The two words may sound similar, but there is a notable difference between Digitization and Digitalization, and this ambiguity has created uncertainty even among IT professionals when it comes to understanding digital transformation at its core.
The above google trends from 2004 to the present reveal that Digitization and Digitalization are nearing parity in internet searches. This convergence indicates a key milestone in the digital era, as higher digitization efforts are the enablers for Digitalization that opens the way for digital transformation.
Digitization – conversion from physical object to cyber-physical object
Digitization is a relatively straightforward concept that enables to convert and provides digital identity to any physical object –
for example,
- By scanning a photo or a document into bits and bytes,
- Converting songs to MP3 format to play on digital devices,
- RFID/bar code tags for inventory items so they can be identified by digital devices like scanners
Digitization is converting physical information into a digital format with a unique identification that can be further processed by an information system that facilitates informed decisions in an environment.
As per the Gartner Glossary,”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.”
The twentieth-century computing and its requirements for data storage, processing, and transfer enable massive efforts in digitizing processes and objects from mechanical and analog electronic technology to digital technology, which is the driving force of the digital revolution, also known as the third industrial revolution.
Digitization is primarily impacting our lives; consider the fact that in 1986, 99.2% of the world’s storage capacity was analog; however, by 2007, 94% of the world’s information storage capacity had shifted to digital. Does that mean we are almost digitized our lives and enterprises?
Measuring Digitization:
A decade ago, there were 100 million personal computers, 10 million mobile phones, and less than 3 million people on the internet, most of whom connected via dial-up modems.
By 2010 there were 1.4 billion PCs, 5 billion mobile phone users, and an internet population of 2 billion, about the size of India and China, combined. High-speed broadband or handheld browsers are usually used to connect these devices, which are geographically and economically spread out.
In the real world, internet connections are measured by the number of people or devices, but the development of the information and communication technology sector calls for a new assessment method.
Any country’s Digitization can be measured across six attributes:
- Ubiquity (level of access to digital services and applications),
- Affordability (pricing),
- Reliability (the quality of connection),
- Speed (the rate of data throughput),
- Usability (the ease with which people can get online and use applications available there),
- Skill (the ability of users to incorporate digital services into their lives and businesses)
Booz and Company’s researchers have found a measurable proxy indicator for all six of these attributes to measure the level of Digitization for any country.
The progression of Digitization proceeds in four similar stages in all the geographies,
- Constrained economies (digitization score below 25):Internet services remain expensive and available to a limited population due to poor economic development and political factors. A constrained economy where enterprises are forced to use less automation mostly depends on manual operations, and the cost and conformance of the product are compromised due to the same.
- Emerging economies (digitization score between 25 and 29.9): The emerging economies have achieved significant progress in the last decades in facilitating affordable and widespread access. However, the reliability of the services remains not at par with limited capacity and lower usage.
- Transitional economies (digitization score between 30 and 39.9): These economies are fast movers and provide their citizens with ubiquitous, affordable, and reasonably reliable connectivity services.
- Advanced economies( with a score of 40 and higher): They are in the most mature stage of Digitization. The talent base and processes are in place to utilize the latest environment sensing technology and data injection from remote devices to analytics on the cloud.
Digitization impact on job creation:
Booz and Company’s analysis shows that a 10% increase in Digitization reduces a nation’s unemployment rate by 0.84%. The digitization efforts of the global economies added an estimated 19 million jobs to the global economy, up by 5% from the estimated 18 million jobs added from 2007 to 2008.
As the country progresses in its Digitization, the potential for innovation and the creation of new jobs increases significantly. A 10 points increase in Digitization has, on average, led to a 6-point increase in the country’s score on INSEAD Global Innovation Index, which ranks countries according to their innovation potential.
Digitalization –Utilization of digitized data for informed decisions.
As per the Gartner Glossary,”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.”
The rise of Digitalization with the acceleration and mass marketing of new digital technologies, like cloud computing, machine learning, artificial intelligence, business intelligence, and the internet of things in the last decade. These emerging digital technologies are fundamental to advancing automation in industry 4.0 (Fourth industrial revolution), a term coined by Klaus Schwab in 2015 at the annual World Economic Forum in Davos, Switzerland.
Automation and digital technology can aid the techno-entrepreneurs in unlocking the new revenue stream from the data aggregated through Digitization, drive effective change management and create new business models.
Apart from the noticeable benefits of Digitalization, the overall effect of Digitalization across the enterprise is called digital transformation, which focuses more on process than outcome.
When the Digitization is completed and supported by automated processes, these managed changes initiate new value chains and experiences that are sustainable, collaborative, M2M capable, resulting in a profitable venture or additional revenue stream.
For example,
- Self-service and capability generation
- Better customer experience
- New revenue streams
- Sustainable growth strategy
- Successful business transformation strategy
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www.infotoday.com
- https://www.strategy-business.com/
