Digitization, Digitalization, and Digital Transformation: Know the Complete Difference

In the era of digital revolution, many companies have embraced digital transformation services. The terms digitization, digitalization, and digital transformation are therefore used by everyone, but can however be confusing.

Although they seem synonymous, these three terms comprise different concepts and are part of the gigantic digital revolution that has been taking place for some years in several areas of business activity.

In this blog, you will understand the differences between these three terminologies, the importance of these processes, and how they can help your business develop.

Differences Between Digitization, Digitalization, and Digital Transformation

Scanning a document in the office is not the same as developing a button in a web environment that allows the user to upload a scanned file, or improving the process by leveraging technology. In the first case, it is the use of technology to save physical space, while in the second there is the intention to save time and effort. While digitization and digitalization aim to transfer data from physical to virtual and/or enable this to happen, the digital transformation process involves a deeper change, which reformulates the very structure of the company in which it is applied.

Digitization

In simple terms, digitization is the passage of information and tools from analogue (physical environment) to digital (virtual environment), such as uploading documents or processes to the cloud, for example. Digitization is foundational as it is the connection between the physical world and software.

Digitization offers, for example, the possibility of digitizing and storing data in PDF, WORD, and Excel documents. It facilitates research on an electronic book. It promotes the conversion of technical books into explanatory videos, which helps to understand information and concepts more easily. Digitization has also made it possible to use e-mail instead of letters on paper.

In addition, the practice also allows activities that were carried out in person to be carried out online. Some of the benefits that we can highlight are:

● Enable internal innovation in the company;
● Ensuring the competitiveness of the business;
● Reduction of costs, errors, and rework;
● Increased productivity;
● Allows the execution of business tasks in the digital environment, such as signing contracts, providing services, etc.;
● Enables various activities to be performed through management software, applications, websites, and others;
● It can be used in documents, processes, and meetings;
● It facilitates the automation of processes;

Digitalization

Digitalization refers to creating or improving processes by taking advantage of digital technologies and previously digitized data. Therefore, digitalization presumes digitization.

All sectors of activity are affected by digitalization. For example, a press newspaper goes digital when it creates a website and offers subscribers digital versions of its articles, videos, or podcasts. It is therefore no longer content to have paper newspapers delivered to the homes of its readers. The use of computers and the Internet in banking processes is also another example of digitalization. Likewise in the automotive field, digitalization helps to use artificial intelligence (AI) to design a car instead of traditional methods which can be tedious.

Adopting digitalization in companies can represent numerous benefits that the manager can realize as soon as he starts to implement this process. Among them, we have:

● More Data Security

Digital transformation services ensure cloud data storage that offers more security, as it prevents the loss of documents and has file encryption, access control, and several other tools that make the process safe and reliable.

● More Efficiency and Productivity

Intelligent technologies such as an online ERP system allow for assertive business management that is consistent with the current reality of the organization. With it, it is possible to analyze data in real time and have a broad view of all activities carried out by the company.

● Ease of Data and Information Exchange

Different sectors of the company can exchange information with each other quickly and effectively through the digital medium. In addition, you can get specific data quickly through a quick search.

● Cost Savings
It is also possible to reduce expenses in various economic segments such as the cost of traveling for professionals, accommodation and food, rent, office supplies, etc.

Digital Transformation

Digital Transformation services and technology is a strategic application of new technologies to solve challenges in productivity, efficiency, communication, and so on. It differentiates itself by transforming the very structure of an organization. Unlike digitization and digitalization, with digital transformation, technology is not seen only as a tool but as the pillar of a business.

It is a process of changing the mindset of companies that use technology to meet the goal of becoming more modern, improving their performance, increasing market reach, and expanding technological advances that impact people around the world. Therefore, it radically changes organizations and secures their place in the future. The greatest ally of digital transformation is innovation, as it allows not only the acceleration of processes but opens the way for the creation of a completely new process.

Digital transformation services and technology involve a planned and strategic application of various technologies focused on improving productivity, efficiency, communication, etc. It is a complex technological, social, and economic movement that uses the virtual environment and digital media to mediate labor relations. Delivery apps are a great example of this practice.

The difference is noticeable between an establishment that receives orders via WhatsApp and manages deliveries itself, and between a restaurant that uses an application. In the second option, it is possible to integrate millions of customers on a single platform, make automatic payments, request changes to the order, follow the delivery person’s journey, and evaluate the service offered, among numerous features.

What are the advantages that your company can enjoy when you adopt digital transformation services and technology?

● More complete and agile business model

Internal processes and communication between employees become more optimized, more productive, and more efficient. In addition, customers also benefit from faster service and problem resolution.

