What Do Digitization, Digitalization and Digital Transformation Mean?
These terms mean many different things to many different people and in many different industries and contexts. However, in the world of business IT they generally mean the following:
- Digitization – Digitization means to transform something from an analog process to a digital process. For example when a bank scans a check to a digital image and stores this image instead of the paper check, the paper check and the manual storage of it has been digitized.
- Digitalization – Digitalization refers to implementing a manual business process in technology and software. A kiosk in a restaurant to order and pay for food is an example of a formerly manual process now implanted as a digital service. Amazon’s online shopping service is an example of many digital business processes combined into a seamless shopping and delivery experience.
- Digital Transformation – Digital Transformation means taking advantage of the fact the software based processes can be evolved and enhanced more frequently to dramatically drive up the business agility of the company, and to gain market share and revenue as a result. This is sometimes stated as “Compete online or die”, but it does not always have to involve people using browsers and mobile devices to access web services.
The Imperative to Digitalize Core Business Processes
The leading initiative for nearly every CIO (especially the ones who have rebranded themselves as Chief Digital Officers) is digitalization. Digitalization means that the key business processes of the company get implemented in software. This creates the following imperatives:
- Drive online business results – revenue, customer acquisition, customer service, customer satisfaction, market share, and reputation
- Time to Market – Implement key businesses in software more quickly than both current and emerging competitors
- Rapid and Continuous Improvement – Rapidly improve those digitized processes in order to compete and gain market share
- Great Customer Experience – Web and mobile experiences must be available all of the time, and offer excellent performance (responsiveness to user actions).
- Fast Resolution of Problems – Every online system has issues, but they need to be prevented as often as possible and solved as quickly as possible.
- Scale in Response to Demand – If the system is subject to spikes in demand (like online retail), then it needs to be able to response to dramatic increases in load without suffering from reliability and performance problems.
- Be Cost Effective – Modern application teams need to be efficient with their time and need to avoid overspending on legacy and expensive toolsets.
In summary, every enterprise must now run like a highly agile, responsive and forward thinking SaaS software product company. The infographic below shows the important Digital Transformation trends for 2019.