Did you know the differences between digitization, digitalization, and digital transformation? Many people confuse them with each other. Sometimes even interchangeably, which is a mistake. In fact, those three terms have different meanings. In this article, you will get the answers in simple explanation.
What is digitization?
Digitization is the process of converting information from a physical format into a digital one.
- Scanning a paper document and saving it on computer’s hard drive as a digital document.
- From using paper to write and see the data to processing them up in an Excel spreadsheet.
What is digitalization?
Digitization and digitalization are closely related. They are often used interchangeably, but in practice, they have two different meanings.
The term of digitalization refers to the use of digital technologies and data to improve existing business processes and create a digital culture where digital data is at the core process.
If companies are in digitalization stage, they are able to change their business processes to be more efficient, productive, and profitable. Digitalizing a business is a step forward into a digital transformation.
The example of digitalization within a company is uploading data or information to the cloud and sharing it with many colleagues, so that it can be accessed and viewed simultaneously, then be analyzed for business purposes.
What is digital transformation?
Digital transformation is the transformation of business activities, processes, and models to fully leverage the opportunities of technologies. The main goal of digital transformation is to improve efficiency, manage risk or discover new opportunities.
The example of digital transformation is using applications or systems to analyze data. The goal is to get new business insights to develop products and services, also improve customer service strategy.
These processes do not need a lot of human interaction because it is automated by the system. As a result, it improves efficiency in time and costs, and may lead to increased sales.
So, what is the difference between digitization, digitalization and digital transformation?
Digitization is the process of converting information from a physical format into a digital one, such as paper minimization and resulting in cost reductions. If a company uses those processes to improve business, create revenue or simplify some business processes, then it is called digitalization. The results of digitization and digitalization process are called digital transformation.
Digitization and digitalization are essential steps toward digital transformation because digital transformation requires a much broader adoption of digital technology and company cultural change. In addition to the broader adoption of technology, digital transformation also requires more contribution from people and strategy.
It requires organizational changes and leverages technologies that empower employees. People, technology and business strategy are working together to get better business outcome. Therefore, you need a successful stage of digitization and digitalization in order to achieve a successful digital transformation.
So, after reading this article and knowing the differences between digitization, digitalization, and digital transformation, can you identify which stage is your company at? Is it at digitization, digitalization or digital transformation?
PhinCon, as an IT solutions and services provider company in Indonesia, is committed to always innovating and keeping pace with digital business world. We are ready to help you to digitize, digitalize and finally digitally transform your business. Reach us at [email protected] for further information.