The Difference between Digitization and Digital Transformation

I have seen many businesses say they have embarked on digital transformation whilst 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’s talk about Digitization: It is simply doing the same things, differently.

To digitize is to convert analog data into digital form. If you scan physical papers into electronic files, convert 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 such as completing application forms by hand to entering data directly on an 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, Digital Transformation: The transforming of business activity with technology. Becoming digital is a totally different exercise from digitization. Digital Transformation (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. An example of this is moving from snail mail to real-time social media or chatbots.

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 new business models and will change the way business is carried out. It will go a long way towards satisfying the end customer, which is the very purpose of being in business.

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