Concept Confusion in Digital Transformation

Concept Confusion in Digital Transformation

Despite the increasing number of digital transformation projects and the fact that they are seen as necessary for competition, there are many different views and approaches to creating a digital transformation roadmap.

The most likely reason for this differentiation is the digital transformation language. More specifically, the confusion and misapplication of 3 key terms related to the integration of innovative technologies – (i) digitization, (ii) digitalization and (iii) digital transformation. All 3 terms refer to different topics.

What is Digitization?

In its most basic sense, digitization is the process of transitioning information from analog to digital form. For example, transferring data written on paper forms to the computer environment, scanning a photo and storing it as a digital file. This information now allows us to extract data that can be made available by a computer system and processed, transmitted, or used to optimize processes. Essentially, digitization creates business use cases that leverage data.

Wikipedia defines digitization as follows. “Digitization is the process of converting information into a digital format. The result is the representation of an object, image, sound, document, or signal obtained by generating a series of numbers that describe a discrete set of points or samples.” (1) Wikipedia.com

What is Digitalization?

Differentiating digitalization from digitization may be considered as a difficult task, but these are very different concepts with very different consequences.

There are many definitions of digitalization. In Gartner’s IT glossary, digitalization is “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.” (2) Colleen Chapco-Wade-Safina,(2018)

While digitization is the process of digitizing data, digitalization encompasses the ability of digital technology to capture and assess data to come up with the best business decisions and enable new business models.

What is Digital Transformation?

Digitalization is an important step towards digital transformation and has a huge impact on product, service delivery and people. It pinpoints a culture shift within an organization, reshaping the way that value is created, and business is run.

Digital transformation is more comprehensive than digitalization. In an article on McKinsey.com, digital transformation is defined as “the reinvention of a business model that requires different functions to work together in new ways across the organization and can only happen through large-scale investments in building an entirely new set of capabilities.” (3) Lamarre, E., Smaje, K., Zemmel, R.

In this article, I tried to explain the difference between the concepts of digitization, digitalization, and digital transformation. In the next article, I will try to highlight the increasing importance of digital transformation and how it provides an advantage in competitive business landscape.

REFERENCES

(1)   (https://en.wikipedia.org/wiki/Digitization)

(2)   Colleen Chapco-Wade-Safina,(2018)

https://colleenchapcowadesafina.medium.com/digitization-digitalization-and-digital-transformation-whats-the-difference-eff1d002fbdf

(3)   Lamarre, E., Smaje, K., Zemmel, R.

 https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-digital-value-guardian-ceos-and-digital-transformations