The rapid development of technology is forcing the industry and business world to keep up with the new world. As the whole world goes digital, companies that continue to rely on analog systems are falling behind in this game and ultimately failing. In the near future, it will become impossible for companies that do not start digitalization procedures to do their business. In other words, digital transformation is a process that today’s business world has to enter. But what is digital transformation?
In this article, we will talk about the difference between digitalization and digital transformation, the benefits of digital transformation, and its importance for the business world while answering the questions ‘What is digitalization?’ and ‘What is digital transformation?’
What Is Digitalization?
What digitalization means is the activation or improvement of processes to benefit digital technologies and digitalized data. Therefore, digitalization requires digitization. The digitalization process increases productivity and efficiency while reducing costs. Digitalization improves an existing business process or processes but does not change or transform them.
What Is Digital Transformation?
Digital transformation is the process of using digital technologies to create new business processes, culture, and customer experiences or change existing ones to meet changing business and market needs. In the digital age, digital transformation is the transformation of the business into the current stage. Digital transformation; is at the top of traditional processes such as sales, marketing, and customer service and addresses how the company interacts with its customers. As we move from paper to spreadsheets and smart apps to run a business, there’s an opportunity to redesign how to do business and how to interact with customers using digital technology.
The transition of old systems to cloud platforms, the use of big data, and artificial intelligence are examples of digital transformation. It’s easier for organizations to update and modify apps in response to new user demands by moving old systems to the cloud. In this scenario, digital transformation helps support agile and flexible IT operations. More importantly, it makes an existing process much more efficient and effective.
Using technology to change or remove an inefficient work process is another good example of digital transformation. One example is the digitization of paper records. Digitalizing records and reports using technology to transform the way an organization saves its information makes work and research activities easier.
Cloud-based platforms are frequently used in digital transformation. For example, let’s consider a furniture store that allows customers to use virtual reality headsets so that they can visualize products from the comfort of their homes. In this case, digitalization transforms traditional physical retail interaction into a virtual relationship where customers can try products and buy them remotely.
What Is The Difference Between Digitalization and Digital Transformation?
Digitalization and digital transformation are the use of digital technologies to create opportunities that generate new revenue and value by changing a business model. The difference between digitalization and digital transformation can be explained simply as follows: Digitalization is the transition from analog to digital. Digital transformation is the name given to this transition process.
Until recently, businesses kept paper records. When someone wanted to collect or share information, physical documents, such as papers and folders, were moved by traditional communication methods, such as faxes or mail. Then computers became mainstream, and most businesses began converting all paper records into digital computer files. All these processes, that is, every step taken to convert information from analog to digital is called digitization.
Finding and sharing information has become considerably easier after the digitalization process, but the way businesses use their new digital records has largely mimicked old analog methods. Even icons of folders on computer operating systems are specially designed to make new users feel familiar and less intimidating.
Digital data was much more efficient for businesses than analog, but business systems and processes were still largely designed around ideas of the analog age on how to find, distribute and use information. Today, we can say that there is a technology-oriented development process and digitalization practices, i.e. innovative technologies that make business life very easy, are rapidly replacing analog solutions.
Digital transformation is more of a dynamic movement than a concept. Organizations that want to review and accelerate processes, innovate, and gain competitiveness with the help of technology have already started their digital transformation processes.
Why Is Digital Transformation Important?
Although each digital transformation initiative has its own goals, the main goal of any digital transformation is to improve existing processes. Digital transformation is important because companies must evolve to remain competitive in their sectors. Failure to improve, Failure to keep up with technology, and insisting on analog solutions means falling behind competitors.
According to a Bain & Company study, only 8% of global companies have achieved targeted business results from their investments in digital technology. One of the strategies that distinguishes leaders is that they spend more time and money transforming their business rather than just managing it.
As AI, machine learning, and big data become a part of business strategy, the digitalization process has taken a big step forward. These technologies are very important because they make better the use of the data collected by company productivity as well as increase productivity. Businesses can expand, improve existing products and services, and create innovative strategies with useful data.
Digital transformation is one of the most important driving forces of how businesses add value to their customers in a competitive and rapidly changing business environment. The process aims to benefit digital technologies to create or change user experiences and business processes, thereby meeting the changing needs and market of users.
AI is now considered one of the main providers of digitalization across multiple industries. AI accelerates digital transformation and stimulates productivity and competition by helping companies become more innovative, flexible, and compliant than ever before. Many businesses now use artificial intelligence cost-effectively.
Benefits of Digital Transformation
- The functioning of a business and the interaction of customers with the business are greatly improved with the right technology.
- The digitalization process increases productivity while reducing labor costs. Using technology to work more efficiently is one of the most effective ways to transform your business. In some cases where manpower is slow, things with the computer can proceed both quickly and without errors.
- Digital transformation reduces the expenses of paper, office supplies, archiving, printing, etc. In addition, since all documents will be registered in cloud systems, problems such as loss or damage to documents are eliminated.
- Digital transformation also improves the customer experience. Customers who use the technology intensively want to interact with the company through multiple contact points such as mobile apps, social media channels, email, live customer support. Digital transformation is the driving force behind improved customer experiences.
When Does The Digital Transformation Stop?
Many people make the mistake of thinking of digitalization as a separate project. As Forrester says, real transformation is not a destination, but a journey. Digital transformation is a slippery concept that involves delivering value to the business and its customers in new and perhaps unexpected ways.
The components of the digital transition are constantly changing. At the moment, the majority of business transformation efforts involve the innovative use of data, such as the Internet of Things, big data, artificial intelligence, or machine learning. In many ways, as the digital transformation evolves, it becomes more about data-driven change than anything else.
Therefore, the digitalization process continues to develop and the identification of digitalization elements continues to be complex and controversial. The only thing we can be certain of is that the transformation will be permanent in any form. This means that CEOs and the rest of the management team need to create a sustainable business strategy focused on digital transformation.