How much does digital transformation cost?
(Baonghean.vn) - Digital transformation is not an expense, but rather a solution to optimize costs and create new value. Digital transformation is not about purchasing the latest and most modern digital technology.
Therefore, the correct question here is "How much money does digital transformation generate?", rather than "How much does digital transformation cost?".
Predictive maintenance in the power industry
Engie is a French electricity company. Engie is implementing digital transformation in its maintenance practices, shifting from traditional maintenance to predictive maintenance. Traditionally, maintenance is performed periodically or when a failure occurs. Predictive maintenance involves anticipating failures in advance, thereby optimizing maintenance plans. Engie has 1.2 million kilometers of power lines, encompassing various assets such as substations, lines, transformers, meters, sensors, etc., collecting petabytes (1 million GB) of data daily in real time, combined with other relevant data, such as weather. Their big data analytics platform for predictive maintenance uses artificial intelligence with over 1000 machine learning models, enabling 140,000 predictions per day, every 10 minutes, resulting in cost savings of over €100 million per year. In particular, artificial intelligence allows us to leverage and model the accumulated knowledge of over 30 years from a number of skilled experts. This can reduce maintenance costs by up to 30% and service downtime by 75%.
How much additional revenue does digital transformation generate?
For businesses, revenue and profit are always among the top concerns. Digital transformation is only successful if it generates more revenue and profit for the business.
Customer service
Viettel is a Vietnamese industrial and telecommunications conglomerate. In the first half of 2020, due to the complex developments of COVID-19, Viettel intensified customer interaction through digital channels instead of traditional ones. New services achieved a customer interaction rate of over 90% via digital channels. Thanks to the digital transformation of customer care operations, customer satisfaction with telecommunications services increased from 87.92% (2019) to 90.02% (2020). Viettel proactively shifted customer interactions to the My Viettel Chatbot system, reaching nearly 25,000 interactions per day (95% satisfaction rate). In addition, Viettel also focused on developing online partners to serve customers shopping from home. As a result, Viettel's revenue in the first six months of the year reached VND 120,000 billion, an increase of over VND 10,000 billion compared to the same period in 2019.
How should we allocate our budget for digital transformation appropriately?
The world average is around 2-3%. In some countries like Singapore, this rate can reach 4-5%. The current average in Vietnam is 0.3%.
Each agency and organization will determine the appropriate spending level based on its digital transformation strategy. For state agencies at the ministerial and provincial levels, the proportion of spending on digital transformation should be at 1% of the total annual state budget. If they want to accelerate the process, especially in the early years when foundational work is needed, the spending could be increased to 2%.
Digital transformation involves shifting operations from a physical environment to a digital environment. Ensuring cybersecurity is a prerequisite for digital transformation. Each organization and business should allocate at least 10% of its digital transformation budget to cybersecurity activities.
