“…… many are now wondering what comes next in their digital journey. Some have questions about what the difference is between digitisation, digitalisation and digital transformation, and how the pieces fit together in a coherent strategy. They also want to know how they can build on the digital tools and platforms they adopted over the past two year.” Johannes Groenewald, General manager: Demand Factory, Tarsus Distribution
Understanding the difference between digitisation, digitalisation and digital transformation
Since the start of the pandemic, small and medium enterprises have embraced technology to reinvent their businesses. From the retailer that put up an ecommerce website and started accepting mobile payments to the professional services business that learned to deliver online training and consulting, SMEs have needed to go digital and do so fast.
Yet many are now wondering what comes next in their digital journey. Some have questions about what the difference is between digitisation, digitalisation and digital transformation, and how the pieces fit together in a coherent strategy. They also want to know how they can build on the digital tools and platforms they adopted over the past two year. Let’s take a look.
Digitisation: the definition Digitisation is essentially the process of converting information from a physical or analogue form into a digital format. Examples include scanning a paper document or ‘ripping’ a CD or DVD into MP3 or MP4 file to be used on a computer. The benefits include reducing the handling costs of physical media (such as storage and printing costs) and making information available as bits and bytes that can be used to drive a digital business process.
And what about digitalisation? Digitalisation is about using digitised data and digital technologies to transform manual business processes into a more streamlined, automated workflow. It isn’t necessarily synonymous with removing humans from a business process since it can also augment human capabilities with digital data and tools.
A simple example is email—we no longer often print or type letters, seal them in an envelope and post them. Instead, we compose an electronic message and send it across the Internet. A more advanced example might be how Amazon has digitalised the shopping experience, allowing people to shop, pay and track a parcel shipment online.
What does it mean to be digitally transformed? Digital transformation (DX) means integrating digital ways of operating into every aspect of the business and changing how the people use technology to perform their jobs. Antonio Grasso, founder and CEO of Digital Business Innovation offers a definition: “DX is a journey, not a destination. While each transformation is unique and aims to achieve specific goals, any organisation looking to evolve, scale or improve digitally is making changes to these seven elements: business processes, operations, business models, strategies, customer relationships, employee experiences and culture.”
Identifying the quick wins Digitisation and digitalisation are parts of the digital transformation journey. Digitisation transforms information, digitalisation transforms processes and digital transformation happens to an enterprise. Full transformation is a long journey that may never reach an endpoint. Thus, each company needs to bank quick wins in the short term while planning for more thorough transformations in the future.
SMEs can advance their strategies by looking at where analogue information and manual processes are bottlenecks in their business or where they can create value by going more digital. For example, in the rush to e-enable their businesses, many have put up snazzy front-end websites while still running a lot of paper-based processes in the back-office.
Others may be digitising paper as it comes into the business, but are not yet using the digital information to transform processes. Closing these gaps can create enormous efficiencies and productivity gains in the short term, while establishing a foundation on top of which the company can advance its digital transformation strategy.