There is a lot of ambiguity in the usage of the three Ds – digitisation, digitalisation and digital transformation. The three terms have extremely different meanings, but a confusion still reigns.
We often hear people use the wrong terms interchangeably to express their ideas to take the business forward, but digitisation, digitalisation and digital transformation are technically very distinct.This happens because we, as individuals, perceive the digital evolution differently – we live in multiple evolutionary levels of the digital journey- and the lines get blurred. For instance, when you invest in property, everything is analogueand you fill out forms manually. The next minute, you are reading news in a digitalised format on your mobile.
However, the difference between digitisation, digitalisation and digital transformation is very distinct and one must understand it. Digitisation made room for digitalisation, and digitalisation pushed digitisation further. Both these phases pushed people to digital transformation. Let’s takea look at what each term means:
This started back in the 70’s and 80’s. Digitisation literally means the translation of analogue into a binary or digital format, which can be processed by a computer. It took three decades to convert non-digital documents, images, photographs, sounds and more into a digital format.For instance, when a text document gets written converted into Word format, it is digitisation. It includes the ability to write, keep records, create digital signature and store the data.
Moving forward to the late 80’s and 90’s, we developed an ability for two entities to store, connect and communicate digital formats. While digitization is more about converting data, digitalization is about engagement leveraging digitised data. For instance, consider the ability to send the digitised Word document and connect. However, digitalisation doesn’t necessarily happen after digitisation. Both functions pushed each other and saw rapid adoption in the late 80’s and 90’s.
Digitalisation created an ability to connect with customers and to communicate faster. Early adopters started using digitalised formats to change their businesses and identify and create new revenue models which never existed earlier. It was possible to get information real time and this elevated the ability to produce tangible value for businesses. There is an eagerness among CXOs in raising the value ofdigital transformation. For instance, an enterprise undergoes a type of digital transformation when it maintains all its records in a digitised form and digitalises it across departments in a way that it is easily available and analysed.
What it means for enterprise
Let’s decipher these phases from an enterprise’s perspective. Uber transformed the manual taxi business into a digitalised business. The first form of digitisation took place when the locations took a digital form with maps and GPS. Because of a digitised form of maps and navigation, digitalisation came about with the ability to communicate the location. By entering the location and destination, a cab is sent to a customer. Uber took this ahead and enabled digital transformation of the taxi business by creating a new business model and generating new channels for revenue.
A quick cycle in India
India is more un-digitized compared to others. If you look around, you’ll observe that all three steps are getting implemented simultaneously. There is more curiosity around digital transformation today, and hence we see a high acceptance of digitization and digitalization. A recent example of digital transformation is how the entire nation reacted to demonetization – we lagged behind earlier as financial transactions were mainly analogue, while the world went digital over the last thirty years. With demonetization, a digital transformation was the best way out and there was an immediate acceptance of digitization and digitalization among financial institutions, businesses and the masses.
Well, what does this mean for businesses in our part of the world? Digital transformation stands for the era we live in. Enterprises across the globe are embracing the benefits of their digital journey. Transformation is as relevant here as it is in any part of the world. Enterprises must take initiative to transform and it must be powered by knowledge. For those who find this step intimidating, find out the potential for your business and figure out the minimum changes you can make to innovate your business and seize the opportunity.
Authored by: Tejinderpal Singh Miglani, CEO at Incedo Inc.