Beyond Digitization To Digitalization

Digital transformation has become a top priority for enterprise leaders across industries. While it’s no secret companies need to become more digital to keep up with an increasingly digital world, a lack of resources or clear digital strategy can prevent successful transformation.

It’s easy for organizations to get confused on what to prioritize in the transformation, or take the wrong approach in driving their business forward. For example, when it comes to implementing digital technology, whether companies just scratch the surface or actually move toward a fully digital environment can be the difference between merely surviving to keep the status quo, or thriving and innovating and ultimately moving the organization forward.

To start, what's the difference between “digitization” and “digitalization” for enterprise leaders? While the terms may sound similar and are sometimes used interchangeably, there are important differences between the two. To digitize is to convert pieces of analog information into a digital format, whereas digitalization involves building digital processes to optimize data, thereby moving toward a digital business. Digitization is a relatively simple, though necessary process, whereas digitalization, though much more difficult, is arguably more important.

While digitizing information and assets is an important step in a company’s digital transformation, it is often a short-term fix, rather than a long-term solution. Simply digitizing without a clear picture of how an organization will become more digital overall can lead to confusion and perhaps even a misuse of resources. In addition to developing digital strategies, companies must be sure to have a roadmap toward implementation. Vodafone’s market research among IT directors and marketers found that 93% of those surveyed say they have a digital strategy, but 85% of them feel their networks are not ready to implement it.

Companies that do not consider a long-term digital strategy risk falling behind in several ways, from a potential decline in sales to personnel turnover, especially among IT leadership and senior management. According to MIT Sloan Management Review, 30% of vice president, senior vice president and director-level executives who do not have adequate access to resources and opportunities to thrive in a digital environment plan to leave their company within less than one year.

To avoid being left behind in an increasingly digital world, companies need to look beyond simply digitizing their operations and fully embrace opportunities to digitalize. Moving all components to a digital environment – digitizing – is the first step, but to digitalize, organizations are putting processes behind their digital data that can lead to innovation.

Here are a just a few of the benefits of moving toward a fully digitalized environment:

• Digitalized systems are easy to use: Making networks entirely digital by automating manual network management processes will make them flatter and more agile. This means they will be able to respond to new demands quicker than ever before. Fully-digitalized systems are easier to maintain and configure, and they provide rich opportunity for innovation given their capabilities.
• Long-term success: Effective use of digital technology, combined with the goal of engaging staff to get a deeper understanding of their technological needs, can give companies a huge lead in the race to expand, while simultaneously making them more dynamic and therefore more profitable.   
• Benefits outweigh risks: The rate of technological change is increasing exponentially. With that change comes a larger set of risks for large corporations as they evaluate their options in modernizing their systems. The greatest risk in these situations however, is standing still. Leading organizations are breaking the boundaries of their existing operations and learning to systematically become their own competition. Further, staff at companies leading the way in digitalization are continually encouraged to explore new territories and embrace challenges.

Companies that do not take the leap toward a digitalized environment may find themselves lagging behind as technology continues to improve, and customers demand faster, easier solutions. While investment in digital technologies continue to rise, those who successfully digitalize their organizations will realize new opportunities for growth and innovation, and can even create new revenue streams in the long term. The technologies and processes that lie on the other side of digital transformation have the power to fundamentally change the way we work and live.