Digitization vs Digitalization: What’s The Difference?

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Digitization, digitalization, and digital transformation are frequently used interchangeably, and it is critical to understand each notion.

Understanding the major distinctions between digitization and digitalization is critical when developing a company strategy.

The process of transforming information from a physical format to a digital version is known as digitization.

The practice of utilizing technology to enhance corporate processes is known as digitalization.

In a nutshell, digitization relates to information, whereas digitalization relates to processes.

This post will help you know the difference between these approaches and make things more apparent.

Digitalization Pyramid

What Is Digitization?

By definition, Digitization is the process of transforming information from a physical format to a digital version.

Gartner defines it as: “Digitization is the process of changing from analog to digital form, also known as digital enablement. Said another way, digitization takes an analog process and changes it to a digital form without any different-in-kind changes to the process itself.”

Digitization refers to the act of transforming anything non-digital into a digital representation that computer systems may utilize to automate operations or workflows.

It is extremely useful for archives to preserve historical information.

Digitized information is easier to store, retrieve, and distribute, and it is the focal point for businesses to get the most out of information.

In a digital enterprise, digitizing paper documents begins with scanning and converting them to a digital version, often PDF. This is frequently followed by the application of sophisticated methods (OCR) to allow computer systems to grasp the context of the document.

This digital format’s outputs will be the inputs to a workflow, a business process, or an enterprise system such as document management systems or enterprise content management systems.

When digitized data is utilized to automate processes and improve accessibility, it can result in increased efficiency; nevertheless, digitalization does not strive to optimize the processes or data.

Digitization is a labor-intensive process. It necessitates human work. It is a way to safeguard your most important papers, photos, and documents.

It is one piece of the puzzle, in order to get the most out of it, organizations need to leverage the power of effectively manage their digital information through the use of technological systems and define organization-wide information management procedures.

Below are some examples of digitization

  • The conversion of handwritten or typewritten text into digital form.
  • The conversion of music from an LP or video from a VHS tape.
  • Conversion of analog VHS tapes to digital data-containing CDs, DVDs, or Blu-Ray discs.
  • Using a digital signature instead of a wet signature.
  • The conversion of paper maps to digital scanned ones.

    Efficiency, dependability, predictability, and operational excellence are all important advantages of digitization.

What is Digitalization?

By definition, Gartner illustrates digitalization as the use of digital technology to transform a company model in order to improve revenue and value-added prospects. It is the process of moving to a digital business.

It incorporates the process of adapting old business models to new technologies and embraces digital technology’s potential to collect data, identify patterns, and make smarter business decisions.

Digitalization is used to describe the process of enabling, improving, and transforming business operations through the use of digitized data and technologies in order to transform how organizations conduct business and improve productivity.

These procedures and interactions may not be entirely digital, but they do rely on digital technologies more heavily than they did previously.

We are surrounded by digitalization. whether it’s through social media, street advertising, or smartphone apps. Digital data has become an essential component of our daily life.

Digitalization necessitates the digitization of information. Organizations cannot embark on the digitalization path unless they have digital assets and automation is one of the most effective ways to implement it.

The automated execution of operations undertaken without human oversight is referred to as automation. RPA, or Robotic Process Automation, is one of the most prevalent types of automation technologies.

One of the most benefit of automation is the ability to automate business rules. They are critical to the smooth running of any business. They set goals, provide job performance standards, monitor compliance, and help organizations automate operations.

Organizations all throughout the world are adjusting their operations to be digitally compatible. Many businesses have already converted or invested in new business models. Consider communication, music, ebooks, and online shopping. This change will not spare any industry.

It is no secret that businesses must continually change in order to stay viable. In our current digital world, organizations don’t have any choice but to embark on the digital transformation journey.

Organizations may run more effectively, save expenses, and boost production as a result of digitalization. In Summary, it is a matter of life and death for them.

