The three terms are often used interchangeably, but they’re not the same.
Digitization
Digitization is the simplest, straightforward term.
“Digitization is the process of changing from analog to digital form, also known as digital enablement. Said another way, digitization takes an analog process and changes it to a digital form without any different-in-kind changes to the process itself.”
– Gartner’s Information Technology Glossary
- If you scan a book, you digitize it.
- If you replace the holiday requests at your company with electronic forms, you digitize them.
Digitalization
Digitalization goes deeper. The term stands for introducing impactful changes to an organization, ones that have the power to transform its company culture, communications, or business operations — even their business model. Like those that the coronavirus pandemic has brought to many companies, transforming their daily office life into remote collaboration with both colleagues and clients.
Here’s how Gartner defines digitalization:
“Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.”
– Gartner’s Information Technology Glossary
- If you used to run a furniture shop in the city center, but have opened an online store and now ship your furniture worldwide, that’s digitalization.
- If you used to host meetups at your headquarters, but have started to organize webinars, that’s digitalization too.
Digital transformation
Digital transformation is a bit of an umbrella term for the conjoint digitization and digitalization efforts within an organization, but most of all, it reflects a company’s mindset. The drive to optimize and grow by means of modern technology, from software solutions through cloud computing to big data.
Gartner puts it this way:
“Digital transformation can refer to anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models. The term is widely used in public-sector organizations to refer to modest initiatives such as putting services online or legacy modernization. Thus, the term is more like “digitization” than “digital business transformation.”
– Gartner’s Information Technology Glossary
- If you take your customer service online (using, for instance: contact forms, emails, audio and video chat, chatbots), that’s digital transformation.
- If you stored your company data locally, but have moved to the cloud, that’s also digital transformation.
Confusing? It is, a little — as there still seems to be some disagreement or disorientation on the subject even among the experts. But by now, you should be more or less able to sense the difference between these three terms, and — most importantly — have an idea of the benefits going digital may bring to your business.