Digitisation vs. Digital Transformation is an issue which has been preoccupying companies ever since digital transformation became the “it” thing for businesses. More often than not “digitisation”, “digitalisation” and “digital transformation” are used interchangeably. But does this really do justice to your company’s goals and aspirations?
This is more than just semantics. No doubt digitisation has brought about significant efficiencies in the ways we work and live, but your understanding of this process has a direct impact on your choice of strategy and your company’s bottom line.
We’ll define what digitisation, digitalisation and digital transformation all mean, and where they belong on your company’s digital transformation roadmap.
Digitisation vs Digitalisation vs Digital Transformation: What's the Difference?
Imagine trying to tell someone you’re trying to digitise your business. Does this even make sense? Do you mean you’re trying to turn everyone and everything in your business into 1’s and 0’s? Or do you mean you’re trying to move everything to the cloud?
Even at this early stage, taking your business digital becomes confusing. Perhaps in this scenario it’s easier to picture this as a process (digitalisation being the process of taking your business digital) rather than an action (to digitise). A process, I’m sure we all agree, is a series of actions. At least this makes a bit more sense.
However, digitalisation is still a process, a series of actions to digitise processes and workflows (eg. paper documents to electronic documents) within your business. It’s not a strategy. Digital transformation, on the other hand, is a strategy — or should we say “digital business transformation?” This emphasises that digital transformation is an approach which leverages technology to effect a meaningful business change.
So, digitisation leads to digitalisation which, in turn, leads to digital transformation. An action which leads to a process which leads to a whole new business model.
Graphic: Digital Transformation Pyramid | Source: Quixy.com
Digitisation vs Digitalisation
As we’ve just seen, digitisation and digitalisation are two aspects of the same process.
Digitisation converts analogue information into digital data (1s and 0s): for example, scanning paper documents into electronic format for processing, storing and sharing. For example, Optical Character Recognition (OCR) software can be installed on mobile devices to read documents into a database.
The whole point of converting this information into a digital format is so that it can feed a workflow or process and improve business outcomes. The benefits of digitisation are efficiency and operational excellence. It enables companies to scale their operations, product and service offerings. It standardises business processes while ensuring their accuracy and security.
Digitalisation: The Next Step
Digitisation bridges the gap between the physical (analogue) world and machines. This has been happening since the first computers were built in the ’60s. In that respect, it's not revolutionary. Value is derived from processing, storing and sharing this data.
Digitalisation takes this one step further and uses this data to support workflows that underpin efficient business processes: for example, sensors connected to IoT networks can generate work orders for service technicians.
This is where digitalisation becomes synonymous with automation. In other words, we digitise data to automate workflows and increase output speed and quality.
As we begin to see real business value from automation, we move on to the next step in the process, which is digital transformation.
Digitisation vs Digital Transformation: Deriving Business Value
Digital transformation is a foundational change in how an organisation delivers value to its customers.
The keyword here is “value”. The question is how your company delivers value to its customers and stakeholders in innovative ways. Digital technologies are the natural solution. Your company simply cannot scale with paper and manual processes. Digital transformation is business transformation enabled by technology.
At its most basic, digital transformation is needed because your customers’ and employees’ lives are increasingly driven by technology. To remain competitive and engage with your customers and peers, digital transformation is essential.
In summary, we can say that digital transformation results from digitalisation. Digitalisation itself is the outcome of a disciplined programme of digitisation. Digitisation bridges the gap between the physical (analogue) world we’re all used to and the world of machines. We can thus speed up the processing, storage, and sharing of data we rely on to improve our lives. As humans, we’re always seeking new ways of improving our lives, to make things more efficient and less burdensome, and this is the basic premise behind digital transformation.
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Frequently Asked Questions
What's the difference between digitisation, digitalisation, and digital transformation?
Digitisation is the act of converting analogue information into digital data, such as scanning paper documents into electronic format. Digitalisation is the process of using this digitised data to support efficient business processes and workflows, often through automation. Digital transformation is a strategy that involves leveraging technology to bring about significant business change.
How does digital transformation deliver value to a company's customers?
Digital transformation brings about a foundational change in how a company delivers value to its customers. It enables the company to innovate and scale by replacing manual processes with digital technologies, meeting the demands of customers and employees whose lives are increasingly driven by technology.
What's the relationship between digitisation, digitalisation, and digital transformation
Digitisation leads to digitalisation, which in turn leads to digital transformation. Digitisation converts analogue information into digital data. This data is then used in digitalisation to automate workflows and increase business efficiency. Finally, digital transformation leverages these digitised and digitalised processes to bring about significant changes in the business model.