Clearing the Air
There seems to be a lot of confusion around the terms digitization, digitalization, and digital
transformation. These terms may look alike but they are not the same; in fact, they have very
different meanings. In an article in Forbes magazine, author Jason Bloomberg spelled out the
differences:
Digitization
Digitization essentially refers to taking analog information and encoding it into zeroes and
ones so that computers can store, process, and transmit such information. It's important to
remember, however, that it's the information you're digitizing, not the processes – that's
where digitalization comes in.
Digitalization
Digitalization is the use of digital technologies and information to change a business model,
transform and streamline business operations, and provide new revenue and value-producing
opportunities. In essence, it is the process of moving from an analog to a digital business.
Bloomberg also noted that digitalization opens opportunities for automation and helps to
transform work roles and skill sets.
Digital Transformation
Digital transformation, in contrast, is not something that enterprises can implement as
projects.
Instead, this broader term refers to the customer-driven strategic business transformation
that requires cross-cutting organizational change as well as the implementation of digital
technologies. Digital transformation initiatives will typically include several digitalization
projects, but executives that believe that there is nothing more to digital transformation than
digitalization are making a profound strategic mistake.
DEMAND, DELIVERY, DISRUPTION | 8
Bloomberg states that in the final analysis, "we digitize information, we digitalize
processes and roles that make up the operations of a business, and we digitally transform
the business and its strategy. Each one is necessary but not sufficient for the next, and
most importantly, digitization and digitalization are essentially about technology, but
digital transformation is not. Digital transformation is about the customer."
