The issue of digitization, as the evolution of digitization and the previous step of a true digital transformation, is a widely recurring theme and it seems that it is almost out of date in our society. But is it so? Are we the citizens, the business fabric … society as a whole, using the resources that we have at our disposal to be more efficient, more productive? A difficult question that we are going to deal with, if not to reel off, at least to put in context in this article.
The exercise that I am going to do today is atypical to me. I never usually write content from a headline. In my case, the creative process is usually the inverse: I turn something that haunts my head into an article, and when I have it written, or at least outlined, I give it a title. However, on this occasion, due to the importance of the matter at hand, it is necessary to focus on deepening the framework of digitization.
What is digitization for businesses?
Business digitization is not a new concept. It did not come with the pandemic, or overnight. It is a process that goes hand in hand with technological advances, allowing businesses to flex and branch their operations.
The clearest example of this is the web presence. In recent years almost all companies have a website where their customers can purchase their products or services.
The possibilities of the digitization of companies are increasingly accessible, especially for smaller businesses, thanks to social networks. For entrepreneurs and SMEs, it is possible to keep running with Instagram and/or Facebook profiles, as well as a website for online purchases.
But business digitization is much more than just a website.
My reflex action is always the same: start by going to Google: almost a million results compared to 17 million for its main competitor: digital transformation. We started badly … Have we got the wrong keyword?
It doesn’t matter, I decide to give it another chance, this time with Wikipedia. It may seem a bit unscientific method, but for me, this online encyclopedia is a reference, as it is the most widespread source of collaborative knowledge globally. And yes, from my humble point of view, the collective is what has the most value when it comes to finding a definition for a concept. Things are not what we try to be, but what people perceive them to be.
The search results indicate that it does not seem that we are on the right path either … This time my collaborative digital oracle has not made it easy for me, since the entry ” digitization ” redirects to ” digital transformation “. And although it seems that we are not going wrong, its entry introduces a series of vague and relative definitions, dependent on each other, which I summarize below:
- Digitization is the conversion of analog to digital information (that is, numerical and binary)
- Digitization is a real process of technologically induced change in industries. And it leaves room for doubt about this assertion by continuing with this literal quote: “The academic discussion surrounding digitization has been described as problematic since a clear definition of the phenomena has not been previously developed.”
- Digital transformation as ” total and global social effect of digitization “
Effects of digitization
That is to say: the digitization process of a company has as a consequence its digital transformation, which implies a paradigm shift and a new organizational culture.
Following these premises, enormous possibilities open up for the semantic analysis of many of the headlines and tweets that bombard us in our daily lives, as soon as we look at the reference blog or the social profile of our favorite “influencer”. So much so that we are tempted to get carried away by scaremongering …
- Digital processing increases the productivity and internationalization of SMEs.
- The digitization of banking, an essential key to its survival in new competitive scenarios.
What does the digitization process include
The digitization of SMEs – or any business in general – does not depend only on having a functional website. There are other equally important edges to consider such as.
- Non-face work: Also known as teleworking, it is an important part of the digitalization model in companies. Allowing, and facilitating, employees to do their tasks without going to an office daily can optimize their productivity.
- Digital means of payment: When going through business digitization it is necessary to contemplate how customers will pay. The use of cash is being displaced, not only by cards or transfers but by the use of well-known electronic wallets.
- Process automation: Another advantage of migrating to the digital environment is to automate processes. Using the cloud and thanks to Big Data, it is possible to reduce customer waiting times, offer them better shopping experiences, make projects more effective and maximize profits.
It is important to understand that the business digitization process does not begin and end with these points. There is a wide range of options to implement digitization, depending on the business sector.
Why choose business digitization?
Faced with a scenario of uncertainty, entrepreneurs and SMEs have a certain advantage, because, given their nature, they can adapt and transform faster thanks to digitization, unlike large companies that tend to slow down in technology adoption processes or cultural changes.
