Even though the terms digitization and digital transformation are often used synonymously in everyday language, they describe “two fundamentally different approaches”. Many companies claimed to be transforming themselves digitally, but on closer inspection, it was often merely a matter of digitally mapping existing processes and not of transforming the business model.
The terms digitization and digital transformation are often used synonymously in everyday language. A still quite large number of companies are not striving for a real transformation of the business model, but are merely mapping existing processes digitally. The avoidance of paper and manual activities is not yet a “digital transformation”.
In companies, it is often a question of the digital mapping of existing processes and not of a change in the business model. A true digital transformation arises from the desire for better effectiveness and is initiated at the structural level. A selective change is not yet a change and the avoidance of paper and manual activities is not yet a “digital transformation”.
The digital transformation of a company is much more than just digitalization at the process level. It is based on strategic considerations and is characterized by disruptive changes. If, for example, a company uses the possibility to digitize all objects along an order process from order to payment and proper posting, the entire process is automated by software. This process of process automation is technology-driven and aims at efficiency. This is described correctly with digitization, creates quite benefits and takes place everywhere.
Transformation is disruptive
A true digital transformation, on the other hand, arises from the desire for better effectiveness and is initiated at the structural level, at the lower level of which digital processes are present. The much more comprehensive digital transformation of a company, characterized by disruptive changes, is based on strategic considerations. Modern technology is only the enabler.
Digital transformation is therefore not only about the question of whether a process can be automated, but also about whether the process in its current form still makes sense at all or whether it can be developed from scratch.
In the course of this, not only innovative start-ups are created, but also new business areas in traditional companies that go far beyond the existing product or service range or differ fundamentally from it. The availability of technological innovations thus gives the impetus to develop completely new business models or processes and to significantly expand them.
It is important to create an awareness that the thinking, systematic and objective of the two approaches, digitalization and digital transformation, are fundamentally different. Companies should never content themselves with successful digitalization, but rather take the far greater opportunities of digital transformation into consideration.
The IoT has arrived in industrial production
The Internet of Things (IoT) and also human-machine communication as well as machine-to-machine communication have already arrived in today’s industrial production. The flood of data that is generated and can be evaluated is already creating entirely new business models and applications.
What is required is strategic thinking, knowledge of new digital concepts, methods and technologies, and courage: it is difficult to question old, previously successful business models and leave them behind. But that’s the point.
This article is originally posted on CIO’s website.