How do you distinguish between digitization and digital transformation? Many people confuse the two but learning and understanding the difference is not difficult. Let us break it down into basic terms and examples.
What is Digitization?
The process of transferring information from a physical to a digital format is known as digitization. It entails translating non-digital data into a digital format that can be used by computer systems to automate processes or workflows. Digitization allows the creation of business value, which necessitates the use of data. It assists in laying the groundwork for data-driven business use cases.
Consider the following examples:
- Scanning a paper document and storing it as a digital document, such as PDF, on the computer’s hard drive.
- Taking handwritten notes and entering them into an Excel spreadsheet.
- Converting analog VHS cassettes to digital data-containing CD, DVD, or Blu-Ray discs.
What is Digital Transformation?
The transformation of business practices, processes, goods, and models to fully exploit the opportunities of emerging technology is known as digital transformation. The key aim is to increase productivity, mitigate risk, and find new revenue streams. Doing things in a modern (digital) way is what digital transformation is all about.
Consider the following examples:
- Reading data from an online PDF or transferring data from a Google Sheet into a data-analysis app or system. The aim is to give us information that will help us develop new products or enhance customer service. Since this mechanism is automated, it does not necessitate a lot of human interaction. As a result, productivity is improved, costs are reduced, and sales can increase.
- Internet movie streaming. Collecting and analyzing data from customers, as well as preparing personalized recommendations, deals, and commercials.
What is the difference between digitization and digital transformation?
The term “digitization” refers to the integration of technology into an existing enterprise. Doing things in a fresh, modern way is what digital transformation entails. Digitization is a subset of digital transformation. Although business leaders often use digitalization as an umbrella term for digital transformation, the terms are very different. Digital transformation necessitates a much wider acceptance of digital technologies as well as a culture shift. People are more important than technology when it comes to digital transformation. It necessitates customer-centric organizational improvements that are backed by leadership, guided by radical corporate culture challenges, and the use of technology that motivates and allows employees.
It includes all aspects of businesses like customer awareness and touchpoints, growth strategy, enterprise mobile apps, process digitization, worker enablement, results, new business models, and more. It opens up a whole new market, as well as new consumer and company opportunities.
Why Differentiating the Terms Matters?
When addressing trends where the language changes as quickly as the technology, nomenclature matters. For example, ‘digital transformation’ was once referred to as ‘digitization,’ and ‘digitalization’ was once referred to as ‘computerization.’
Business leaders who believe they can digitize a business or digitalize enough processes to digitally transform it are misinterpreting the terms and losing out on opportunities to change, gain a competitive edge, adapt to customer and employee needs and demands, and become more agile.
However, the fact is that only a small percentage of companies have successfully implemented digital transformations. Just 25% of companies had turned into digital enterprises, 41% were on transformational journeys, and 34% spent more time talking about the trend than acting on it, according to a global survey. It is worth noting that 85 percent of executives believe that digital sophistication is key to their company’s success. The gap between understanding digital as a strategic necessity and effectively executing a transformative plan shows that many executives are unsure how to capitalize on the possibilities that digital presents for individuals, processes, and technology.
The Wrap Up!
The process of transforming information from an analog to a digital format is known as digitization. Digitalization refers to a company’s use of this process to boost business, generate revenue, or simplify certain operations. Digital transformation refers to the end-product of this operation. On the path to becoming a digital enterprise, digital transformation necessitates digitization and digitalization.
The Digital Age is only now beginning to alter the way businesses work. There will be even more advances and new words to learn and appreciate as time goes by. The twenty-first century brought in a new age of technology, which has been reshaping daily life, facilitating obsolete systems, and spawning entirely new business sectors.
Is your business digitizing its information? Is your company being challenged by digital transformation considering that everything is now online? Are you interested in digital transformation? MIMO keeps up with these changes and has extensive experience in its successful implementation. We can assist you in digitizing, digitalizing, and ultimately digitally transform your company.