Taking this into account, the digitization of SMEs allows protecting two fundamental axes of any operation:
To the former, letting them know that the company is willing to adapt to continue meeting their needs, offering them opportunities to take advantage of technology to their advantage. For example, online purchases, use of applications, greater knowledge of their tastes and interests, a gesture that will surely generate loyalty among the brand’s consumers, even when the pandemic passes.
As for employees, digitization processes can bring initial resistance. However, digitization allows more effective management of processes helping teams to waste less time, achieve their objectives, distribute work better, measure productivity indicators and, very importantly, avoid contagion by eliminating daily transfers thanks to decisions such as teleworking.
Although the digitization of companies does not happen overnight, it is important to seek advice for proper implementation. Doing it as soon as possible will also give you more guarantees to survive the crisis. What are you waiting for? Digitization is now!
Process reengineering as a step before digitization
Digitizing processes involves automating, with the help of technology, how we approach the resolution of a problem or business need, be it of a mathematical, logistical, or industrial nature. From there, the broad spectrum of the new? Technologies ( cloud computing, big data, internet of things, robotics, fintech, blockchain …) configure a menu from which each of us must select what adds value to our companies, that is, what helps us to sell more and produce better (or vice versa), as we said a few years ago.
In an era in which the adjective “smart” has been applied to almost everything applicable, and preferably in its condition in English (smart city, contract, car, tv …) we can afford to coin a new term: smart digitization. Because digitizing or automating a process may not be a good solution if before facing it we do not analyze whether we are doing it manually efficiently, and what the parameters to take into account in its automation should be. Process reengineering is a more global way of approaching digitization.
Without delving here into the keys that can help managers to successfully face the digitization of their companies, let’s just advance a central idea: this should not be approached from the point of view of technology but of people and the transformation of business models. Let’s talk about the digital transformation of finance, purchasing departments, or factories (the 4.0 revolution), technology is nothing more than a “ commodity ”, a simple instrument to achieve an end.
Digitization Vs. Digital Transformation – Difference And Definition
Digitization and digital transformation are often used synonymously – but there are significant differences
The difference between digitization and digital transformation is greater than you might think, but many people use it as a synonym. We explain what digitization means and what is fundamentally different from Digital Transformation.
The terms digitization and digital transformation are synonymous for many executives. The problem is that even vendors often have an unclear definition of terms and this degenerates into a so-called buzzword, which is simply misused for marketing purposes. If you were talking about completely digitizing a company, you would have to map everything digitally or only use robots and smart devices with IoT, since everything would be digital.
So you have to come up with more realistic considerations of these two terms. Digitization, as well as digital transformation, especially affect companies, their culture, work methods, and also our society. Technology and technological progress play a decisive role here.
It should also be said: Digitization or digital transformation, the two terms are used differently by different specialists. For some, this difference may be marginal or even unimportant, but when it comes to companies and their strategies, the terms are very important. So it pays for all managers to understand the serious differences between pure digitization and digital transformation.
Digitization is just the process of pressing analog media into bits and bytes (or other forms of 0’s and 1’s like smoke signals). This mere mapping of the information in a version 0 and 1 is therefore called digitization.
Common examples of digitization are photos, movies, music, etc. Analog information, such as pictures or sound, is stored in digital units. Information such as sound waves or light waves are mapped by digital pulses in a similar (approximate) way and thus stored. The following small graph shows how an (analog) wave is stored in various information blocks. For example, each block would represent the frequency and volume of a sound. With the information from the 7 blocks, the sound could be reproduced roughly. As you can imagine, the so-called “resolution” or “bit rate” plays an important role here. The higher the bit rate, the more these bars are used to display the curve. So MP3 files always have a different bit rate.
The same principle applies in companies, for example, in processes. What was previously processed on paper (analog) can be digitized in the same way. However, in this example, it is not about sound waves but documents, letters, notes, processes, or information.
Therefore, when you talk about business digitization, you are talking about a digital representation of the current business with the help of digital media. Nothing has been automated or changed yet.
