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Everything you need to know about Digitization, Digitalization and Digital Transformation

  • Vanshika Kaushik
  • Nov 02, 2021
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Education, Healthcare, Business, Real Estate there’s a single game changer that is slowly transforming these sectors and i.e. technology. The world has become a digital economy and in order to survive in this competitive era it is mandatory to mend the age old ways of conducting business operations.

 

Most of the business enterprises have embraced the changes and are adopting digitization, digitalization and digital transformation to stay ahead in this competitive era.

 

All the three terms are different from each other and support an enterprise’s working in their own ways; let us try to understand their differences in detail.

 

What is Digitization?

 

There was a time when every record was manually maintained. User manuals and user guides were printed on paper; physical records were maintained in the accounting books; even the repair copies were printed on paper. Fast forward to the 21st century everything is digitized whether maintaining ledger records or keeping the customer details intact every physical record book of data; has now taken an online form.

 

User manuals are available as PDF’S, hard copies have become a thing of the past. Everything is either a PDF or an easy to download word file. In simple words everything is “digitized”. “Digitization” is a “conversion” process. It refers to the conversion of “analog data” into “digital data”. 

 

(Related Reading: How to Improve Your Bottom Line Using Consumer Technographic Data)


 

For example let’s say an individual needs soft copy of the assignments for sharing it with a friend, for the required purpose they will be required to click pictures of the assignment and further would be required to proceed with the “pdf conversion” once the physical book becomes the “pdf version” the book is said to be “digitized”.

 

Vinyl records conversion into CDs, DVDs also falls under this category of conversion. Conversion of “written” customer records into excel sheets; is also “digitization”. Digitization simplifies data sharing; soft copies can be easily shared via email; digitized records can be accessed within seconds.

 

Digitization reduces the workload of an enterprise with automated softwares for data conversions; maintaining customer records is easier than before. Everything in this era is digitized, digitized music, digitized movies. Digitization aka “creating digitized copy of an asset”.  

 

 

Advantages of Digitization

 

  • Digitization makes data sharing easy.

  • Digitized asset copy makes data accessible within seconds.

  • Digitization helps a company to stay ahead in the competitive era.

 

Every company uses different tools for digitization. Following are some important tools for “digitization”.

 

Tools for Digitization

 

  1. Cloud ERP systems

  2. Digital Accounting Tools

  3. Chatbots

  4. CRM Platforms

  5. Chatbots

  6. Social Media Management Platforms

 

As now you would have developed a basic understanding of “Digitization”. Let us move further with the next term i.e. “digitalization”.

 

 

What is Digitalization?

 

 

Digitalization is the next step in the journey of business transformation. As digital data is now available to the organization; it becomes important to maximize the usage of “digital data” for business success. Digitalization means adopting new digital technologies in an attempt to improve the working of a business.

 

Most of the business enterprises are using cloud computing to leverage the benefits of “digitalization”. Customer data that is available via cloud facilitates technicians to quickly work upon the issues. In remote working the cloud computing technology is a real saviour it connects different teams together and facilitate cross departmental exchange of data.

 

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Team communication and collaboration is now way more simple than it ever was. Data availability prepares technicians in advance. They already know what are the common issues that new customers may encounter which helps them to quickly resolve the issues.

 

Digitalization means taking full advantage of the digitized information for the business benefit. Customer Relationship Management software and tools helps a company to maintain healthy relationship with its customers.

 

Digitalization means making maximum use of the digitized information for the business benefit. Following are some advantages that “digitalization” offers.

 

 

Advantages of Digitalization

 

 

  • Digitalization provides an efficient way to use “digitized information”.

  • Digitalization provides a robust system to the business enterprise; the new technologies always provide new ways of working to an enterprise.

  • The adoption of new technologies helps a business to maximize profit.

 

Every business enterprise uses different tools for digitalization ; following are some of the important tools for digitalization.

 

Tools for Digitalization 

 

  1. Content Management Systems

  2. Customer Relationship Management Platforms

  3. Cloud Storage

  4. Project Management Tool

 

By now you must have understood the process of digitalization let’s know understand the process of “digital transformation”.

 

 

What is Digital Transformation?

 

 

Digital transformation means using technology at every level of an organization. Business organizations means devising new ways for an overall transformation of the business enterprise. Digitization and Digitalization are part of Digital Transformation.

 

(Related Reading: 5 Factors Influencing Consumer Behavior)

 

The pandemic halted the active working operations of several businesses during that time and even at the present it became evident; that every company that needs to maximize its profits needs to take its business to a “digital platform”.

