29/04/2019 |

What Is Digitalization Compared to Digital Transformation?

What does digitalization have to do with digital transformation?
And what is the difference?

Reflection of city and a photographer in a window

Internet of Things, Disruption, Industry 4.0 – with the rapid growth of information and communication technology, the media has become alert and receptive to new buzzwords. And although each of these words has a different focus, they all have one thing in common: they are concerned with the consequences for products, services and consumers that arise from the increased use of digital capabilities.

After all, I myself belong to a generation that experienced the dawn of digitization at a very early stage, first in study and private life, but also later in working life when the Internet gradually took hold. We used to read books on micro fiche and cut out diagrams created with Harvard Graphics to glue them into documents. Anyone who was late for an appointment tried to find a telephone booth. Unimaginable today? Yes and no, because we can still imagine these situations a little if the permanent availability and universal connectivity due to an Internet failure suddenly ceased to exist.

But how has working life changed? And why do we need digital transformation today when we only want to benefit from digitization? And how are they related? Recently I read:
“Digitalization leads to Digital Business. Digital Transformation needs Digital Business and Digitalization.”(Benjamin Talin, More Than Digital)


Digitalization needs Digital Transformation needs Digitalization

One could easily say that digitization has created the need for digital transformation and vice versa. If one looks at the beginnings of digitization, surely no one foresaw the effects that would arise from this or the overall economic change process that might be needed.

At the beginning, we just stared in amazement at what digitalization was all about; we integrated computers and mobile phones into our lives with enthusiasm. We were not thinking about the Internet of Things, the cloud, artificial intelligence, or even of what perspectives or consequences could arise.

Digitalization, without the transformation of the key players, remains what it seems to be: a technical adaptation.

And when it comes to perspectives and consequences, it gets complicated because in addition to the technological changes, it is above all about the people on whom these influences have had an impact and whose (working) liives have been changed in a decisive way. Certainly this is one of the reasons why digitization has digital transformation following on its heels. Digitalization, without the transformation of the key players, remains what it seems to be: a technical adaptation. Only with the involvement of all parties, departments, areas and topics do companies today change and sometimes reach to ultimate goal that what we understand to be successful digital transformation.

And here we are again talking about what makes many companies fail: digital transformation simply does not stop with the introduction of technology and that’s why it differs from digitization.

The Added Value is in the Digital Transformation

Digital transformation can help us generate the added value from digitization. For this, we need to be aware of what the important components of each are and consider these accordingly:

  • Employees must be equipped with the appropriate skills. That means helping them to gain digital skills, such as handling big data, working with different IT systems, building the right processes, and collecting the right data. High-quality data are crucial and their quality is reflected in how it is captured as well as in its processing.
  • An appropriate focus on customer needs. This requires an understanding of our customers, not only in what they express as their wishes, but even in what they have not yet recognized themselves as a demand. The keyword customer experience does not just mean optimizing the customer’s relationship with products and services, but rather continuously expanding the collection of data on customer behavior and using this information to analyze and segment needs.
"Make your employees happy and become more productive," can be the unspoken goal of these actions.
  • The optimization of operational processes. Continuous process optimization is an integral part of digital transformation that makes processes faster and more cost-effective. This has a significant influence on employee work conditions and thus requires changing how traditional personnel topics are handled. This includes, above all, the range of job opportunities so that they expand to include innovative models, such as flexible working hours, networked work, and the automation of recurring tasks. “Make your employees happy and become more productive,” can be the unspoken goal of these actions.
  • New business models that enable agile action and that quickly adapt to market demands. It is important to develop short- and medium-term strategies that can be implemented quickly on the basis of flat hierarchies. This can be a challenge for executives who must give up part of their usual authority in favor of creativity, innovative thinking and dissolving departmental boundaries.

Digitalization and digital transformation – one cannot go without the other – at least not for companies that want to be successful in the future.

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