Digitalization vs digital transformation - the difference

The difference between digitalization and digital transformation: the two terms are often used as synonyms. Even though digitalization and digital transformation have a lot in common, they are still different. We explain the differences below.

Digitization

The original meaning of digitization goes back to the 1970s. It is quite simply about the Conversion from analog to digital Formats: Scan the invoice and archive it digitally, transfer the film from the VHS cassette to the PC using a video grabber or convert the record into an MP3 file using modern record players.

However, the more time passed, the more widely the term was used. Digitization was also used for the Pure digital creation of files by digital cameras or digital audio recorders.

When people talk about digitalization in everyday business today, the Provision of documents in digital form understood: No longer receiving the invoice in paper form, but digitally and archiving it in the cloud in a legally secure manner. Here, the concept of digitization already goes beyond pure analogue-to-digital conversion and Includes processes. At best, the processes are already so automated that manual work steps can be drastically reduced, making work easier.

The subject area has become increasingly multifaceted and the term is used less and less in its original sense (conversion from analog to digital), which often causes confusion today.

Digitalization is sometimes also understood as an era - similar to industrialization. The term digital revolution can be used here as a sharper demarcation.

Digital transformation

The basis of digital transformation is (among other things) digitalization. However, digital transformation goes beyond the process of digitalization just described and describes a complex change process.

Drivers such as digitalization or a digital infrastructure (mobile networks, PCs, smartphones, cloud computing, etc.) are changing customer requirements. Because many things have become more convenient.

Customers used to go to the bookshop and look in vain for a book that was out of stock. The friendly bookseller would order the book, but the customer would have to go back the next day to pick it up. Today you order from Amazon on your smartphone - or rather Ecobookstore - and have the book conveniently delivered to your home.

Or digitized even further: You buy the book directly with your e-book reader and hold the electronic book in your hand a few seconds later.

Customers are becoming accustomed to these convenient processes. Thanks to digitalization and the corresponding infrastructure, new opportunities are being created through purely digital business models. But also Growing challenges as a result. This is because processes are changing at both an operational and a social level.

In today's business world Digital transformation is often understood to mean the Change processwhich is triggered by digital technologies or the customer expectations based on them.

Digitalization and digital transformation - an example

Let's take a simple example: the daily newspaper. In analog times, it was delivered on time in the morning in paper form for breakfast in the letterbox. Today, we can hardly find a wide-open newspaper on the bus or train - everyone is looking at their smartphone.

Step 1: Digitization

Through the Digitization the newspaper content into a converted to digital format and are now mainly available in the form of HTML pages as articles to read on websites. Thanks to the digital infrastructure, the newspaper can now be read via the Internet on a smartphone or tablet (digital infrastructure).

This brought some advantages for the reader:

• Practical pocket size instead of bulky paper
• Quick access to a large number of daily newspapers
• A lot of content cheaper or even free of charge
• More targeted selection of articles for personal preferences possible
• News in real time instead of soccer results from the previous day

Due to the clear advantages of digital newspaper articles, more and more readers are canceling their print subscriptions. The total circulation of the German daily press has almost halved since 2000.

Digitization caused major difficulties for some publishers. Suddenly, websites appeared on the Internet that produced high-quality content purely digitally with a small team (= low-cost) and monetized it using innovative business models. Those who did not react quickly enough to the Change process reacted, went under.

Step 2: Digital transformation

Now comes the digital transformation to bear.

For example, there was a great Uncertainty with regard to the digital Business models. How willing are my readers to pay? Can I monetize the content with advertising? Do I transfer the proven subscription model to the digital world? Should it be seen as a supplement to print? Or do readers want to pay per article in purely digital form?

The content also had to adapt to the digital format. Editors could no longer write for print as before. Reading behavior on screens is different than on paper. Aspects such as Search engine optimization (SEO) or the formulation of a headline that encourages a click led to Change processes in the editorial offices.

Also technical many newspaper publishers lacked digital expertise. While the printing processes were part of the core competence of many daily newspapers, the provision of articles in digital form was a technical hurdle. In the beginning, websites were therefore often developed externally; there was no in-house expertise.

In addition many other small changes: Win customers online instead of in the pedestrian zone. Customers can easily cancel their subscriptions online. Set up a digital CRM and marketing automation internally. And so on.

Those who did not master these change processes, which affect almost all areas of a company, quickly enough found it difficult.

Mastering digital transformation

If you want to survive the digital revolution, you need to understand that this internet is here to stay and that agile organizational methods are no longer a buzzword from hip start-ups. Scrum, minimum viable products or design sprints help to pick up the necessary speed to meet rapidly changing requirements.

Hardly any industry can do without digital transformation. Whether it's newspaper publishers, cab drivers or car manufacturers, everyone has to adapt to changing customer expectations and react to changes - or, in the best-case scenario, even implement them themselves. disruptive innovation initiate. Otherwise the next start-up from Silicon Valley ála Google, Facebook, Uber, Amazon or Tesla will pass us by.