Digitalization and digital transformation have become frequent buzzwords over the last few years—but what’s the difference between the two? While they are often used interchangeably to describe the process of adapting technology within an organization, both words have distinct meanings and different end goals. Understanding the difference between digitalization and digital transformation is a crucial step for organizations looking to stay competitive in today’s rapidly changing digital landscape. Especially because, according to a recent study, 88% of consumers say they expect companies to accelerate digital offerings post-pandemic.
What is Digitalization?
The digital wave all began with digitalization: paper records moved to the computer, faxes became emails, physical signatures turned electronic. Digitalization refers to turning physical into digital in order to store data electronically and make it accessible in real-time. While it certainly makes operations simpler, digitalization doesn’t change business processes–it’s just made them faster and easier.
What is Digital Transformation?
On the other hand, digital transformation is a broader concept that uses technology to fundamentally transform business processes, models, and strategies. The long-term approach requires a culture-shift to result in increased opportunities, improved customer experiences, and escalated growth.
The first step to drive true digital change requires companies to rethink their business models and adopt new tools. These can include RPA, data analytics, BPM, artificial intelligence, and other technologies that drive innovation.
But implementing new technologies is only one slice of the pie; the other—arguably more difficult—piece requires a fundamental shift in an organization’s mindset, culture, and processes. In fact, studies have shown that 87 percent of C-suites and executives agree culture creates bigger barriers to digital transformation than technology. According to a 2016 report by McKinsey, “sustaining a transformation’s impact typically requires a major reset in mindsets and behaviors”
How Does Digitalization Aid Digital Transformation?
While digitalization is a simple step to help organizations streamline operations, it is not enough to ensure long-term success. However, successful digitalization efforts can support organizations in a digital transformation. Creating a truly digital-first organization starts by exploring new business models, cultivating a culture of innovation and integrating emerging technologies to help automate.
Successfully implementing digitalization and digital transformation can reshape an organization’s culture and drive efficiency. Taking the steps to drive digital change are essential for organizations looking to leverage technology to stay competitive in the digital world and drive sustainable growth.