Digitization, digitalization and digital transformation, what are they and what is the difference between them?
With the advancement of technology, the world is moving into an increasingly digital environment. In this technological environment, we often hear three different terms: digitization, digitalization and digital transformation. All three are key to organizations adapting to the ever-changing business environment.
What is DIGITIZATION?
Digitization refers to the process of converting analog or physical objects into digital form with the help of digital technologies. An example of this would be document scanning, where text from physical paper is converted to PDF or other digital formats, which are then stored on a computer.
Digitization organizes information into units of data called bits. Analog information is recoded into zeros and ones so that computers can process, store, and transmit it. The process of digitization is the basis for recording data and is therefore an important aspect of digital technologies.
Over time, companies have adapted digitization techniques to improve the use and processing of data. For example, data digitization by scanning paper customer application forms allows the information to be stored on computers and ultimately processed to obtain customer demographics and insights. Digitization allows companies to transform data and leverage it to improve operations and increase revenue.
What is DIGITALIZATION?
Digitalization is the change of a company’s business model using digital technologies. In digitization, physical objects or information are stored in computers, but the process by which that data is used must not change. This is the key difference between digitization and digitalization. With digitalization, digital technologies and digitized data are used to enable or improve work processes.
While digitization focuses on converting and recording data, digitalization is about developing processes and changing workflows to improve manual systems. An example of this would be using digitized customer data from various sources to automatically generate insights based on their behavior.
In business, digitalization is used to achieve various goals, such as increasing operational efficiency, reducing costs, reducing human error, and enabling data analysis. Companies can create new revenue and opportunities to create value through digitalization.
An example of this is banking. From requiring in-branch transactions to send money to other recipients, banks have developed online banking systems that enable real-time transfers without the need to visit a bank. Individual data in application forms is digitized and used to enable easy transfers within accounts. It enables an easier workflow for both the organization and its customers, which increases business efficiency.
What is DIGITAL TRANSFORMATION?
Although digitization and digitalization are not linear processes, they serve as steps on the road to digital transformation. The main goal of digital transformation, however, is the integration of technology into most, if not all, business processes. In digital transformation, digital technology is integrated into all areas of business, with the aim of significantly improving the efficiency of workflows and creating value for customers. Digital transformation enables businesses to adapt to ever-changing industry trends and landscapes. So it’s not about using the latest or most complex technology. The human factor and the creation of value, or in other words, digitalization for people, is what’s important here.
The trend of digital transformation has critically changed the way companies do business. Digital transformation includes digital technology in all areas of their business in order to improve or completely create new value for their customers. Sometimes new businesses develop entirely from digital transformation. For example, Spotify has removed the need for collecting CDs. Now, with just a few clicks of a button, you can play your favorite music anytime, anywhere.
An important aspect of digital transformation is that it can be unique to each organization. Businesses need to know which technology is right for them and choose which areas they should optimize to drive growth.
If you are considering digitalization or digital transformation, don’t hesitate to contact us using the form here. We will happily to listen to your challenges and propose possible solutions.