The Three Amigos: Digitization, Digitalization, And Digital Transformation
As the hype around digital transformation continues to persist, the terms ‘digitization’ and ‘digitalization’ join the fray, increasing the extent of hype while adding confusion.
Many people have begun to conflate terminology either out of ignorance or for their benefit, which creates confusion, because suddenly we are talking about different things but calling them the same. Some have started lettering digitalization as digital transformation to appease management, get a project approved, or make a procurement.
The three terms have distinct meanings depending on which authority we are listening to.
Digitization: The Straightforward term
Digitization is a process of converting analog information into digital format by encoding them into zeros and ones that describe a discrete set of points so that computers can store, process, and transmit such type of information. In simple words, digitization is about converting something non-digital into a digital representation or artifact.
According to Gartner’s IT Glossary, “Digitization is the process of changing from analog to digital form”.
There are many examples of digitization within the modern-day world, as there have been for many decades.For example, a user enters personal info into a mobile app. The mobile app encodes this info into a discrete series of symbols and sends this info to the application that will push the info into a backend system or database where it gets decoded and the data is then accessible for other computer systems and use cases.
Nevertheless, of what kind of non-digital content you’re working with, what defines digitization is that you’re working with information, and ensuring that it’s been converted into a digital format.
Although digitization has no business value of its own it lays the foundation for business cases that leverage the data i.e., it enables to create business value, which needs data.
It is important to recollect, however, that it is the information you’re digitizing, not the processes — that’s where digitalization comes in.
Digitalization: Fraught with Ambiguity and Confusion
‘Digitization’ and ‘digitalization’ are two conceptual terms that are closely associated and infrequently used interchangeably in a broad range of literature.
Digitalization refers to enabling or improving processes by leveraging digital technologies and digitized data. That means that digitalization presumes digitization as described in the previous section.
Moving from sending physical letters via the postal service to using email or online web chats, or from having in-person meetings to using online video conferencing tools all comes under digitalization.
While digitalizing a business, a small amount of digitization also occurs, the information that was once stored in a non-digital format, is now been converted into digital form, so we can say that these two concepts are closely related and go hand-in-hand with each other.
The digital business that is digitalized is generally an integrated mix of digital and physical activities, across many different channels and formats.
Some of the business activities may get automated because of digitalization, production and manufacturing lines or equipment monitoring, while others require human involvement with a greater reliance on digital technology, such as online chat tools or social media management.
Digitalization requires retraining of employees, so that they are very well versed with using new technologies and digital processes, or to reallocate them into new activities and processes within the business.
At the end of the day, digitalization builds up a business that has digital information at its core.
The global health crisis linked to spread of Covid-19 has made tremendous structural change to the way the businesses, government and citizens have made certain services available and used them, causing everyone to push the accelerator on digital transformation.
A recent study at McKinsey, the current level of computer-based interactions with consumers is far ahead of the trend expected by 2023.The companies have evolved their products partially or fully digital in order to be competitive in the marketplace. Digitalization has also helped people in daily aspects of life, leading workers, and students to carry out their work remotely, which has resulted in reduced mobility and an increase in online sales.
Digital Transformation: Disrupting the Core of a Business
Digitalization refers to the material implementation of technology. This is quite different from digital transformation, which is intangible by itself.
Digital transformation is the overall strategy in which a business model can be changed. It basically modifies the core of enterprise operations in order to disrupt or generate a higher impact on clients and workforce. There are several digitalization processes that can accomplish this transition.
Talk about digital transformation! With everything from pizza delivery to childcare is now available remotely , customers are expecting more and more companies and industries to embrace digital as their primary means of doing business. For service departments, that means greater expectations for 24/7 problem-solving on the customer’s channel of choice.
In the final analysis, we digitize information, we digitalize processes and roles that make up the operations of a business, and we digitally transform the business and its strategy. Each one is necessary but not sufficient for the next, and most importantly, digitization and digitalization are essentially about technology, but digital transformation is not. Digital transformation is about the customer.