 

(Must Check: 15 Digital Marketing Tools For Business)

 

Technology, data, process, and organizational change are a part of digital transformation.

 

Small sized and medium sized businesses built their websites in order to stay connected with consumers. Digital Transformation is a big step; that challenges the traditional modes of business. In simple words Digital Transformation is the change of the business model.

 

Companies have to modify their business models, their working systems, their ways of consumer interaction and even their previous marketing strategies just to adapt in the new business environment. 

 

Digital Transformations begins from the consumer perspective. The company redevelops its marketing strategies, provide new products that are in demand, and uses new channels for advertisements to reach its customers.

 

“Every digital transformation is going to begin and end with the customer, and I can see that in the minds of every CEO I talk to.”

MARC BENIOFF, CHAIRMAN AND CO-CEO, SALESFORCE



Digital Transformation adds value to every customer interaction. For companies, digital transformation is a big leap into the future. It can be advantageous or disadvantageous; it will depend on how well the business strategy is formulated.  

 

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Advantages of Digital Transformation

 

 

  • Digital Transformation helps in devising new ways of consumer interaction.

  • Digital Transformation means instilling a new ray of hope in the business model; it also means developing business strategies as per consumer demand.

  • In the digital era; digi transformation provides companies with new ways to modernize their business.

 

Tools for Digital Transformation 

 

  1. Recruitment Management Tools

  2. Project Management Tool

  3. Cloud Storage

  4. Digital Accounting Tool

  5. Payroll Management Tool


 

Let us understand the differences between these three.

 

3 Differences Between Digitization, Digitalization and Digital Transformation


Topic 

Digitization 

Digitalization

Digital Transformation

Meaning 

Digitization is the process of data conversion. It converts analog data into digital  data. 

Digitalization is a process of using new technologies for maximizing business profits.

Digital Transformation is a broad term that involves making new business strategies, devising new product line and modifying the business process.


 

Course of Action

Company adopts new tools and software to simplify business operations.

Company adopts new tools like Customer Management Systems and new software for maximization of profits.

Companies refine its traditional business framework and develop something new that suits the customer requirements. 

Example

Conversion of written material into PDF. 

Product Development, Procurement, Devising new marketing Strategies 

Product Development, Procurement, Marketing Strategies, Payroll Management, Customer Management Systems, Project Management Systems



Watch this video to learn more about the difference between Digitalization, Digitization and Digital Transformation. 



 

Some New Technologies in Digital Transformation

 

(Please note AI Multiple is used as a reference for this section)

 

  1. Artificial Intelligence and Machine Learning

  2. Blockchain

  3. Deep Learning

  4. Robotic Process Automation

  5. Cloud Computing

  6. Internet of Things (IoT) 


 

Digital Transformation: Case Study of AUDI

 

There are multiple companies that benefited from a change in their business model and marketing strategies. One such company is AUDI. AUDI began its journey ; as an automobile company , though in 2012 it introduced a new showroom concept with the name AUDI city. 

 

AUDI city allows customers to have a hands-on experience on the AUDI model in a digital space. Multiple colour combinations, feature assessment can be experienced in a compact space. Customers were fascinated and keenly explored the entire catalogue virtually. 

 

As most of the people incline their trust in the digital sources, basically consumer recommendations and reviews, this new digital space provided them an opportunity to get the feeling of owning an AUDI, without even owning one in real. 

 

The virtual space provided a great boost to the sales of AUDI; in AUDI City London sales got a 60% boost. Netflix, Amazon Business, Ford, Glassdoor are some companies that explored new digital marketing strategies. 

 

(Related Blog: List of Digital Marketing Channels for Businesses)

 

 

Wrapping Up

 

“The key to digital transformation is re- envisioning and driving change in how the company operates. That’s a management and people challenge, not just a technology one”. 

 

The digital world has taken over the modern era. Top notch companies like Facebook and Snapchat are providing new tools for marketing. Long gone are the times when traditional advertising attracted customers; now social media marketing is dominating the marketing and advertising realm.

 

In the present scenario, the companies that are fixated upon the traditional models of business will no longer be able to flourish in the future. Every small and medium sized business is modifying its traditional modes of business to strike a chord with the consumer.

 

(Related Blog: 3 Skills for Business Success)

 

Digital Transformation will transform the traditional business model; only the companies that will adapt in accordance to the future will be able to maximize profits in the long run.

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