Moving From Digitization to Digitalization
In the business industry, Digitization and Digitalization, these two terms are often coined together.
Where industries relied only on digitization in the past few decades, digitalization has opened paths to success. 87% of senior business leaders call digitalization any company’s top priority, and 91% of businesses are now engaged in some form of digital initiatives, according to Gartner.
But what do these terms mean? Why are we moving from digitization towards digitalization? What are the benefits of this new venture? Let’s talk about it.
What is Digitization?
Digitization refers to the process of converting analog information to digital formats. Digitization focuses on automating and optimizing internal processes and minimizing paperwork, for example, converting paperwork into PDFs as digital formats.
What is Digitalization?
Probably the most critical question. According to Gartner, digitalization includes the usage of digital technologies to transform or change a business model and create new revenue streams and value-producing opportunities.
Many businesses have successfully used digital technologies to optimize their business. This ranges from processing business orders to automating marketing activities. For a better understanding, let’s take cloud computing as an example.
Cloud computing has proven its worth and shown companies how to have a competitive advantage over their competitors. They have given the users, employees, and businesses a better productivity rate and enhanced performance.
So, this use of cloud computing application refers to digitalization where the company leverages the digital technology for its benefit. But you need to understand that digitization is a necessary step for any business to digitalize.
Benefits of Digitalization
Digitalization has brought various beneficial changes. So, let’s see how it has proven its worth for countless businesses:
● Fewer and fewer human-generated faults
● Better and secure data storage (cloud application)
● Thorough data analysis
● Increased efficiency
Other benefits include:
Reduced Transaction Costs
Lower transaction costs directly impact the expenditure of any business. Nowadays, businesses have a margin to test new goals and technologies in a low-risk environment. Companies can easily decide if a specific strategy could be beneficial for them or not.
Such as the advertising industry that’s heavily influenced by digitalization. Advertising on digital platforms (mainly social media) is much more effective and efficient than any other medium.
Like the Facebook Ads campaign where you have tons of inputs, you can decide which strategy is best for your business, plus, you can target different target audiences just as efficiently, all within a fixed budget.
Improved Digital Presence
An increased digital presence is the most visible and important advantage of going digital. Any business that decides to go digital with multiple social media accounts, business websites, and business directories has tenfolds better visibility than a company that doesn’t integrate digitalization.
In the rapidly transforming digital era, any business’s digital presence is obligatory. The digital channels promoting digitalization are highly focused, and every business owner should focus and make this their business’s priority.
How Digitalization Impacts Communication Channels?
Leveraging the digital presence to your advantage leads to the creation of new communication channels. Email, social media, desktop, mobile, and web applications are only a few of these communication channels. Using these channels may lead to increased revenues and customer loyalty if done effectively.
Key Features of Digitalization
● Most companies are thinking of shifting to a hybrid work model that promotes work from different locations. Remote work has become the new normal and is predicted to rise by 300%.
● The digital customer service interactions will also increase by 40%.
● Almost 55% of startups are using a digital business strategy.
● 89% of all companies have already started implementing a digital-first business strategy or are planning on implementing them.
About this article
This article has been written by a student on the Grenoble Ecole de Management’s Advanced Masters in Digital Strategy Management. As part of a content creation assignment, students are given the task of writing articles based on their digital interests and disseminate the articles online. Articles are marked but we make minimal changes to the content. Thanks for reading! James Barisic, Programme Director, MS DSM.
