As companies embrace the era of digital revolution, terms like digitization, digitalization, and digital transformation are now commonplace. But understanding the distinctions between these concepts can be confusing. What is the difference between these three concepts? To help answer the question, we’re diving into the definitions, objectives, and mechanisms of these approaches.
The digitization of processes has become increasingly popular companies over the years.
Definition and objectives of digitization
Digitization leverages technologies and digital tools to enhance or redefine business processes and models. Its primary objective is to facilitate opportunities across all sectors by:
- Reducing the need for physical movement
- Automating processes
- Transforming business processes and models
- Enhancing the customer experience
- Creating new services and products
- Improving overall efficiency
All in all, digitization enables companies to save both time and money.
Concrete examples of digitalization in different sectors
All sectors of activity are affected by digitalization. For example, a press newspaper going digital, offers digital versions of its articles, videos, or podcasts to subscribers online. This leads to a reduction in the demand for paper newspapers, but could increase the numbers of readers online.
Internet banking is also a product of digitization. In the automotive industry, digitalization uses artificial intelligence (AI) to design cars over tedious, traditional methods.
Digitization or digitization
Digitization, and even dematerialization, is a transformative process that presents the opportunity to significantly decrease time-consuming manual tasks.
Definition and objectives of digitization
Digitization refers to the conversion of analog data into digital formats. This process involves utilizing applications, software, and other IT solutions to transform images, videos, texts, and audios into digital data. Once the data is digitized, it becomes simpler to archive, access, and share. One of the primary benefits of digitization is the ability to find and access information from any location worldwide.
Illustration of digitalization in various professional contexts
Digitization offers various benefits, such as the possibility to digitize and store data in formats such as PDF, Word, and Excel documents. It simplifies the search process for electronic books and enables the conversion of technical books into explanatory videos, enhancing the comprehension of information and concepts. And also thanks to digitization, traditional paper-based letters were replaced by email communication.
We talk about digital transformation when a company integrates different digital technologies into its operations.
Definition and objectives of digital transformation
The main objective of digital transformation is to integrate technology into almost all business operations. This digital process aims to improve the efficiency of business workflows in order to create added value for customers.
Success stories of digital transformation in different industries
Having become an essential step in the development of all sectors of activity, digital transformation represents an opportunity to improve company responsiveness and performance. Here are examples of some companies that have successfully carried out digital transformation:
- Nike, the renowned sports shoe brand, achieved digital transformation by digitizing its processes.
- The Lego brand embraced digital transformation by developing mobile games, applications, and films.
- Starbucks, the coffee giant, implemented digital transformation through the creation of a mobile application for online ordering and automation of manual tasks.
Other prominent brands like BMW, Domino’s Pizza, and BNP Paribas have also accomplished successful digital transformations.
Differences between digitization, digitalization, and digital transformation
The three concepts have different objectives, in scope and results. The method of integrating these three approaches is also different.
Context and scope
As mentioned above, digitization refers to the process of converting physical information into digital data. It creates the opportunity to automate manual business operations using digital technologies. On the other hand, digital transformation aims to revolutionize the entire functioning of a company through the integration of digital technologies. This transformation is intended to enhance growth and competitiveness.
In terms of their respective scopes, digitization is limited to handling analog files, while digitization is concerned with specific business processes and operations, whether isolated or interconnected. In contrast, digital transformation has a broader scope than the first two concepts. It has a comprehensive impact on the entire company, leading to profound changes in business models, day-to-day operations management, and communication regarding products and services.
Objectives and results
These three approaches differ primarily in their specific objectives. Digital transformation takes a more global and strategic approach, leveraging digital technology to drive transformations across all aspects of the business. Dematerialization focuses more on data conversion, while digitalization aims to automate processes to enhance the customer experience. Once files are stored digitally, they can be processed in a more secure manner.
Digitization helps to streamline processes with the aim of improving the customer experience. It also facilitates a more holistic approach to situations, leading to improved decision-making capabilities.
The implementation of dematerialization in companies typically does not require any organizational changes. However, adopting digitization may require adjustments in both the organizational structure and corporate culture to promote the use of digitized technology.
Incorporating digital transformation into your company’s marketing, digitization, and development strategy involves making changes to business models and organizational practices. This means developing digital data-driven skills to enhance the value of your company’s services on a broader scale. Digital transformation also affects internal processes and creates a shift in corporate culture, which currently emphasizes placing the customer at the forefront of all communication and commercial strategies.
Strategic choices: digitization, digitization or digital transformation?
When integrating any of these three approaches, it is important to consider their specific factors. For dematerialization, the main challenge lies in resource limitations. To overcome this hurdle, it is necessary to identify the areas within the company that require dematerialization and prioritize them accordingly. By gradually allocating resources to the most critical areas, costs can be minimized, and partnerships can be leveraged to their fullest potential.
The challenge that companies generally face in implementing digitalization is resistance to new technologies. To avoid this, train your employees and collaborators to use the new digitalization tools.
Integrating digital transformation into a company can create various problems, including:
- Inability to manage the magnitude and speed of transformation
- Data insecurity
- Bad digital strategy or rather poor leadership
To address this, establish a dedicated team to support the company’s transformation process. Conduct an audit to assess the current state of the company and determine the feasibility of the transformation project. Create a roadmap to ensure effective monitoring of the various stages involved in implementing the company’s digital transformation.
Digitization is the first step before progressing to digitalization, which involves leveraging digital technologies. When implemented on a broader scale to drive the company’s development and communication strategies, it becomes a digital transformation. Each of these concepts holds significance in today’s business landscape. To truly harness the benefits of each, be sure to develop a robust strategy for adaptation and decision-making.