People often get confused with the terms digitization, digitalization and digital transformation. They sound similar but in application, they are slightly different.
By Kushagra Verma
I have always been confused about where, when and how to use the words digitization, digitalization and digital transformation until I met up with an Associate Professor who explained the technical terms to me.
The professor started by asking me this simple question— Have you seen any business that embarked on digital transformation?
I told him that I had seen many Sir, I explained to him that digital transformation is the use of technology to change the business model and to provide an avenue for generation of revenue and value producing opportunities.
He merely said “This is a shallow definition of what digitization is, and nowhere can digital transformation be explained this way”, he also added “Changing something to digital, is totally a different exercise from digitization.”
The term digitization refers to taking information represented by a continuously variable physical quantity and integrating this information into positive and negative so that the computer can store and process it.
Digital information is in the form of either 0 or 1, often referred to as positive and negative, which are also known as bit.
Digitization makes communication more comfortable and faster in the industrial sector. Digitization involves the use of new technologies to make existing business models quicker and efficient.
In a nutshell, digitization refers merely to transforming a piece of information from analog to digital (computer readable). Thus, regarded as a critical element of data processing, storage, and transmission. It allows information in all kinds of formats to be carried with equal efficiency.
Digitization is mostly used when different information such as text, image or voice are converted into two number system, “1” and “0” (Binary Code).
Examples of digitization include scanning of analog phases like a digital photo or recorded videos into a computer and the creation of a 3D model of audio and object surface.
Digitization in business means anything digital from an increased business internal productivity to streamline training, document processing, and on-boarding — just anything to make sure that your organisation is technologically oriented.
The advantage of this is the speed and accuracy in the format which this information can be transmitted.
A common misconception is that term digitization is the same as digitalization.
To digitize something is to convert it from one format to another. i.e. From an analog format to digital formats, such as scanning a photo and having a digital copy in a computer.
So, in a nutshell, digitization applies exclusively to analog materials while digitalization applies only to born-digital materials like a Microsoft Word document which is saved as Docx file.
Digitalization becomes more complicated because of the rapid change in communication. The format used to save a file ten years back may become obsolete now, our computers may not support the features and converting an outdated file to a newer one might be expensive or almost impossible to afford.
Digitalization changes people and restructures our day-day activities. Acquisition of these skills increase our regional success, reshapes our individuality and shift the phase of our industry.
One of the most critical elements of digitalization is “Mechanization” which transform your entire business process and also increases efficiency and data transparency.
These two terms are mistaken to be the same while in reality they both have a different meaning and point to two different ways of responding to technology.
As earlier explain to digitize simply means to convert analog data into digital form. This can be informed of switching cassette tapes to MP3 file and scanning writing document into electronic files. While digitalization is using technology to make what will make the work more efficient and improved accuracy and detailing, without changing the business model
It is the concept of using digital technology to solve traditional problems.
In a nutshell, this refers to the ideology reaching a digital maturity, when it is affecting the business and the entire society such as the government, medicine, and science and so on.
The term digital transformation has been the course of discussion for experts, government officials and cooperate executives. This concept is gradually capturing the business industry and highlight the need to introduce a new business model and strategy by professionals and developers who want to build a successful career in the business industry.
The superficial revolution of business activities and business models to sufficiently influence the opportunity of digital technologies is what is often seen as digital transformation. This transformation also involves the use of digital technologies and changing the business process.
According to research by McKinsey, digital transformation is in progress and proceeding in a different phase from everywhere in the world. Europe is at the moment operating at 12% digital potential, USA is operating at the rate of 18%, inside Europe Germany operate at the rate of 10% digital potential while the UK operates almost as far as 17% digital potential.
Digital transformation is the concept behind digitalization and requires technical know-how of an engineer capable of operating in different system level and focusing on transforming the customer experience, operational process, and business model. A wise man once said “Failing to plan is Planning to fail”, a company that fails to plan, focus and apply vision for the digital transformation falls short of expectations and hardly survives the ever-increasing competition and become irrelevant.
Digital transformation changes the cooperation of customers and their expectations. This process gradually brings about the need to switch among service providers. Any significant change in this transformation requires an effort and breaking away from the comfort zone.
Significant changes bring explore new opportunities and the dispute surrounding digitalization has, therefore, gained increasing importance for politics business and social issues and has gained ground in political issue on community development and new policy in practical business approach.
So… To sum up, we can summarise by saying that:
Digitization is the utilization of digitized device and act of moving from analog to digital, while digitalization uses a digital device and result in more beneficial process and the planned application of technology to achieve to an improved business model; and digital transformation is a continuous process that brings in a new business model and changes the way business is carried out.
The author, Kushagra Verma is member of Marketing Team at ESDS