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Is it digitisation, digitalisation or digital transformation?

In the ‘digi-world’, companies are confusing these terms in ways that short-change the power and importance of digital transformation.
Tanya Long
By Tanya Long, Chief operating officer, Argility Technology Group.
Johannesburg, 09 Feb 2023

There is, of course, no such word as ‘digi-world’ but from the outset, I think you get the drift. What company is not scrambling to keep abreast of the latest digital transformation strategies aimed at effecting significant change in business operations? 

You’ll note I don’t talk about companies ‘considering’ digital transformation. The reason for that is clear – the digital horse is well out of the box and any company not, in 2023 (post- the pandemic/remote working and more) in the throes of digital transformation is probably destined for the scrap heap.

But it can be a daunting prospect in terminology alone. We have digitisation, digitalisation and digital transformation. I will outline the differences between them and show how this is anything other than an argument in semantics.

Each one is often interchangeably and inappropriately used, with people using one but then clearly meaning another. I will also shed light on where it is all headed and what it can do for businesses.

Let’s kick off with a definition of each term.

Various sources, including Gartner, describe digitisation as the process of changing information from analogue to digital form, also known as digital enablement. Whereas digitalisation as a term is accused of being fraught with ambiguity, but is defined as 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.

Each one is often interchangeably and inappropriately used, with people using one but then clearly meaning another.

In short, migrating from analogue to digital: digitisation relates to information, digitalisation relates to processes.

Let’s move on to digital transformation, which McKinsey defines as an effort to enable existing business models by integrating advanced technologies. It allows digital technologies to be integrated into already existing business models, changing the way the company operates and delivers its product or service.

Hopefully, at this point, you are not feeling even more muddled because, as Forbes notes, companies confuse them at their peril. So, as can be seen from the foregoing, all three of these terms have distinct meanings but again, I confirm this is more than an argument in semantics.

Forbes emphasises that in reality, people are confusing them in ways that short-change the power and importance of digital transformation, thus putting the very survival of their organisations in peril.

It explains that a company may undertake a series of digitalisation projects, from automation through to employee retraining, but that is not digital transformation, which Forbes notes is not something that organisations can implement as projects.

Instead, this broader term refers to the strategic business transformation that requires cross-cutting organisational change, as well as the implementation of digital technologies.

Digital transformation initiatives will typically include several digitalisation projects, but again Forbes emphasises that executives who believe there is nothing more to it than digitalisation are making a profound strategic mistake.

Each of these terms is required for different actions/scenarios in a business, but are not enough in themselves to drive the next action. The real distinction is that digitisation and digitalisation are about technology, whereas digital transformation is about the customer, and on that note, all sources are in agreement with Forbes.

Where my opinion differs is that none of the definitions brings disruptive technologies into the picture.

If digital transformation has turned the business world on its head by revolutionising how companies do business with their customers and above all how their customers interact with them, what have disruptive technologies done? Think about it the next time you tap your phone to order a taxi.

So, yes, digital transformation is a reality that businesses today are forced to embrace, plan for, or risk being fired out of the market by competitors that are getting it right.

But it is the digital disrupters such as blockchain, artificial intelligence, the internet of everything and more, that are having the greatest impact.

Of course, all of these terms eventually end up interwoven, with all roads leading to a successful and agile digital transformation implementation – without it, there is little hope of being a market disrupter.

Let’s break down what’s driving digital transformation and what are the caveats on the journey.

Unquestionably changing consumer demand is at the top of the list. Customers today have the power of choice that is enabled by digital technologies, and they wield it like a weapon and quite rightly so.

Service, convenience, user-friendly interactions are all top of their – not wish list – but rather their demand list.

Changing technologies and evolving competition in markets where businesses capable of embracing change and focusing more on customer-driven strategies are capturing, keeping and growing their businesses. Companies with the vision to transform and in doing so, see opportunities before they turn into imperatives for sustainability are winning.

Two factors are highlighted as the biggest obstacles to successful digital transformation journeys: poor change management and not focusing on the crucial customer experience.

Strategic planning that aims to apply digital technologies – across all aspects of the business – is essential if companies are to meet ever-changing customer demands.

Digital transformation is about removing customer effort and frustration, being relevant and providing hassle-free convenience. It is the ability to be agile and take a holistic look at the entire customer experience.

In a nutshell and to again refer to Forbes, we digitise information, we digitalise processes and roles that make up the operations of a business, and we digitally transform the business and its strategy.