Digitization and digitalization have become popular buzzwords since the beginning of the digital age. In recent times, the term “digital transformation” has also gained popularity within business and technology circles. Although they are frequently mistaken for being different names for the same thing, they are three distinct technology concepts with various business applications. Let’s explore each one of them in this article.
Understanding the differences: Digitization, Digitalization, and Digital Transformation
Digitization
Digitization, to put it in simple words, is the process of converting analog information into digital form. Digitalization, on the other hand, is the practice of using technology to improve business processes.
Digitization takes place in several ways, but mostly it occurs because of the sampling and quantization process, which first collects the signal at discrete intervals before turning it into a numeric representation. The signal can then be modified, stored, and transmitted more easily when it is in its analog form.
Digitization is used in several applications, ranging from audio and video to photography and data storage. Many industries have seen radical change since the arrival of digital technology, which also made formerly analog processes much simpler and more effective.
Digitalization
Digitalization is the process of converting current processes to use digital technologies, as compared to digitization, which is the conversion of analog information into digital form. Simply said, digitalization refers to processes, whereas digitization relates to information.
Making analog processes digital is the process of digitalization. Leading research company Gartner defines it as – “Using digital technology to change the business model and provide new prospects for revenue and value”. In other words, digital technology is used to make routine jobs more productive and efficient. This could include anything from automating tasks that were earlier been manually handled. One such example is generating reports through software rather than spreadsheets or other paper-based processes.
Business operations can be streamlined and made more efficient through digitalization. Moreover, businesses can save time and money by adopting digital because digital information can be transmitted and stored more easily than analog information.
Digital Transformation
Now, let’s understand what is meant by Digital Transformation.
“The process of adopting emerging technology to streamline a company’s core operations and customer value propositions are known as digital transformation.” This all-encompassing strategy needs to be changed toward the culture, structure, processes, and governance.
Digital transformation is not another term used for digitalization and is much more than that. Digital transformation covers more than simply the process of digitalization; it also refers to the accompanying organizational change. Identifying which processes could be improved or replaced by digital solutions, then implementing those solutions into practice to maximize their impact, are the first steps in this transformation journey.
Digital transformation is the driving force that is much-needed for many reasons. Nowadays, customers expect businesses to provide digital solutions like online ordering and self-service, and they can quickly go anywhere else if they don’t find them. At the same time, new technologies like robotics, big data, artificial intelligence, and the Internet of Things allow businesses to enhance their operations and provide better customer service. Companies may adapt to these transformations and stay competitive in the market by implementing digital transformation.
How Digitization, Digitalization, and Digital Transformation are important for businesses?
For companies to benefit from digital technology, digitization is necessary. Data that has been digitized is easier to access and analyze. For businesses that deal with a large amount of data, like healthcare and financial institutions, this is especially crucial.
By using digital technologies, businesses were able to enhance their performance and processes. For instance, many businesses have put enterprise resource planning (ERP) systems into their workplace to streamline their operations and more effectively manage their inventory, finances, and human resources.
Digital technologies are used to develop new or fundamentally different business models, which is a step beyond digitization and digitalization. For instance, by leveraging digital technologies, Uber and Airbnb have established whole new businesses.
The three concepts of digitization, digitalization and digital transformation must be understood by businesses if they want to stay ahead of the curve. By investing in technologies to support these processes, companies can maintain their efficiency, flexibility, and adaptability toward the shift.
What’s happening in Digitization, Digitalization, & Digital Transformation?
Except for a few industries, like the energy and construction sectors, where data is still retained in an analog format, the majority of businesses today have digitalized their data. As far as digitalization is concerned, many businesses have implemented it in some capacity to improve their performance.
However, few businesses have made the switch to digital transformation, which requires a comprehensive strategy. Furthermore, a large number of businesses that have taken this path are having difficulty with it.
It is observed that the success rate for transformation is relatively very less. There are many reasons for this, some of them are a lack of comprehensive strategy, a lack of leadership commitment, and difficulties with implementation.
Conclusion
While approaching Digital Transformation it is recommended that companies use an outside-in approach focused on needs of the ecosystem and customers. Instead of just focusing on organisational efficiency while considering a digital transformation for your business, think about how you can add value for your customers and other stakeholders.
We hope that this article has helped gain more insight with Digitization, Digitalization, and Digital Transformation. If you are interested in transforming your business operations digitally with the best practice of ERP and CRM implementations, our certified consultants can guide you to make it happen.
