So, if you use digital data, extracted from physical carriers, to automate business processes and workflows, we speak about digitization as well. Digitalization is a generic term for the digital transformation of the economy. It defines digitalization as “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.” Similar to Wikipedia, Gartner also says, “Digitization is the process of changing from analog to digital form.”, “At SAP we’ve done digitization for many decades,” says Uwe Riss, Senior Researcher for Digital Business, Research & Innovation Hub St. Gallen, SAP, in a recent interview with SAP News titled Digital Business Modeling: A Structural Approach Towards Digital Transformation. For this I needed an unsuspecting test subject. 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. Pwc, for instance, talks about ‘the digitization megatrend’, speaking about a digitized world. So, what is digitization? Period. Turn everyone and everything in bits and bytes? In the context of ‘physical information carriers’, such as paper documents or analog, printed images, we mainly digitize by using document scanners in business (you can also, for instance, scan or simply take a picture with your mobile). Here is another one, by way of example. Digitizing has increased the efficiency of our processes; digitalization means that business now uses technology to engage with people to precisely address their particular needs.”, Riss explains that it is digitalization that has the greatest potential to alter the way we live. — And then we even don’t tackle the differences between that buzzword digital disruption and (digital or other) business disruption, which can be due to digital technologies, the impact of people leveraging them and changing behavior but also due to societal phenomena, economical phenomena or even regulatory changes, to name a few. Digitization in one sentence? But I would digitalize a factory.”. Sounds scary, doesn’t it? And here we have three definitions, or better contexts in which the term is used. Digitization is the base aspect of simply converting physical forms into digital files, which can then be used to drive digitalization. We know; confusing. Satisfied that I could once and for all end all confusion between digitization and digitalization, I shared this research with my manager. There is analytical value in explicitly making a clear distinction between these two terms. It sounded weird. Feature Article Someone wanted to digitize his workforce. The second term is digitalization. Digitization refers to creating a digital representation of physical objects or attributes. What does a University Competence Center (UCC) do? At home in the kitchen, my husband was busy rushing back and forth, switching between spatulas as he prepared the kids their customized dinners. The digitization of an entire business: how do you do that? And it requires more than just digitized data. In this article, you will get the answers in simple explanation. A deep-dive into Google Analytics revealed that, although Google Search recognizes both terms, they are sometimes used interchangeably in search results – somewhat like synonyms. Digital transformation encompasses all aspects of business, regardless of whether it concerns a digital business or not, in times when the acceleration of technology adoption and of change leads to entirely new market, customer and business (people, capabilities, processes, models,…) realities, opportunities and challenges, ultimately leading to a new economy (what IDC calls the DX economy). Digitization is an act that may enable digitalization, but the latter always requires … The kinds of improvements that would cause a customer, partner or employee to describe the organization (or at least parts of it) as doing “digital”. 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. At SAP we’ve done digitization for many decades. The Gartner glossary goes a good step further in assigning meaning. Well, as you might know social business also means something else. You’ll notice that today digitization is indeed mainly used in a context of document capture and scanning, and in a context of digitizing business processes. “Now we are on the way to digitalization, which is different. The conversion is from a physical form of information to a digital form, and the results may have their implications. Terms get commonly used but people forget their origins. 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. The following graph shows a converging trend in interest over time, with digitization still the leading term people search on – although interest in digitalization is picking up. In other words: technologies causing behavioral changes as people love them, in turn causing disruption. Business owners need to discern the differences between Digitization, Digitalization and Digital Transformation in order to develop a disruptive vision for maximum growth. But back to digitalization, digitization and digital transformation. Digitalizing your business leads to digital business. Digitalization, on the other hand, is the use of digital technologies and leveraging for business purposes. The reason why we say ‘as we use it today’ is that originally digital transformation was used to describe the transformation of, for instance, paper into digital information. The complex relationship between mentorship and equality in the workplace is a favored topic at purpose-driven companies. Digitalization on the other hand, is what leads to digital busines. In this article, we’ll try to clear up the confusion. The difference between digitization and digital transformation is greater than you think, but many use it as a synonym. We also already see the same evolutions popping up regarding industrial transformation and Industry 4.0. 