Understanding the difference between Digitalization, Digitization & Digital Transformation

One of the reasons these three-D words – Digitalization, Digitization & Digital Transformation – are used interchangeably is that the words appear so similar to one another. However, each of these words embodies different meanings, and the distinction must be understood by one and all.

Let’s understand the three terms in-depth here.

  1. It all started with Digitization. Before Digitization, everything was manual, analog, and physically handled. When Digitization happened, data no longer exists on paper – it exists as digital bits. So, it all started with transforming analog data into digital data, and computerization was the key to achieving the same.
  2. Digitalization was the next to follow as businesses adopted Digitization, the era of automation set in into the commercial world. That is what is called digitalization. It is a method of applying the latest digital technologies to automate processes and systems.
  3. Digital Transformation is the third step in the process. Automation was not the end of the process. The digital transformation uses digital technologies to enhance business entities’ processes, systems, organizational culture, performance, productivity, and experiential customer experiences. Digital transformation today has become a necessity for organizational existence and success. Digital transformation has often been termed as a mindset rather than a process or methodology. Transformation needs to be accepted by the people working in the organization and take it forward to the next level.

Understanding the three terms using examples

  1. Digitization – before Microsoft introduced Excel, most of the data were captured manually on paper and files. Excel was a step forward and a perfect example of Digitization. Similarly, scanners have existed for a long time, but when the scanned document could be saved as a PDF, it was a move for the organization towards Digitization.
  2. Digitalization – one of the best examples of digitalization is cloud computing, where information is saved and shared via cloud systems by modern businesses. Take the case of Google sheets – it is almost a replica of Excel but in the cloud.
  3. Digital Transformation – earlier companies, use to have big server rooms with their people working on LAN. Now, the servers are no longer on the premises; they are mostly on the cloud. The shift from the physical area to the cloud model could not happen in a day. Nor was it a process that could happen just by involving the senior management or the company’s owners. The entire task force and workforce had to be trained and educated on the need and the associated benefits. Thus, it needed a change in each person’s thought process, which is why it can be rightly called Digital Transformation. Earlier, e-commerce existed as a website-driven method – today, it is an app-driven process where customers can instantly open the app and place orders within minutes. They are given recommendations based on their interest, earlier purchases, etc. It is all being done with the help of intelligent technology and can be aptly termed as Digital Revolution or Digital Transformation.

Summarizing the difference between the three D’s

DigitizationDigitalizationDigital Transformation
Analog to digital– using the latest tools to automate processes.– shift in mindset for enhanced customer experiences.
Combines manual with computerizationPartial automationEnd-to-end automation

Are all the three required? These terms denote a step towards the digital age that we are currently living in. they are all integrated with one another and cannot have a stand-alone existence. And, together, they can create wonders helping optimize processes and make them more productive. If your business is in the phase to enter either of the three, get in touch with iBoss for their technical expertise and professional support.