Digitization, Digitalization, and Digital Transformation: Getting the nomenclature right

As we are surrounded by digital technology, terms like “digitization”, “digitalization”, and “digital transformation” have become a part of our lives. Moreover, these terms got more attention as Covid-19 pandemic hit the world.

For example, the arrival of the pandemic accelerated digital transformation across economies, as reported by IMF. While these terms sound similar, they have different meanings. Businesses associate these terms with different goals and activities.

It is important to understand the differences between digitization, digitalization, and digital transformation to make the right decisions for your business. By understanding the differences, you can choose the right strategy to take advantage of digital technologies.

If you are confused by these terms, don’t worry, as this article will shed light on all your doubts. You can get a complete understanding of digitization, digitalization, and digital transformation in this article to decode the nomenclature.

What is digitization?

When you process information from its physical format to a digital format, it is called digitization.

The purpose of doing this is to convert a non-digital asset into a digital asset to be used by computers and help in automating processes and workflows. This results in creating business value in terms of data, which serves as a foundation for future business models. Some common examples of digitization that we already engage with on a day to basis are:

• Capturing data on MS Excel or Google spreadsheet from a handwritten note
• Scanning a newspaper cutout and converting it into a pdf file

What are the Benefits of Digitization?

Digitization offers lots of benefits, such as convenience and reduced costs. It can improve user experience and help businesses speed up operations. The following are the key benefits of this initiative.

Accessibility

Digitization enhances accessibility by enabling businesses to access data easily and conveniently. For example, after scanning and converting documents to a digital format like PDF, they are easily accessible from a common platform, that is the database of a company.

Accuracy

Saving data in digital format can provide greater accuracy compared to analog. It reduces human errors by eliminating the chances of making mistakes that could be made when handling information manually. Hence, digitization is important to ensure the authenticity of data.

Cost-effective

Choosing digitization offers cost benefits as your business can avoid expenses from managing physical copies and handling them manually. It can help your business save paper costs and reduce manual labor. Apart from this, storing a huge amount of data without requiring as much space as you need in physical copies is possible.

Preservation

It’s hard to keep physical copies stored for a long time. However, digitization can help preserve data for a very long time, even for many future generations. Hence, it is a long-lasting method for storing data.

Security

Physical copies can be easily stolen or lost. By converting data into digital format, it can provide enhanced security. Your business can leverage advanced data protection solutions and best practices to ensure the integrity and security of your data.

What is digitalization?

It is getting the most out of the digitization process to achieve digital business transformation objectives. Digitalization is often used synonymously with digitization, but at the core the concepts do differ. Unless the digitized outcome contributes positively towards the result, we should refrain from calling it a digitalization effort. No matter how closely related, they may sound.

While increased revenue, efficient business transactions, improved digital culture, increased employee productivity, etc. are some of the positive outcomes of digitalization, here are two of its most common examples:

• Uploading the employee feedback form on HRMS for assessment purpose
• Scanning and storing travel vouchers on the cloud and retrieving them in the future for audit purposes.

What are the Benefits of Digitalization?

Digitalization enables you to leverage technology to improve your business operations. It helps automate operations to streamline business processes and enhance overall efficiency. The following are all the benefits of leveraging digitalization for your business.

Improves Efficiency

Digitalization enhances business efficiency and productivity by automating processes. With automation, the overall time taken in a process is reduced and everything is streamlined, resulting in increased returns.

Enhanced Decision-Making

Another advantage of digitalization is better decision making. The implementation of technology in business processes helps you collect data that provides useful insights. For example, implementing CRM for customer service enables you to collect useful data that you can analyze to make better decisions.

Saving Costs

Digitalization can help businesses reduce costs and help them utilize existing resources better. It helps automate processes and minimizes the time and effort it takes in it. Plus, it also eliminates human errors. These benefits lead to significant cost savings.

What is digital transformation?

Digital Transformation is when you are trying to solve a business problem with the best possible technical means. For this, you must have a thorough understanding of the problem. The importance of digital transformation lies in the fact that it enables you to address issues using technical means and new technologies.

A word of caution here, digital technologies and their implementation are just one aspect of the entire digital transformation journey. Other notable elements are transforming people's mindset and the company's culture that needs to adopt the digital-new attitude. We also need to look at the business areas and the processes that govern them.

In a nutshell, digital transformation is adopting the mindset to solve problems using the best available technological solutions.

What are the Benefits of Digital Transformation?

There are many areas where digital transformation can play a decisive role in your company. However, the following are some of the most crucial changes that digital transformation can bring about.

Robust Operations

By infusing your legacy systems with artificial intelligence, machine learning, and predictive analytics, you increase your business processes' accuracy and fidelity. It also makes your business more resilient and mitigates any risk in the future.

Happy Customers

With digitization, you can deliver an exceptional customer experience transformation solutions by building a more user-friendly interaction platform for users. This leads to strong customer engagement and increases the probability of conversions.

Business Edge

En-route on your digital transformation journey, you automatically become a more dynamic and agile business entity than your competitors. You can explore markets that were not accessible earlier, and you can unlock new revenue streams that can further strengthen your brand's position.

Digital Culture

Digital transformation instills digital culture in your team members by encouraging them to learn and practice new advanced skills. They become more aware of the digital world around them and contribute more productively.

Data-Driven

If you want your organization to become more data-savvy, digital transformation is the way. It helps you optimize data collection, processing, and analysis for better decision-making. You are in a position to better understand market signals and get insights about changing customer preferences, and measure how your strategies work in real-time.

Digitization, Digitalization, and Digital Transformation: What is the difference?

Digitization is the conversion of analog assets and processes to digital. Digitalization is all about converting business processes using digital technologies to increase the business's efficiency and revenue.

A digital transformation is an approach to problem-solving through technology. It is more about people and their mindset than it is about technology.

The differences between digitization, digitalization, and digital transformation are summarized in the table below.

ConclusionThe use of digital technology is pivotal for modern businesses to deliver greater customer experience, to survive, and to ensure continuous growth. There are various paths to embracing digital technology – digitization, digitalization, and digital transformation.However, digital transformation is a long-term strategy that puts technology at the forefront. It is incorporated into the core culture of a business and results in a holistic transformation. No matter what strategy you choose, you need a reliable tech partner like Radixweb to accomplish your goals.With solid experience in serving businesses with innovative IT services, we are a truly reliable tech partner offering unmatched digitization, digitalization, and digital transformation services. Get the benefits of our expertise in the latest technology to give your business an edge over competitors with cutting-edge digital solutions.Contact us for more information and embrace the digital revolution.