Digitization (dig-i-ti-za-tion) and digitalization (dig-i-tal-i-za-tion) may sound similar and are often used interchangeably, but the reality is they are two separate concepts that accomplish unique goals.
Digital aspects have become interwoven into the steady rhythm of our lives, so much so that we often don’t even realize it anymore. We can go for hours with only our smartphones and limited human interaction without batting an eye.
Imagine a typical afternoon of running errands:
These scenarios all encompass digital transformation across numerous areas of business and various verticals.
Each digital touchpoint has a business behind it that is working to incorporate numerous digital aspects that contribute to transforming a process to be more ‘seamless’ to the end-user, whether through digitization or digitalization. Understanding these different versions of digital can quickly lead to confusing tongue-twisters.
In this blog, we’ll break it all down and discuss ways digital transformation can help optimize your business processes and benefit the future of your enterprise as a whole.
According to Gartner, digitization is defined as “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.”
Digitizing is when data is converted to a digital format but the data itself does not change. Digitization can have notes of nostalgia since many of the examples hearken back to past decades. Digitization could involve taking a photograph from an old-school album and scanning it to create a digital file, or converting your home movies from clunky VHS to MP4 video files.
The process of digitizing has changed the game in business environments, especially with the strategies required for companies to stay competitive in the current economic climate.
According to the McKinsey Global Survey of executives, participant companies have accelerated the digitization of their customer and supply-chain interactions, and even their internal operations by three to four years. This includes areas such as back-office, production, and R&D processes.
Here are two examples of digitization of business processes in action:
More and more fast-food and fast-casual restaurants are making the leap from analog person-to-person ordering to giving customers the digital tools to customize their orders and eliminate miscommunication opportunities. In-restaurant kiosks let customers easily place their specific orders, log in to access their favorite items for faster ordering, or input their rewards numbers to pay with points.
Now it’s time to understand digitization vs digitalization. One of the main differences between digitization and digitalization is that while digitization is about the transfer of data, digitalization is about optimizing the processes for data. Per the Gartner glossary, digitalization is “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.”
As the prevalence of digital transformation grows, examples of digitalization become more and more widespread.
Digitalization has sped up the development of new digital technologies such as cloud computing, artificial intelligence, and machine learning. Perhaps we are seeing the incorporation of digitalization the most in light of the shift to remote and hybrid work. According to a McKinsey survey of business executives, 85% of respondents said their businesses have somewhat or greatly accelerated the implementation of technologies that digitally enable employee interaction and collaboration, such as video conferencing and file sharing.
Offices now leverage programs such as Zoom for virtual meetings, Slack for chatting, and Asana for productivity. At Kenway, we use Microsoft Teams to manage operations like storing files in the cloud or hosting client meetings. Microsoft Teams usage has seen rapid growth in recent years, steadily progressing from 150 million active monthly users in 2020 to 320 million active monthly users in 2023.
Digitalization did not go away with the pandemic. A Gartner poll showed that 48% of employees will likely work remotely at least part of the time after COVID-19 versus 30% before the pandemic. This means that many companies will continue relying on digitalization to make their processes more efficient, simplify business decision-making, and improve business outcomes.
Digital transformation is the process of leveraging technology, organizational processes, and people to develop or enhance existing business models and revenue streams. Digitization and digitalization are essentially digital transformation’s supporting players.
In fact, several different platforms are implemented across enterprises to perfect and accelerate the adoption of a more digital-forward workforce. Salesforce is the ultimate example of a tool companies leverage to help them enable enterprise-level digital transformations. Salesforce comprises a suite of cloud-based applications that unify customer data into a single, shared view, turning information into insight.
As a Salesforce Partner, Kenway partnered with a leading financial services company to help them comply with new regulatory requirements by using Salesforce to implement firm-wide process automation.
The era of automation is here to stay, especially after benefits were realized when organizations were forced to shift to a digital environment in 2020.
Below are some stats that could help put this migration into a digital-forward world into perspective:
It’s crucial to understand the nuances between digitization, digitalization, and digital transformation.
Here are simple definitions of these terms for quick reference:
In summary, digitization and digitalization lay the groundwork for technological integration and operational efficiency, while digital transformation drives fundamental change, reshaping businesses for sustained relevance and competitiveness in the digital era.
Kenway recently worked with an industry-leading healthcare solutions provider to define and implement data transformation to support an improved future state. The client faced a worst-case scenario when it learned that the strategic partner it had leveraged to help collect and aggregate data was not only terminating its agreement but also becoming a direct competitor in just 12 months.
The client’s most significant obstacle was getting all the data from the existing solution provider and migrating that data to the new solution provider. Further complicating the situation, the existing data set had quality issues that needed to be addressed prior to the migration. Kenway delivered this digitally transformative solution:
A thorough understanding of these three terms is essential for their potential benefit to your company. Whether you need help with digitization, digitalization, digital transformation, or some intersection of all three, Kenway is here to ensure your organization navigates the digital landscape with expertise and optimal execution.
We address your digital transformation requirements by identifying the capabilities and services required to solve your business challenges–it’s never a one-size-fits-all approach.
Are you ready to accelerate your business processes? Connect with us to learn how we can help with your digital transformation needs.
Digital transformation is crucial for businesses to adapt and remain competitive in the ever-changing digital landscape of modern business. Whether pursuing simple digitization or complex digitalization, using the digital tools at your fingertips will push your organization to greater heights.
Digitalization can aid in customer experiences by simplifying processes for employees, therefore creating more space for employees to develop relationships and serve customers with their full attention.
In the world of modern business, digital transformation impacts every sector. A few to pay particular attention to are healthcare, banking, and IT.