Which are the differences between digitization, digitalization and digital transformation?
There seems to be quite some confusion regarding the usage of terms: What do they mean?
Why it matters: a matter of sense
Now and then you also have these terms that are used by different people for different reasons.
Remember how we all talked and still talk about social business in the context of hyper-connected human business, leveraging social technologies, with ‘segments’ such as social collaboration, social customer service and, of course the best known one, digital media marketing? Well, as you might know social business also means something else. Just look up what Professor Muhammad Yunus means when he speaks about social business. And he was first.
Fortunately we don’t have the same issues of extremely different meanings when it boils down to digitization, digitalization and digital transformation but still, confusion does reign and far from everyone agrees. So let’s take a look at each one of them and do leave your comments. Why does it matter? Well, although some of these terms are used interchangeably and that really doesn’t harm anyone, it’s good to know what we talk about if we use one of those terms.
It makes things clearer, makes you look better when having to present something to someone and you use the terms correctly and, maybe most importantly, it doesn’t cause confusion in times when everyone use these terms for different purposes, which makes them lose their sense.
What is the difference between digitization and digitalization?
Digitization is a term we’ve been all using for ages. Yet, at the same time, as the example in the beginning shows, not always in the right context, at least in my view.
Here is another one, by way of example. Someone wanted to digitize his workforce. Sounds scary, doesn’t it? In my mind it creates this image of a huge machine that is brought in to turn all workers into bits and bytes instead of atoms (more about the bits versus atoms idea by the way in our post on the information age).
What is digitization? The first definition
Digitization is used in several meanings as said but for me it has two meanings which are closely related with each other.
For starters, digitization is creating a digital (bits and bytes) version of analog/physical things such as paper documents, microfilm images, photographs, sounds and more. So, it’s simply converting and/or representing something non-digital (other examples include signals, health records, location data, identity cards, etc.) into a digital format which then can be used by a computing system for numerous possible reasons.
Digitizing doesn’t mean replacing the original document, image, sound, etc. Sometimes it gets destroyed (after having digitized a paper document you can destroy it or keep it, depending on, for instance, legal requirements), sometimes it disappears anyway (if we capture the sound and ‘motion (of your presentation at an event, the digital format continues to exist while your voice and physical presentation are gone during that presentation are gone forever) and sometimes it is transformed but that’s not that much about digitization in the strictest sense (if you take a picture of a building you have a digitally born representation of the building but the building is not digitized or you might have an analog picture which you scan so it is digitized).
What is digitalization?
The second term is digitalization. Often used interchangeably with digitization as mentioned (and with digital transformation too), digitalization is really something else. And here we have three definitions, or better contexts in which the term is used.
In business, digitalization most often refers to enabling, improving and/or transforming business operations and/or business functions and/or business models/processes and/or activities, by leveraging digital technologies and a broader use and context of digitized data, turned into actionable, knowledge, with a specific benefit in mind.
It requires digitization of information but it means more and at the very center of it is data. While digitization is more about systems of record and, increasingly systems of engagement, digitalization is about systems of engagement and systems of insight, leveraging digitized data and processes.