What do we actually want to achieve when talking about becoming more digital?
A few days ago a business partner and I had a chat and at some point the question came up: What’s the difference between Digitisation and Digital Transformation? Let me be blunt here: At first, we didn’t really have an answer that really expressed our understanding of what these terms describe in detail.
Consequently, we opened up a very specific social business network and researched it for articles and posts covering this matter. The few we’ve found all had their edge. During the course of our conversation we agreed that this is a question still worth asking, answering and discussing.
We believe, that there can’t be successful Digital Transformation without Digitisation and Digitalisation. Nevertheless, without Digital Transformation, Digitisation and Digitalisation may most likely lack a certain focus within the organization and therefore go very slow – if at all.
This article intends to first delineate the terms Digitisation and Digital Transformation in regards to their specific means. Then, we’ll bring the two into context in order to share our understanding of whether they are “chicken and egg”, “apples and oranges” or even the exact same thing.
So, what is Digitisation now?
According to Gartner, Digitisation can be 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.”
In 2014 Scott Brennen and Daniel Kreiss stated, that “Scholars across disciplines use the term digitisation to refer to the technical process of converting streams of analog information into digital bits of 1s and 0s with discrete and discontinuous values.”
In this, Brennen and Kreiss describe a relocation of information. Originally being analogue information, information that is stored on e.g. paper, they consider Digitisation as the process of taking this information onto digital media and structuring it in a proper manner. Working with a software provider for Logistics I witness this process every single day: Instead of using paper-based systems to process goods in- or outbound, these activities are now PDA-based or even apply speech recognition. Directly integrated with Supply Chain Execution Systems the data is available instantaneously, stored in databases waiting for us to analyse it instead of having people try to decipher and interpret my handwriting…
What Brennen and Kreiss’ statement has in common with Gartner’s is the use of digital technologies to process data, while business-focused resource Gartner takes this to another level. They even go as far as saying that during this process existing business models are enhanced and new streams of revenue created. Have you ever used a tracking ID to trace a parcel you’re expecting? From an information point of view it is simply a sequence of digits and letters, but to us it represents the illusion of insights and control about the delivery, which most of us happily pay for, right?
In his 2014 article in Wall Street Journal’s CIO Journal, Thomas H. Davenport refers to Digitisation as a course of “taking manual or offline business processes and converting them to online, networked, computer-supported processes.” Just like the transformation of information outlined above, which – to be honest – customers or end users do not really care about, Davenports delineation also focuses on the internal matters of processing information with the use of digital technology. Though he does specifically include the processing of data for the purpose of making business processes computer-assisted, he does not go as far as including the change of business models as Gartner does. Taking the tracking ID example, Davenport would store unique identifiers for each parcel but not offer customers the service of tracking those.
Therefore, we assume that the term Digitisation includes the transformation of analogue information and processes into bits of zeros and ones, in order to be processed by networked computers.
We consider the outcome of a perfectly executed and completed Digitisation a paper-free office.
Is this the same as Digitalisation?
In 1974, Robert Wachal first discussed the social implications of computer-assisted research under a headline of “digitalisation of society”. Initially, it supposedly was less concerned with the process of transferring analogue data into digital data. Eventually, Wachal states that “digitalisation has come to refer to the structuring of many and diverse domains of social life around digital communication and media infrastructures.”Do you remember when we started writing emails instead of sending letters? More and more distributed workforces even take this further and use tools like Slack or alike to communicate. These have been the first steps of an ongoing process we may call Digitalisation.
According to SAP Senior Researcher for Digital Business, Uwe Riss, “digitalisation means that business now uses technology to engage with people to precisely address their particular needs.” He underlines the above statement that Digitisation is about making information available in a digital manner, while Digitalisation is about using digital technology to interact. These interactions are the social factor in a digital business, whether we’re communicating internally or with externals.
Comparing Digitisation and Digitalisation, the first one rather describes a technical process of transforming information from physical copies into streams of zeros and ones. Digitalisation instead seems to be focused on interactions and how we apply digital media to communicate. Therefore, Digitisation and Digitalisation are definitely not the same, but build on each other.
We consider the outcome of a perfectly executed and completed Digitalisation a provider-user-relation, both internal and external of our organization, where both parties can interact instantaneously using online or digital media.
It may abolish endless waiting times in hotlines or offices, trying to explain what we want from the provider. Instead, after a successful Digitalisation, there should be no analogue communication such as letters between concerned parties. Desirability of a suchlike state or how much of our interactions shall be digitalised through Apps or websites may be decided upon on a case-by-case basis.
Rest assured, being a romantic my better half will still receive handwritten letters every time I feel like opening up and telling her how much I appreciate everything I have. The same goes for well-treated business relations. Aside from that, where effectiveness and efficiency count, I’ll go down the digital path.
And what about Digital Transformation?
According to Wikipedia, Digital Transformation can be defined as “the change associated with the application of digital technology in all aspects of human society.” Derived from that, one may define Digital Business Transformation as “the change associated with the application of digital technology in all aspects of doing business”. At DigitalWiki, Stephanie Tank stated that with Digital Transformation not only actions are concerned, but the way an organization thinks is specifically included.
After having these findings drive our discussion I came to the conclusion that Digital Transformation, or rather Digital Business Transformation, combines the above matters. I believe, that Digital Transformation can be described as “the controlled, at best parallel, process of
- Digitising and structuring information and processes (controlled Digitisation)
- Implementing a desired level of digital interaction within an organization (controlled Digitalisation)
- Embedding a digital culture
with the distinct purpose of enabling the organization to create new, customer-focused, customer-enabling and customer-involving services or products with the use of insights generated from digitised information.”
An organization with a digital culture is able to use the insights of subject-matter-experts as well as the knowledge and expertise of all, and then self-create new models for doing business as a whole group, executed by few. These insights can be used to benefit better decision-making by supporting Big Data and Analytics to increase our depth of understanding about details of what we do and why we do it the way we do it. These insights may as well be used to create new business models or value chains.
The outcome of a perfectly executed and successful Digital Transformation can be considered as an agile organization that welcomes change, challenges the status quo and reinvents their products, processes, services and interactions using digitised information and digital interactions.
To put this all into a nutshell, and to answer the question whether Digitisation and Digital Transformation can be considered “chicken and egg”, “apples and oranges” or nearly the same: There can’t be successful Digital Transformation without Digitisation and Digitalisation. Nonetheless, without Digital Transformation, Digitisation and Digitalisation may most likely lack a certain focus within the organization and therefore go very slow – if at all.