These three terms- digitization, digitalization and digital transformation have created a lot of confusion over the past decade (Probably longer. I’ve lost count.). As their meanings have slightly evolved over time, people are consistently using them interchangeably and oftentimes incorrectly. Obviously, it makes things clearer when you present the word correctly and are able to articulate the words meaning so everyone is on the same page, this is especially important when you are relating it back to your business. So what do all these terms mean and why are they important when it comes to discussing your overall business strategy and path to finding long term success?
Gartner’s IT Glossary states that, “digitization is the process of changing from analog to digital form” – a definition few would disagree with. Digitization is converting something non digital into a digital representation, and allowing computer systems to then use it for various use cases. Digitization within a business lays the foundation for business cases that leverage data, so it would be considered an enabler to creating value within the business which needs data, but it holds no true business value in itself.
Digitalization takes on the actual automation- this can be shifting work roles or transforming business processes in a general sense. It refers to taking the digitized data we discussed earlier and using digital technologies (e.g. APIs) to enable, improve or transform business process. That means that digitalization assumes that digitization in some form has taken place.
Digitalization offers true business value when implemented correctly. It offers improved data transparency, increased process efficiency, reduced costs and overall less manual effort on tasks that can be automated to name a few- thus allowing workers to focus more on important tasks at hand. Organizations may take on numerous digitalization projects, but this does not amount to a digital transformation.
That is the
million dollar billion dollar question. Digital transformation is not simply a series of digitalization projects, but the ability of an organization to tackle continual change with ease- to the point where it becomes a core competency within teams, allowing the business to become customer-driven end-to-end. Digitalization initiatives will certainly be a part of the overall digital transformation, but should not be confused as the transformation itself.
The digital transformation organizations take on then becomes their digital journey, as change is constant so the ability to continually innovate with such agility never truly ends. The transformation itself is the profound change of business operations, competencies and business models allowing the organization and individuals to fully leverage digitalization efforts. Digital transformation itself is not about the technology then, but the customer.
Businesses are all at different stages of their digital maturity. Some are focused on driving efforts to solve siloed business problems with individual technologies. Others are more mature and focused on integrating digital technologies and evolving their business in the service of transforming its overall work. What stage are you at and what is your plan to get to the next level? Contact our team to start a meaningful conversation about your digital journey.