Digitization in different contexts and examples
In everyday business, digitization can mean digitizing documents such as invoices, files, products and their use for processing, storing, or sharing. For example, image recognition programs can be used to read the content of forms and transfer them to the system. This is the first part of the way companies can digitize themselves by converting documents and analog content into digital form.
Examples: Digital photo instead of an analog photo, scanner instead of paper, email instead of a letter, etc.
Digitization of processes and procedures
As already mentioned, processes or procedures can also be digitized. To do this, existing processes and procedures are taken and an attempt is made to map them with the help of digital media. Tools like forms, emails, websites, etc. They are often useful for digitizing existing analog processes.
Examples: Email invoices, replace forum forms with digital forms, etc.
Automation through digitization
Digitization is also often used as a synonym for automation. It is possible to simply map the processes digitally or automate them. In the case of automation, it is often referred to as ‘Robotic Process Automation, which is used to automate the processes of a company with the help of technology. Companies often use the term ‘digitization’ when digitizing AND automating their processes, because it usually makes sense to combine these two steps.
An example of such an automated process would be the following: An order is created, the shipping label is created, the invoice is sent, and the warehouse is contacted to prepare the shipment. In this way, entire processes can be transformed into a single automated process.
Examples: Automatically send an invoice after an order, automatic payroll based on the hours entered, etc.
Digital Business is the term used to describe business areas, business models, and entire companies in digital form. These are changing through digital technologies and possibilities. In the process, new technologies are constantly being adapted to new technologies, processes such as the supply chain are adapted, and it is also ensured that it is possible to network and exchange information with others.
Examples: Sales are digitized and automated through online stores, ecosystem platforms, etc.
What is digital transformation?
When it comes to digital transformation, business units and their processes are also observed, but the understanding goes far beyond simply adapting to new digital technologies. Thus, in the digital transformation, solutions are sought or even problems are rolled up again, which are solved with the help of technology. For example, paper is not simply digitized and then processed, but rather whether the process is still necessary or can be simplified with the help of new technology.
So digital transformation is nothing more than problem-solving with the best (new) technical means possible. To some extent, this also applies to topics such as ‘Agile’, ‘Design Thinking’, ‘Brainstorming’, and other new ways of working, as they are necessary to take a differentiated view of problems. Once these issues are understood, they can be solved with technical means and using new technologies.
It is important to understand that digital transformation is never triggered by technology, but is always about solving a problem or providing a new approach to the customer. The customer-centric solution is always the beginning of the digital transformation, not the technology.
Alternative explanation – cause and effect
Having understood the connections and explanations, we can also correctly conclude that digitization is something like the ’cause’. Suddenly digital things become possible and there are digital images of certain objects. This cause leads to certain effects at the company level. These effects, and also the reaction of companies to these causes, ultimately cause an internal transformation of business models, processes, strategies, people, and much more, which we generally call digital transformation.
Digitization and beyond
If you take Google’s English definition of «Digital Transformation», you will find “Digital transformation is the profound and accelerating transformation of business activities, processes, competencies, and models to fully leverage the changes and opportunities of digital technologies and their impact across society in a strategic and prioritized way. ” (“Digital transformation is the deep and accelerated transformation of business activities, processes, competencies, and models to take full advantage of the changes and opportunities of digital technologies and their impact on the whole of society in a strategic and priority way.” .)
Digitization has led to digital content. This content can then be processed in digitized processes and new technologies lead to the development of a digital business strategy. But digital transformation goes one step further. Of course, digital content, digital processes, and also a digital business model are needed, but Digital Transformation considers all aspects of the business. It doesn’t matter if it’s about customer needs, innovative new products, opportunities and challenges in the marketplace, or ultimately the “New Economy.”
This connection becomes obvious when you look at the elements of a successful digital transformation. Many companies only look at the first areas of digitization and only try to map existing processes and business areas with digital tools and processes. The problem is often that new opportunities and challenges, as well as new possibilities, are completely forgotten.
A successful digital transformation requires digitization, but you must not get lost in digitization and therefore lose sight of digital transformation.
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