Digitalization vs Digitization: What’s the Difference?

Welcome to the rapidly changing digital world, filled with societal challenges and evolving customer behaviour. Companies are being forced to innovate. Digitalization and digitization play crucial roles in this, but what are the differences?

Digital technology has undergone enormous changes over the past twenty years. In 2000, digital services like YouTube and social media platforms like Facebook didn’t exist. Bitcoin, Spotify, and blockchain were unknown terms. Even the smartphone was relatively unfamiliar.

With these changes came terms like digitization, digitalization, and digital transformation. But what do these terms mean? Are companies simply digitizing their services, or are they aiming for a broader digitalization of their business model?

What is Digitization?

Digitization refers to converting information into a digital format. In short, it means converting information into a digital form that electronic devices can use. An example of digitization is converting physical information into PDF files.

But why is digitization so important? It improves efficiency, saves costs, and provides faster access to information, making companies more flexible and competitive.

It is a step toward working more efficiently, but digitization is not enough to change your existing processes. This is where digitalization comes into play.

What is Digitalization?

Digitalization is the use of digital technologies to improve business processes, products, and services. It goes beyond simply digitizing information. It involves companies reorganizing their business model to work more efficiently. This way, they can strengthen their position and better respond to a rapidly changing market.

Digitalization, therefore, revolves around enhancing the value of new technologies. This leads to better customer experiences, lower costs, and innovation in products and services.

Digitalization

Example: Apple and Tesla’s Innovation

Apple is a perfect example of digitalization. Steve Jobs led Apple in digitizing the music industry through the introduction of iTunes, which not only changed the distribution of music but also the revenue model of the music industry. With this, Apple created an entirely new digital business model and set a standard in innovation.

Besides Apple, Tesla is another strong example of digitalization and innovation. Tesla has changed not only the way electric cars work but also the way cars are designed, produced, and used.

Tesla has employed digitalization to send software updates to its cars continually. This improves features and resolves issues without the owner needing to visit a garage.

Moreover, Tesla reinvented the design of electric cars. They made electric vehicles attractive, sporty, and luxurious, completely changing the perception of electric driving. In doing so, Tesla created a whole new digital ecosystem, where the car is more of a ‘smart device’ than a traditional means of transportation.

This demonstrates how digital innovation and a new business model can transform an entire industry, as Apple did with the music industry and Tesla with the automotive industry.

Further Transformation

Digital transformation takes it a step further. It’s not just about using digital technologies; it’s about transforming an organization. It requires leadership, a culture change, and the courage to take steps into the unknown.

Achieve Your Ambitions

Do you want to digitize and transform as an organization? Discover how we can help you elevate your business processes to the next level. Contact us for a free consultation.