7 Common Digital Transformation Mistakes and How to Fix Them

7 Common Mistakes in Digital Transformation

Digital transformation is an unavoidable trend, but 60-80% of projects fail due to common mistakes. Below are 7 frequent mistakes and quick fixes:

• Lack of a clear strategy: Not having a detailed plan leads to resource wastage. → Solution: Develop a clear roadmap with specific goals.
• Insufficient leadership support: Leaders are not committed or delegate everything to the IT department. → Solution: Leaders must participate directly and foster a digital culture.
• Inadequate employee training: 70% of employees lack digital skills. → Solution: Invest in skill development and enhance team capability.
• Technology-first mindset: Investing in the wrong technology that does not suit needs. → Solution: Select technology based on business objectives.
• Weak security plan: Vietnam recorded 90,033 security vulnerabilities in 2024. → Solution: Implement comprehensive security from the outset.
• No performance measurement: No clear KPIs make progress evaluation difficult. → Solution: Create and monitor KPIs aligned with goals.
• Poor change management: Employee resistance and an unprepared corporate culture. → Solution: Develop a detailed change plan and encourage innovation.

Summary of Mistakes and Solutions

Act now: Focus on strategy, leadership, and training to ensure successful digital transformation.

Mistake 1: Lack of Strategy

Issue: No Clear Direction

Many businesses initiate digital transformation without a clear strategy, leading to resource wastage and failure to achieve business goals. Statistics show that nearly 98% of enterprises face difficulties during digital transformation
^[5]. Common problems when lacking a strategy include:

• Selecting technologies unsuitable for the scale and needs.
• Lack of coordination among departments, hindering progress.
• Difficulty measuring effectiveness and making timely adjustments when needed.

Solution: Develop a Digitalization Plan

1. Assess the current situation: Analyze existing processes to identify weaknesses and outdated systems ^[3].
2. Define specific goals: For example,
   Rạng Đông developed a digital transformation strategy from 2020 to 2025 with a vision to 2030, resulting in 15.6% growth in 2020 and 16% in 2021.
3. Develop an implementation roadmap: Break the process into smaller stages, focusing on pilot projects before scaling up ^[9].

Key Components of the Strategy

“Digital transformation is not a destination but a journey that we constantly inherit and develop.” – Mr. Lê Vũ Minh, Digital Transformation Consulting Director at FPT Digital ^[8]

A well-founded digital strategy is a crucial first step in ensuring success. According to research, organizations with effective change management strategies are six times more likely to meet or exceed their digital transformation goals
^[4]. Once the strategy is in place, leadership support is also critical for a smooth transformation journey.

Mistake 2: Lack of Leadership Support

Issue: Limited Commitment from Leadership

Statistics indicate that 60-80% of digital transformation projects fail
^[2]. One of the main reasons is insufficient commitment from top leaders. Common signs include:

• Delegating all responsibilities to the IT department without close supervision
• Lack of collaboration among departments
• No specific change management plan
• Unreasonable budget and resource allocation

“Our research shows that many businesses ‘delegate everything’ to the IT department to explore and implement technology-related changes… This is one of the main reasons most digital transformation projects fail.”
– Dr. Nguyễn Quang Trung, Head of Management Department, RMIT Vietnam
^[2]

This calls for a change in the leadership itself, not only in management style but also in how they inspire and guide departments.

Solution: Increase Leadership Involvement

1. Establish a digital culture
MISA demonstrated this by automating accounting processes thanks to leadership-driven innovation ^[7].

2. Invest in personnel development
Over half of Vietnamese businesses identify limited funding and capital as a major barrier ^[1]. Leadership should ensure reasonable budget allocation for digital skills training and talent development.

3. Encourage employee-driven innovation
FPT.eInvoice is a prime example, allowing employees to contribute to system improvements. This not only reduces paperwork but also streamlines processes
^[7].

Effective Leadership Practices

Digital transformation involves not just a technological shift but a comprehensive change in people, processes, and culture
^[11]. When leaders empower employees and create a trusting work environment, businesses can more easily adapt to digital changes
^[10].

These strategies not only help enterprises overcome challenges but also lay the groundwork for sustainable success in their digital transformation journey.

