If you've ever come across terms related to digital transformation and been in the dark about what they meant, or simply wondered what the difference is between digitalization and digitization, this collection of our most frequently asked questions should get you the answers you're looking for.
What is a digital transformation in business?
Digital transformation in business is when businesses leverage existing digital technology and deploy new digital solutions so they can be better at whatever they do.
This often goes along with centralizing existing technology, adding and scaling new technology, replacing processes, and changing systems so that they can better serve customers in a digital age (and cut costs and boost productivity while they’re at it).
What is digital transformation consulting?
Digital transformation consulting, or DTC, is when a consulting company helps senior leaders (usually C-suite) find and leverage digital solutions and digital strategies to help them better meet demands.
This usually includes three major parts:
- Finding vendors (e.g. we know we need a CSP, but we don’t know which CSP)
- Strategic consultation (how can we be better by using technology?)
- Finding solutions to serve customers with digital customer experience, and the operations that go along with that (we know our customers are online but we don’t know how to serve them that way).
What is digital change management?
If digital transformation and DTC tend to focus on technology, digital change management is the people involved. It’s the process of both implementing the changes you’ve so carefully orchestrated, and ensuring that key staff throughout your organization are both bought in and action the changes.
It’s also about changing how organizations think, so the framework of what’s possible shifts to reflect a new digital reality.
What is the meaning of digitalization?
Digitalization is when you use digital technology to improve your business. Specifically, it’s when you use digital tools to:
- Increase revenue
- Make processes more efficient
- Drive digital business
Digitalization is fundamentally about net new business or process creation.
For instance, a brick-and-mortar store opening an e-commerce platform is digitalization – it’s a net new digital asset, not an improvement over existing processes.
What is the meaning of digitization?
In contrast to digitalization, digitization is turning existing non-digital processes into digital ones.
For instance, instead of creating an e-commerce store (digitalization), digitization is using a cloud-based accounting system to replace a paper filing system. Same system, same process, different (and digital) tool.
There are two parts to this. First, it’s the process of turning an existing analog product or record into a digital one. For instance, turning a paper-based change approval into a digital one by scanning it into a PDF.
Second, it’s about the automation of business processes and workflows. For instance, when you take that scanned copy and use it to automatically kick off the change workflow.
Over time, these processes and workflows become completely digital – and thus, are digitized.
What is the digitization of records?
The digitization of records is digitization but on a much larger scale.
Essentially, digitization happens at an organization- or enterprise-level: one company can choose to digitize their processes and workflow and undergo the digitalization processes to expand their business without a broader ecosystem.
Digitization of records is when digitization (and usually digitalization too) happens at an industry or vertical level. It’s when a digital ecosystem and infrastructure are grown, and then records are digitized en masse to shift an entire industry.
A good analogy is Sweden changing what side of the road everyone drives on in 1967.
The value of the switch can only be captured if everyone does it all at once. Likewise, digitization of records is only feasible if everyone in the ecosystem participates.
For instance, if one small clinic has digital health records, that’s not especially useful because patients have to go to other labs, hospitals, and specialists to process that data.
But if everyone gets a digital health record, and there are digitalization processes afoot to change how people engage with digital records, and there’s digitization at an organizational level, then everyone benefits.
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