Digital change, digitization and digital transformation are terms that are now present in almost every corporate strategy. As a result, hardly any company today has more analog than digital information.
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 digitization comes into play, we'll enlighten you below.
First things 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 digitization?
Digitization basically means implementing digital technologies into your existing, current business processes. So what you used to do in analog, you can do faster and more efficiently with the help of modern technologies and digital applications.
For example, you can use digital solutions to account for expenses and travel costs or fill vacancies with the right talent. Thanks to data available in digital form, which can be processed by information technologies, you can increase your efficiency. So, for every business unit, there are digital solutions that can automate your work processes and save you valuable time and money. In summary, digitization is the conversion of analog data into digital formats. Read here how you can successfully digitize your HR department and attract the best talent.
What is Digital Transformation?
You may be asking yourself whether you have not already achieved digital transformation by automating business processes. 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 is fundamentally concerned with the question of whether a process is still needed in its existing form. Digital transformation is therefore a process based on the continuous development of digital technologies and solutions. Apart from this, 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 blockchain. Accordingly, the requirements, wishes and needs of customers are changing and companies are consequently forced to completely rethink their business models. Thus, 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.
Furthermore, digital transformation describes not only an adaptation to changing customer expectations, but also a process of social change. Among these, other players also play a role, such as science, politics or government institutions, which also exert influence on each other and promote digital transformation. Consequently, it can be said that consumer expectation management in particular 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, notifications about the current location and delivery time of the order can be quickly viewed digitally. Accordingly, you probably can't even imagine that there is an online store that offers these functionalities anymore not offered. In the course of this, nowadays it is no longer up-to-date to receive product information by fax, for example.
Thus, customers' preferred ordering channels have changed drastically over time. As a result, companies are forced to adapt in order to maintain customer satisfaction and loyalty. However, this is not just about the technology itself. Rather, it's about finding an innovative solution to a problem and creating new processes that add value for the customer. This approach creates new sales channels, products and business models.
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 by merely introducing a new technology. A digital transformation takes a holistic view of a business model. Rather, it questions the existing business processes and deals with the constantly changing, shifting requirements and expectations of customers. However, it should be borne in mind that the process of digital transformation does not end with the fulfillment of customer requirements, but must be continued on an ongoing basis. This means that companies must always remain innovative and demonstrate a high degree of flexibility and adaptability in order to meet the constantly changing circumstances - for the benefit of the customer and for stronger customer loyalty, which is ultimately what makes the business successful. In short, digitization forms the basis - but transformation only happens holistically. Successful digitization and transformation of a company build on each other.
If you have more questions about digitalization and digital transformation based on Microsoft technologies, or you are interested in specific Microsoft solutions - book here for a free consultation with one of our digitization experts or send us an email at email@example.com. We look forward to an exchange with you!