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. In conclusion: digitization is digitization. As defined by Gatner IT Glossary, “digitalizationis 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.” Digitalization is an adaptive approach of working around how users interact with digital information using technologies applicable to it. Technologies as such are rather seldom disruptive. It requires far more bridges to be built in an encompassing digital transformation strategy. In business we speak about digitization from the perspective of processes too. And that brings us to the second meaning of digitization. Many people confuse them with each other. So, it’s simply converting and/or representing something non-digital (other examples include signals, health records, location data, identity cards, etc.) Obviously, sometimes terms do have different meanings because they are used by different people within a different context for very good reasons. Just for the term digitization we found about 5 different uses at the time of writing this. It requires digitization of information but it means more and at the very center of it is data, nowadays lots of data and big data. However, the vast majority, defines digital transformation as an enterprise-wide phenomenon. However, there is an important and distinct difference between the two terms. Digitization is the utilization of digitized device and act of moving from analog to digital, while digitalization uses a digital device and result in more beneficial process and the planned application of technology to achieve to an improved business model; and digital transformation is a continuous process that brings in a new business model and changes the way business is carried out. That is done by turning an analog signal into digital. Indeed! Digitization vs. Digitalization. We do to. In some areas of business, the distinction is very clear cut, while in other areas there is confusion over the two terms, with the result that they are being used interchangeably. 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). And at Cisco they seem to refer to digitization as “the connection of people, process, data and things to provide intelligence and actionable insights enabling business outcomes”. Digitalization is the act of implementing digitized technology on a large scale, like utilizing ecommerce platforms in a corporation, while digitization is the conversion of materials to digitized technology. Admittedly, for some digitization is more than what we just described. Automate everything and replace humans by robots? Now we are on the way to digitalization. Digitization is used in several meanings as said but for us it has two meanings which are closely related with each other. This, in turn, creates new opportunities to engage differently. Normally and in most business cases it’s far more important that the data which capture software can retrieve from the scanned image, by using all sorts of intelligent and less intelligent capture technologies, are extracted in a digital form and leveraged to feed a workflow, a business process, a system, whatever is needed to achieve an outcome. If you interchangeably talk about digitalization, digital business and digital transformation we understand. People. Paper clogs up processes. — And that requires change. Search statistics can reveal a great deal about how terms are really being used today. 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. “As a simple example, it can mean that an almost invisible technology helps us find the restaurant we like or the transportation we need, wherever we are and at any time – and at once.”. The list of what you can digitalize (supply chains, leading to digital supply chains, etc.) And often those meanings can be totally different, given their background, which is perfectly OK. There seems to be quite some confusion regarding the usage of terms such as digitization, digitalization (two letters difference) and digital transformation. It is moving from analog to digital inputs. Digital Transformation is really business transformation enabled by digitalization. Digitization enables youto collect data through digital methods and digitalization helps you find ways to use this data to benefit your company, and take your business to the next level. Paper creates disruptions to smooth information flows. Today, some people, mainly active in the document and scanning business, still use the term digital transformation while they mean the digitization of documents AND of processes. Wait, wasn’t that digitization? And he was first, long before social business in the context we use it came around. When you hear people say “we have digitized”, most of the time they mean “we have moved from paper to digital data and from manual processes ,which were about dealing with paper, to digital and automated workflows and processes.”. Yet, who wants the snake oil? into a digital format which then can be used by a computing system for numerous possible reasons. Often you strive towards a minimum of paper. The meaning of digitalization is less clear-cut, though many sources agree on the fundamental premise: digitalization revolves around using technology to innovate and redefine … What is digitization? Once analog data has been digitized, there’s enormous potential for applications that facilitate standard work practices. 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 meaningless in the end. Summarizing you can say that digital transformation requires digitalization ‘en route’ to digital business (capabilities) and requires digitization, since the glue and a core business asset of digital transformation (and of digitalization) is obviously (digital) data, leading to information, knowledge, intelligence, action and business model changes. Digitization is used in many contexts it is very often confounded and/or interchangeably used with digitALization. But some only look at specific aspects, thus often creating silos or having a view that’s too technological or too much focused on one aspect of business, you name it. Just look up what Professor Muhammad Yunus means when he speaks about social business. Fair enough, it’s a free world, but if you ever read another post on this site and see the term digitization, that’s not what we mean! These document scanners create a digital representation (document imaging) of a scanned document, a photograph, etc. In the digitization process, the technology is the main focus as well as different processes in action at the present. Digitization, Digitalization and Digital Transformation has different meanings. Yet, at the same time, as the example in the beginning shows, not always in the right context, at least in our view. Stefan Weidner from the UCC location at the University of Magdeburg explains how SAP software is being... 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