Mistake 3: Inadequate Employee Training

Issue: Workforce Not Ready

A recent survey shows that 70% of employees in Vietnam are not fully aware of the necessary digital skills
^[12]. This leads to concerning issues:

• 76% of organizations lack personnel capable of protecting systems from cyber threats ^[12].
• The demand for digital skills increased by over 200% from 2018 to 2022 ^[13].
• More than 50% of businesses struggle to invest resources in training ^[1].

“Problem-solving and algorithmic thinking are becoming increasingly important because AI can assist in programming, but programmers need analytical skills such as how to approach problems, analyze, and design code.” – Prof. Hoàng Hữu Hạnh, Director of the International Training Center, Posts and Telecommunications Institute of Technology (PTIT) ^[12]

Solution: Develop Employee Skills

To address this issue, businesses need to prioritize skill development for their workforce. Below are key skills to focus on:

After identifying these critical skills, businesses should take concrete steps to build digital capabilities.

Build Digital Capabilities

1. Assess training needs
   Analyze skill gaps to identify areas that need improvement. According to surveys, 34% of employees lack study time and 29% struggle with course costs ^[12].
2. Design appropriate training programs
   Training programs should be designed with clear, concise content that can be completed within a short timeframe.

   “Training institutions should focus on creating interactive content with key points that can be learned in a short time.”
   – Mr. Hanh ^[12]

3. Implement effective training
   Ensure training is carried out systematically, following the planned roadmap.

Surveys show that nearly 80% of employees believe upskilling helps improve salaries and negotiation power ^[12]. This clearly highlights the importance of training in developing a digitally capable workforce.

Mistake 4: Technology-First Mindset

Issue: Chasing Technology

According to statistics, 70% of digital transformation initiatives do not meet their objectives ^[14]. Of the US$1.3 trillion spent on digital transformation in the past year, US$900 billion was wasted because companies focused too much on technology rather than real business needs ^[14].

Consequences of a technology-first approach include:

• Investing in unsuitable solutions, causing waste.
• Employee opposition due to fear of job loss.
• Disruption or breakdown of current workflows.
• Negative impact on corporate culture.

Solution: Choose Technology Based on Business Needs

To avoid wasting resources, businesses should carefully consider the following criteria:

“There is no single technology that will deliver ‘speed’ or ‘innovation.’ Digital transformation works because leaders focus on changing organizational culture and processes before they decide what digital tools to use and how to use them.” – Behnam Tabrizi et al. ^[14]

After choosing the technology, businesses should assess the value of their investment using specific metrics.

Evaluate the Value of Technology Investment

To measure effectiveness, businesses should focus on:

1. Financial indicators
   Identify ROI, payback period, and Net Present Value (NPV) to gauge the financial benefits of the investment ^[16].
2. Performance indicators
   Track KPIs such as revenue growth, reduced operating costs, and employee productivity ^[16].
3. User feedback
   Collect input from employees and customers to evaluate the impact of new technology on experience and job performance ^[16].

When technology is chosen to align with business objectives, metrics like ROI and KPIs clearly reflect the investment’s value. Vietnam’s IT services market is expected to reach US$3.20 billion by 2028, growing at an annual rate of 12.70% from 2023 ^[15]. This indicates significant potential in making the right technology investments in Vietnam.

Mistake 5: Weak Security Plan

Issue: Security Vulnerabilities

As of June 2024, Vietnam has recorded 90,033 security vulnerabilities. Cyberattacks increased by 9.5%, with nearly 14,000 reported cases. Among these, 27.4% targeted platforms and software, and 25.3% targeted corporate websites. Notably, 280,000 computers were infected with APT malware, a 55% increase compared to 2022. Losses from ransomware in the first half of 2024 exceeded 240 billion VND^{[17] [18] [19]}.

Solution: Approach Security from the Start

To build an effective security system, businesses should focus on the following measures:

“As businesses go digital, cybercriminals have more opportunities to exploit online banking and payment transactions.”
– Trần Đức Anh, Specialist at Tilleke & Gibbins ^[17]

Next, let’s look at how data protection regulations in Vietnam help reinforce security systems.

