Digital transformation, digitization and digital transformation are terms that are now present in almost every corporate strategy today. As a result, hardly any company today has more analogue than digital information available.
All these terms have something in common, but what are the exact differences? In fact, there are clear demarcations that are certainly not clear to everyone. To give you a better understanding of what constitutes a digital transformation and where digitalization comes into play, we will explain it to you below.
The most important thing first: Digitization means converting something analog to digital thanks to digital technologies. In contrast, digital transformation means the complete transformation of existing business processes and models.
What is digitalization?
Digitization basically means the implementation of digital technologies into your already existing, current business processes. So what you used to do analogue, you can do faster and more efficiently with the help of modern technologies and digital applications.
For example, you can use digital solutions to settle expenses and travel expenses or fill vacancies with the right talent. With data available in digital form that can be processed by information technologies, you can increase your efficiency. This means that there are digital solutions for every business unit that you can use to automate your work processes and save valuable time and costs. In summary, digitization means the conversion of analog data into digital formats.
What is Digital Transformation?
You may be wondering if you haven’t already achieved digital transformation with business process automation. However, digital transformation goes one step further. It implements completely new business models, organizations and ideas in such a way that products and services are sold in a completely new way. Consequently, digital transformation fundamentally deals with the question of whether a process in its existing form is still needed. Digital transformation is therefore a process based on the continuous development of digital technologies and solutions. Apart from that, the digital transformation is shaping and influencing our society and economy in the long term, e.g. in the form of social media, big data, cloud services or block chain. Accordingly, the requirements, wishes and needs of customers are changing and companies are consequently forced to completely rethink their business models. As a result, companies are discovering and implementing more opportunities for innovative and disruptive approaches to their business models. In addition, the development of new innovative technologies in turn accelerates the process of digital transformation. The main drivers are business intelligence technologies such as data analysis, cloud computing, big data and IT security.
In addition, digital transformation describes not only an adaptation to changing customer expectations, but also a process of social change. Among them, other actors also play a role, such as science, politics or state institutions, which also exert influence on each other and promote digital transformation. Consequently, it can be said that maintaining consumer expectations is crucial as one of the driving forces for digital transformation. This forces companies to adapt technologies and disruptive business models. Thus, digital transformation and digitization are not the same thing and cannot be used as synonyms for each other.
Digital Transformation in Everyday Life – An Example
A good example would be online shopping and order tracking.
You are certainly used to placing orders online or via app and being able to track them directly. For example, messages about the current location and delivery time of the order can be quickly viewed digitally. As a result, you certainly can’t even imagine that there is an online store that doesn’t offer these functionalities. In the course of this, it is no longer up-to-date to receive product information, e.g. by fax.
As a result, customers’ preferred ordering methods have changed drastically over time. Therefore, companies are forced to adapt in order to maintain customer satisfaction and retention. However, this is not just about the technology itself. Rather, it is about an innovative solution to a problem and the creation of new processes that offer added value to the customer. This approach creates new sales channels, products and business models.
Conclusion
Digital transformation and digitization form an interplay. Digital transformation is a holistic process that requires digitization as a stable foundation. However, digital transformation does not end with the automation of individual business processes or the mere introduction of a new technology. A digital transformation takes a holistic view of a business model. Rather, it questions existing business processes and deals with the constantly changing, changing requirements and expectations of customers. However, it should be borne in mind that the process of a digital transformation does not end with the fulfillment of customer requirements, but must be continued continuously. As a result, companies must always innovate and demonstrate a high degree of flexibility and adaptability to meet the ever-changing realities – for the benefit of the customer and for the stronger customer loyalty that ultimately determines business success. In short, digitization forms the basis – but transformation only happens holistically. After all, a successful digitalization and transformation of a company build on each other.
