Since the advent of the digital age, digitization and digitization have been buzzwords. Lately, digital transformation has also become a popular phrase in business and technology circles. These are commonly thought to be different words for the same thing, but they are actually three separate technology concepts that have different implications for your business. Let’s take a closer look at each of them.
What is digitization?
Starting with the simplest term, digitization is the process of converting analog information into digital format. This can happen in several ways, but is usually done through a process of sampling and quantization, which captures the signal at discrete intervals and then converts it to a digital representation. Once in digital form, the signal can be manipulated, stored and transmitted more easily than in its analog form.
Digitization is used in a variety of applications, from audio and video to photography and data storage. The advent of digital technology has revolutionized many industries and made previously analog processes much easier and more efficient.
While digitization refers to the act of making analog information digital, digitization is the movement of existing processes to digital technologies. In other words, digitization is for information, while digitization is for processes. Next we will see digitization.
What is digitization?
Digitization is about taking analog processes and making them digital. Gartner Glossary defines it as the use of digital technologies to change a business model and create new opportunities for revenue and value. In other words, digital technology is applied to everyday tasks to improve efficiency and productivity. This can involve anything from automating tasks that were previously done manually, such as using software to generate reports instead of using spreadsheets or paper-based processes. Or it could involve using digital devices to perform tasks previously done offline, such as using a smartphone to make restaurant reservations or buy movie tickets.
Through digitization, companies can streamline their operations and make them more efficient. And because digital information can be transmitted and stored more easily than analog information, businesses can also save time and money by going digital.
What is digital transformation?
Digital transformation is the process of streamlining a company’s core operations and customer value propositions using emerging technologies. It is a comprehensive strategy that requires changes in culture, structure, process and governance.
Digitization is sometimes referred to as “digital transformation”. However, digital transformation is a broader concept that not only encompasses the process of digitization, but also the organizational change that comes with it. This transformation is a journey that begins with identifying processes that can be improved or replaced by digital solutions, and then implementing those solutions to maximize their impact.
Several factors are driving the need for digital transformation. Increasingly, customers expect companies to offer digital solutions such as online ordering and self-service, and they are quick to go elsewhere if they don’t. At the same time, new technologies such as artificial intelligence, big data, robotics and the Internet of Things are creating opportunities for companies to improve their operations and better serve their customers. Digital transformation can help businesses keep pace with these changes and stay competitive in today’s business environment.
Relevance for business
Digitization is essential for companies that want to take advantage of digital technologies. Digitizing data makes it more accessible and easier to analyze. This is especially important for organizations that process large amounts of data, such as healthcare providers and financial institutions.
Digitization builds on digitization by using digital technologies to improve processes and performance. For example, many companies have implemented enterprise resource planning (ERP) systems to streamline their operations, especially to more effectively manage their inventory, finances, and human resources.
Digital transformation goes beyond digitization and digitization by using digital technologies to create new or fundamentally different business models. For example, Uber and Airbnb have created entirely new businesses by leveraging digital technologies.
Businesses that want to stay ahead of the game need to understand the three concepts: digitization, digitization, and digital transformation. By investing in technologies that enable these processes, they can keep their business efficient, agile and responsive to change.
Trends in Digitization, Digitization and Digital Transformation
Today, most companies have digitized their data, with the exception of a few sectors, such as the energy and construction sector, where data is often still stored in an analog format. As for digitization, many companies have adopted at least one form of it to improve their performance.
But few have taken the leap towards digital transformation, which requires a global and strategic approach. Moreover, many companies that have gone down this path are faced with it. According to a recent Boston Consulting Group study that surveyed 950 companies, the transformation success rate in 2021 was only 35%. The reasons for this are varied, but include the lack of a clear and integrated strategy, insufficient leadership commitment and complexities of implementation.
Conclusion: Digitization vs Digitization vs Digital Transformation
Companies that have been most successful in digitalization, digitization and digital transformation have taken an external view focused on the needs of their customers and their ecosystem. So, if you’re considering embarking on a digital transformation journey for your business, focus on creating value for your customers and other stakeholders, not just your organization’s efficiency.
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