Difference between Digitization and Digital Transformation
Updated: Jun 14, 2020
I have seen many businesses saying they have embarked on digital transformation while in reality, they have just digitized some of their processes. There is confusion over the two terms, Digitization &Digital Transformation.
The two terms are often used interchangeably when their actual meanings are totally different. In fact, they point to two very different ways of responding to disruptive technology.
Let me talk about Digitization: It is doing the same things, differently.
To digitize is to convert analog data into digital form. If you scan physical papers into electronic files, converted typewritten text into a digital form, switched from cassette tapes to MP3 files, or moved from old style camera film to digital photos, then you have digitized your data. It also means automation of manual processes like filling any application form by hand to entering data directly on digital media like iPad or web portal.
We now browse the internet for information, take pictures with our smartphones, and send emails from our laptops. This is digitization.
Digitization has made communication faster and easier and opened up new channels for real-time information. In the industrial sectors, digitization has involved the application of new technologies to existing business models to make them operate better. Digitization is doing what you have always done, but using technology to make it more efficient. The business model does not change, but operational efficiency is improved.
Now let us talk about Digital Transformation: It is transforming business activity with technology. Becoming digital is a totally different exercise from digitization.
DX is the process of changing existing business models with new digital technologies like APIs, Analytics, Mobility etc. It goes deeper, creating new strategies and processes which lead to a new and better way of providing value for your customers, doing things faster, easier, and smoother. E.g. moving from snail mail to real-time social media or chatbot. Businesses can use DX to expand into new markets, offer new products, and appeal to new customers. It is the process of moving to a digital business.
DX also means using the data collected from digitization for actionable insights and then changing the way we do business.
Digital transformation is not a one-time action, but a continuous process. It brings in the new business models and it will change the way business is carried out & it will go a long way in satisfying their end customer, which is the very purpose of being in the business.