In a nutshell, digitalization is the process of leveraging digitization and transforming your business processes for digital.

Digitalization Examples

Digitalization boosts efficiency and production while lowering expenses. It enhances rather than transforms an existing business process or processes. That is, it converts a process from a human-driven event or series of events to a software-driven event or series of events.

Manufacturing will be transformed by digitalization. But it’s not without its drawbacks. While any type of business transformation is difficult, McKinsey estimates that more than a third of businesses fail to digitalize.

In our digital world on average, industrial companies plan on investing 6% of their annual revenue on digitalization over the next five years.

Automotive

Changing the automobile industry from a fuel-guzzler to a software-driven vehicle (tesla). Their production is increasingly digitalized and mechanized.

Banks

According to McKinsey research, banks can automate up to one-third of their operations with AI/ML to save money and eliminate human error. COIN, a data-driven automation tool from JP Morgan Chase, employs a private cloud network and machine learning algorithms to evaluate complex documents.

According to an estimate, the platform can accomplish routine activities that took up to 360,000 hours in the past in only a few seconds.

Movies

In the movie industry, digitalization spawned entirely new business models. One of the most well-known instances is Netflix, a digital media company. The success of Netflix was due in part to digitization, but it also necessitated a digitalization strategy.

To put it another way, digitalization enabled Netflix to build its subscription-based model and then integrate it across platforms such as the internet, App Store, smart TVs, and more.

Digitization vs Digitalization: Visual Comparison

DigitizationDigitalization
DefinitionTransforming analog data to digitalUtilizing technology to enhance corporate processes
is known as digitalization
Related toInformationBusiness Processes
Examples
1- Scanning a paper document
2- Convert music to mp3
3- Convert wet signature to electronic
4- Converting a paper map to digital
1- Video conference call instead of physical meet up
2- Automating work certificate processes in businesses
3- Ability to use ATM to deposit cheques
4- Audio conferencing, chat, messaging
Benefits
1- Faster access to information
2- Reduced storage cost
3- Improved digital preservation & archiving
4- Ability for integration
1- Efficiency & productivity improvements
2- Improved transparency
3- Faster & better decision making
4- Improved customer satisfaction

What is Digital Transformation?

Although business executives frequently use the term “digitalization” to refer to both digital transformation and digitalization, the two are not interchangeable.

Digital transformation necessitates a much wider use of digital technologies as well as a shift in culture. People are more important than technology when it comes to digital change.

It necessitates customer-centric organizational reforms that are backed by leadership, driven by radical corporate culture challenges, and the use of technology that empowers and enables people.

The term “digital transformation” refers to a shift in business activity, model, and competencies in order to make use of newly accessible technology.

Organizations are undergoing digital transformation as they embrace new and creative business models based on technology advancements.

It’s the process of fundamentally changing anything utilizing digital technologies, and it refers to the use of technology and, perhaps, cultural shifts to better or replace what was previously available.

Digital transformation can help businesses grow into new areas, introduce new goods, and attract new customers. It also refers to turning digital data into actionable insights and subsequently transforming the way we do business.

Digital transformation is an ongoing process, not a one-time activity. It introduces new business models and alters the way businesses are conducted. It will go a long way toward ensuring that the end consumer is satisfied, which is the whole point of doing business.

Conclusion

Digitization and digitalization are parts of a digital transformation.

Digitization is concerned with events that have already occurred.

Digitalization is concerned with current events.

Digital transformation refers to events that will occur in the future.

What is Digitization?

Digitization refers to the act of transforming anything non-digital into a digital representation that computer systems may utilize to automate operations or workflows.

What is Digitalization?

The use of digital technology to transform a company model in order to improve revenue and value-added prospects. It is the process of moving to a digital business.

What is Digital Transformation?

It’s the process of fundamentally changing anything utilizing digital technologies, and it refers to the use of technology and, perhaps, cultural shifts to better or replace what was previously available.

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