Table of Contents:
- What is Digitization
- What is Digitalization
- Digital Transformation in Business Operations
- Notable Case Studies: Netflix, Adobe
Plenty of words sound alike — there, their, and they’re; by, buy, and bye; and aisle, isle, and I’ll — yet have entirely different meanings. While digitization, digitalization, and digital transformation don’t all hit your ears the same, they’re close enough to cause confusion. By taking a moment to sort out digitalization vs digitalization, you stand to gain significant understanding in managing the scope and potential value of each.
While digitization merely means transforming analog data into a digital form, digitalization focuses on improving processes and automating workflows to increase efficiency and reduce costs. Digital transformation uses digitized data and several layers of digitalized systems to create a competitive advantage, enhance innovation, and encourage agile cultures and new business models.
Digitalization vs Digitization
Digitization is a super simple concept. When you scan a document, you are digitizing it. You’re converting an analog item to a digital version that uses zeros and ones (aka bits) to create sequences of coded information (aka bytes).
Digitalization uses digitized items to enhance business operations and experiences. If digitization is converting data to a digital form, digitalization is transforming that data into improved business processes and systems. Digitalization of data cannot take place without digital information.
When a company inserts digitalized processes into most or all aspects of its organization, it undergoes digital transformation (DX). DX depends on digitalization, which requires digitization.
One way to think about the differences in these concepts is by using a past, present, and future lens. In this view, digitization is the past because it does nothing beyond changing the format of something already existing. Representing the present, digitalization uses tech and tools in day-to-day operations. Digitalization also partially impacts the future since it can reduce costs and improve efficiency, but its outcomes are greater when used strategically throughout several layers of a business, which is digital transformation.
What is digitization?
Digitization converts analog information into digital form. Also known as digital enablement, it organizes information into bits and bytes using a binary system of zeros and ones. Data in a digital format can be processed, stored, and transmitted through the use of digital technologies.
Examples and Applications
- Scanning paper documents into PDFs
- Converting music from CDs to digital files
- Digitization of media such as online newspapers
- Developing an electronic map from a paper map
- Creating a computer model of a 3D object using design software
Benefits
- Enhances accessibility and preservation of data
- Increases efficiency and accuracy by creating a single source of truth
- Improves cost-effectiveness and convenience
- Allows for easier collaboration
What is digitalization?
Digitalization is a strategic process that fundamentally changes daily workflows and systems by using digitized data and technology to improve workflows and operations. The key difference between digitization vs digitalization is that the former is merely about creating data, whereas the latter uses the data with technology.
Examples and Applications
- Migrating to cloud-based computing and storage systems to improve data management and access
- Implementing digital tools and automated workflow systems to improve manual business processes and enhance communication
- Using CRM systems, e-commerce platforms, and digital marketing strategies to elevate customer experience
- Employing ERP systems to house and store data and create a single source of truth
Benefits
- Transforms operations for improved efficiency and reduced costs
- Minimizes human errors and time spent fixing them
- Simplifies data management and increases visibility for better decision-making
- Aids in insight generation based on real-time customer behavior data to then help personalize interactions and increase satisfaction
- Boosts innovation for the creation of new value propositions and revenue streams, leading to greater profitability
- Improves sustainability and reduces carbon footprint
The Digital Shift in the Business World
Digitization is a key component of the Digital Revolution, aka the Third Industrial Revolution. This period was all about computing, and this process was necessary to meet the increased demand for data storage, processing, and transfer. From just 1986 to 2007, our storage capacity went from 99.2% analog to 94% digital. This made things like home computers, the Internet, and smartphones possible.
The increased use of digital data mirrors developments in new tech, with artificial intelligence, machine learning, and cloud computing all coming about in recent years. Due to such rapid changes, the executive chairman of the World Economic Forum, Klaus Schwab, introduced the Fourth Industrial Revolution as a distinct new period due to its “velocity, scope, and systems impact.” This period marks a time of transformation so rapid it’s exponential rather than linear pace and so disruptive that it impacts almost every industry.