Data Protection Regulations in Vietnam

The Personal Data Protection Decree (PDPD) outlines critical requirements for businesses to comply with ^[20]:

1. Data storage
   Organizations must store personal data within Vietnam’s territory and maintain a physical presence when providing online services.
2. Impact assessment
   Mandatory Data Protection Impact Assessment (DPIA) and system logs for all data processing activities.
3. Protective measures
   • Use encryption and data classification
   • Implement strong authentication methods and access control
   • Continuously monitor and detect intrusions
   • Train employees on security awareness

With over 20 million cyberattack alerts in Q1 2024 alone ^[17], complying with security regulations is crucial, especially as digital transformation advances.

Mistake 6: No Success Metrics

Issue: Lack of Performance Monitoring

According to an Everest Group report, up to 73% of businesses do not achieve the expected value from their digital transformation efforts ^[24]. The main causes often stem from:

• Choosing inappropriate KPIs: Focusing only on user counts or processes while ignoring strategic factors ^[21].
• Misusing KPIs: KPIs are used only for reporting and not for critical decision-making ^[21].
• Lack of clarity in oversight: Responsibilities for KPI monitoring and project scope are not clearly defined ^[22].

Solution: Establish Clear and Effective KPIs

To ensure digital transformation delivers real value, businesses need to build a set of KPIs aligned with strategic goals. Here are some examples:

Besides establishing KPIs, continuously monitoring key success indicators is crucial to optimizing the effectiveness of digital transformation.

Key Success Indicators in Digital Transformation

1. Operational efficiency
   According to Deloitte, 81% of businesses measure digital transformation ROI by productivity ^[23]. This requires closely monitoring process handling times and operating costs.
2. Engagement
   Measure adoption rates of new technology, user satisfaction, and feedback ^[27].
3. Creating new value
   With the goal of the digital economy contributing 30% to GDP by 2030 ^[26], businesses should track revenue from digital products and the effectiveness of new business models.

Mistake 7: Change Management Issues

Issue: Resistance from Employees

Research from RMIT Vietnam and KPMG Vietnam indicates that resistance from employees and stakeholders is among the biggest risks in implementing digital transformation ^[2]. The main reasons often stem from an unprepared corporate culture for innovation, fear of failure, and anxiety about organizational restructuring.

Digital transformation often leads to role and structural changes, making employees feel uncertain ^[1]. This is especially apparent in small businesses where innovation and risk-taking cultures are not strongly established ^[2].

Solution: Steps for Change Management

To minimize resistance and ensure a smooth digital transformation, businesses can implement the following measures:

These steps provide the necessary foundation for transformation. However, businesses should tailor their strategies to fit local culture and context.

Change Management Tactics for Vietnamese Businesses

“When trying to understand cultural context, it’s important to consider not only national and regional cultures but also corporate, generational, and professional cultures. These can even have a greater impact.”
– Robert Gibson, Intercultural Expert ^[28]

To manage change effectively, Vietnamese businesses should focus on three important elements:

• Build cultural capacity: Increase adaptability and commitment within the organization by understanding and respecting employees’ cultural values.
• Empower leaders: Train key personnel, enabling them to be positive change agents within their teams.
• Continuous evaluation: Monitor the progress and impact of changes through specific metrics, making timely adjustments when necessary.

Drawbacks of Digital Transformation for Employees

Conclusion

From identifying mistakes to proposing specific solutions, now is the time to act and make digital transformation a reality.

Important Points to Note

Vietnam’s digital economy is expected to reach US$45 billion by 2025 ^[29], opening significant opportunities for businesses on their digitalization journey.

It is time for businesses to create a detailed plan to translate these strategies into concrete actions.

Plan for Next Steps

“Successful digital transformation requires informed decisions and timely actions, leveraging technology and digital assets to achieve clear results.”
– Shashi Jagadiswaran, Partner, EY Consulting Vietnam Joint Stock Company ^[30]

• Analyze the current situation – evaluate trends, technology, business models, and workforce capabilities ^[25].
• Define vision and strategic direction with clear measurable indicators ^[25].
• Focus on improving internal platforms and enhancing customer experience ^[25].

Start the Journey

With a digital foundation in place, businesses can embark on their transformation by:

• Prioritizing key sectors such as finance, banking, healthcare, education, and manufacturing ^[6].
• Investing in internal training and attracting suitable talent ^[25].
• Continuously evaluating effectiveness and updating relevant parties on progress ^[25].