● Best customer experience

Digital transformation services and technology make it possible for technological tools to be used in favor of public segmentation, making the relationship closer and communication more assertive.

● Sales

A faster and uncomplicated purchase directly influences customer satisfaction and possible loyalty. After all, your customer is looking for convenience and practicality when choosing your service or product. So be prepared to meet expectations.

● Innovation

In the current scenario of the world market, it is practically impossible to be oblivious to innovations and digital transformations, especially when we talk about the integration of people who are physically distant.

Therefore, digital transformation is an interesting alternative that allows your business to keep up with the pace of evolution and the growing needs of this market.

Myths about Digital Transformation

Many companies including some software companies are still unable to start a digital transformation program within their system because they cling to myths about the subject. Here are some myths about digital transformation services and technology that you need to erase from your mind right now and the correct way to think about each one of them:

This subject is only for technology and software companies

It is very easy to hide behind the thought that digital transformation should only happen to software companies that were born in a digital context, such as e-commerce, SaaS, and other “digital native” businesses. But is this really the case? No way! Any company, no matter what segment, can benefit from developing a digital culture. That’s why there are so many tools, paid or free, available for virtually any type of digital initiative imaginable.

It all comes down to the customer experience

Another myth is that digital transformation services and technology is all about creating the best possible customer experience. It is true that this really matters, but it is not enough. Again, it’s worth highlighting that digital transformation is a process that needs to be spread across the entire company, so naturally, it’s not just about the customer experience.

The IT sector will carry out the transformation

Information technology (IT) needs to be very well structured to guarantee the level of performance that a digital and software company needs. However, between saying that and saying that digital transformation is the sole responsibility of the IT team, there is an abyss! What needs to happen is a reconciliation between the managers and those who will put the technology to work, and not an outsourcing of responsibilities in this way. The IT outsourcing sector is just one of those involved in the digital transformation of any company. But it is crucial to ensure that it is sharp to meet day-to-day demand.

Just develop multiple digital initiatives

This is perhaps the biggest mistake made by executives and decision-makers in companies. The thinking goes something like this: “if my company already has x digital initiatives in progress, I am already part of this transformation”. Unfortunately, the issue is deeper than that. It’s great to develop strategies like content marketing — which, by the way, plays a big part in digital transformation — but these strategies are only part of the solution. Therefore, remain firm with your digital strategies, but do not fall into the illusion that they are the transformation itself.

Embracing Digitization vs Digitalization vs Digital Transformation as Part of Your Strategic Planning

You’ve learned about the differences and similarities between digitization vs digitalization vs digital transformation. To ensure the competitiveness and growth of any organization, it is essential that you adopt these strategies and be ready to revolutionize the way you work and the mindset of your business. Start planning the digitization of processes in your company as soon as possible and introduce your business to the digital transformation scenario.

By investing in digital transformation services in companies, it is possible to obtain better results through creativity and innovation. Optimizing outdated processes and ensuring your organization differentiates itself from the competition is essential to expanding your market share and ensuring long-term business growth.

The 6 Phases of Digital Transformation

In a report from Altimeter, business trend analysts led by Brian Solis tell us that there are 6 phases in the transformation of a company. These are:

Business as Usual

At this stage, the business operates normally; doing nothing or just doing the same job, the same way it’s always been done.

Present and Active

Here, the company begins to experiment with new ideas based on specific initiatives. The management begins to take note and little by little, creativity and digitization begin to be valued.

Formalized

This is when the transformation begins, little by little. The experiments have led to some successful pilots and management gives carte blanche to explore further and the first initiatives are formalized.

Strategic

At the strategic stage, the company has decided to move forward with digital transformation services and technology. Management gives voice to change agents, and it is decided to take action and invest in new people, processes, and technology.

Converged

Here, the company has dedicated money and resources to new initiatives for digitizing the workforce. At this stage, digitalization is now a key priority across the enterprise. A formal transformation team is established and digital transformation services are driven in all areas.

Innovative and Adaptive

Through the innovative and Adaptive stage, digital is now part of the company’s DNA. Continuous improvement is the new normal. The organization is flat and agile, with teams that keep up with new technologies and innovations and adopt new solutions as gaps are detected.

Conclusion

Digitization is the first step that a company takes before proceeding to digitalization through the use of digital transformation services and technologies. When it is applied globally for the implementation of the company’s development and communication strategies, it becomes a digital transformation. Each of these concepts is important in today’s business environment. To really reap the benefits of each, you need to develop a good coping and decision-making strategy.

Looking for a Digital Transformation and software development Company to partner with? Hidden Brains is the best out there.

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Albert Smith

Albert Smith, Marketing Manager at Hidden Brains, drives brand growth with innovative strategies in web, mobile app, and software development.