportunity to drive value creation, enable innovation, and improve efficiency and effectiveness.
In this article, we look at the benefits and opportunities finance managers can leverage from digital transformation processes within their financial reporting, controlling and governance frameworks, and we seek to highlight practical aspects on the implementation strategies in Vietnam.
Background on digital transformation in Vietnam
Digital transformation is the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. It is a way of reimagining business in the digital age and creating value for customers. Digital transformation is using digital technologies to fundamentally change the way an organization operates and delivers value to its customers. It can involve the adoption of new technologies, such as cloud computing, big data analytics, and artificial intelligence, as well as the re-engineering of business processes to take advantage of these technologies.
In a more concise way, we could define digital transformation as the radical reshaping of industries, companies, and even society through the use of advanced and emerging technologies and advanced data analytics.
Digital transformation always commences with a clear direction from the top management, and they should start the process by:
- Defining a clear vision and strategy that aligns with the organization’s goals and customer needs.
- Assessing the current state of digital maturity and identifying the gaps and opportunities for improvement.
- Building a culture of innovation and collaboration that encourages experimentation and learning from failures.
- Investing in the right technologies, platforms, tools, and skills that enable digital transformation.
- Measuring and monitoring the outcomes and impacts of digital transformation initiatives and adjusting as needed.
In Vietnam specifically, digital transformation can offer a number of benefits, including:
- Improved efficiency and productivity: Digital technologies can help organizations automate tasks, streamline processes, and make better decisions. This can lead to significant cost savings and improvements in productivity.
- Increased agility and responsiveness: Digital technologies can help organizations respond more quickly to changes in the market and the needs of their customers. This can give them a competitive advantage in the marketplace.
- New revenue streams: Digital technologies can enable organizations to create new products and services, or to reach new markets. This can lead to increased revenue and growth.
However, digital transformation can also pose a number of challenges for Finance Managers, including:
- The need for new skills and expertise: Digital transformation requires organizations to acquire new skills and expertise in areas such as data analytics, cloud computing, and artificial intelligence. This can be a challenge for organizations that lack the resources to invest in training and development. Finance managers need to ensure that their finance teams also have the necessary skills and competencies to leverage digital and analytics tools, such as data science, machine learning, visualization, and automation. They also need to help build a digital talent pipeline and culture across the organization.
- Lack of agility and innovation in finance processes and governance: Finance managers need to adopt agile ways of working, such as cross-functional teams, iterative cycles, and rapid prototyping, to deliver digital solutions faster and better. They also need to foster a culture of innovation, experimentation, and learning in finance (and other areas of businesses as well) and enable more data-driven decision making.
- Lack of alignment and collaboration with IT and other functions: Finance Managers need to work closely with IT and other functions to ensure that the digital initiatives are aligned with the business strategy, supported by the right technology and data infrastructure, and delivered with speed and quality.
- Lack of clarity and prioritization of digital opportunities: Finance Managers need to have a clear vision and strategy for digital transformation and identify the most valuable and feasible digital opportunities for their finance function and the organization. They also need to balance the short-term and long-term benefits and costs of digital investments and allocate resources accordingly.
- The risk of disruption: Digital transformation can disrupt existing business models and processes. This can lead to job losses and other challenges for organizations that are not prepared for change.
- The need for investment: Digital transformation can be a costly undertaking. Organizations need to be prepared to invest in new technologies, training, and infrastructure.
Despite the challenges, digital transformation is essential for organizations that want to remain competitive in the 21st century. Finance Managers who can successfully navigate the digital transformation journey will be well-positioned to help their organizations achieve their strategic goals.
Finance managers play a key role within the digitalization process of an organization
Some of the key roles finance managers play in digital transformation are:
- Defining and communicating the digital vision and strategy: Finance Managers can help clarify what digital means for their company, how it aligns with the overall business goals, and what are the key initiatives and metrics to track progress.
- Enabling and funding the digital initiatives: Finance Managers can allocate resources, manage risks, and ensure accountability for the digital investments. They can also adopt agile budgeting and forecasting methods to support faster decision making and learning.
- Leveraging digital and analytics capabilities: Finance Managers can use advanced technologies and data analytics to enhance their own functions, such as financial reporting, planning, treasury, tax, audit, and compliance. They can also provide insights and guidance to other functions on how to use digital transformation and analytics to improve performance.
- Leading by example and fostering a digital culture: Finance Managers can demonstrate their commitment and enthusiasm for digital transformation by embracing new ways of working, such as agile, design thinking, and collaboration. They can also promote a culture of innovation, experimentation, and learning across the organization.
Best practices and specific examples for Finance Managers
Here are some specific examples of how digital transformation can benefit organizations in general and Finance Managers in particular:
- Improved financial reporting: Digital technologies can help Finance Managers to automate the production of financial reports, making it easier to identify trends and patterns in financial data. This can help Finance Managers make better decisions about how to allocate resources and manage risk.
- Increased transparency: Digital technologies can help Finance Managers to share financial data with stakeholders in real time. This can help to build trust and confidence with investors and other stakeholders.
- Enhanced decision-making: Digital technologies can help Finance Managers to access and analyze large amounts of data, which can be used to make better decisions about business operations.
With support from Finance Managers, organizations operating in Vietnam can overcome the challenges of digital transformation by using best practices such as:
- Partnering with digital transformation experts: this can help businesses to access the skills and expertise they need to implement digital transformation.
- Investing in training: Businesses should invest in training their employees for the skills needed to implement digital transformation.
- Developing a digital strategy: Businesses should develop a digital strategy that aligns with their overall business strategy.
- Measuring the impact: Businesses should measure the impact of digital transformation and make adjustments as needed.
By taking these steps, businesses in Vietnam can overcome the challenges of digital transformation and achieve long-term success.
Digital Maturity Assessment: First step towards Digital Transformation
There are different ways to assess the digital maturity of the finance function and organization, depending on the objectives and scope. One possible approach is to use a digital maturity assessment tool (DMAT) that can help measuring and benchmarking current level of digital capabilities and performance across different dimensions, such as strategy, processes, data, technology, talent, and culture. A DMAT can also help identify the gaps and opportunities for improvement and prioritize the digital initiatives that can deliver the most value and impact.
Another possible approach is to use a digital maturity model that can help classifying finance function and organization into different stages of digital maturity, based on the extent to which businesses have adopted and applied the key digital practices and technologies that drive financial performance. A digital maturity model can also help understanding the characteristics and challenges of each stage and provide guidance on how to move to the next level of digital maturity.
Overall, digital transformation can offer several benefits for Finance Managers in Vietnam. By embracing digital technologies, they improve the efficiency and effectiveness of their organizations and make better decisions that will help them to achieve their strategic goals.
If you need any assistance with these or any other matters relevant for international investors in Vietnam, our experts are ready to work with your company to ensure you understand how the above will apply to your specific situation in Vietnam.
Contact our teams for expert support and further information on digitalization of the compliance and financial departments in Vietnam to ensure you are protected in the market.
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