Digitisation, Digitalisation, Digital Transformation: What’s the Difference?

SGH News


With all the hype surrounding the acceleration of digital transformation due to the impact of the Covid-19 pandemic, in Zoom calls around the world, executives also scramble to discuss concepts such as digitisation and digitalisation. While the increasing use of the 3 “D” words are often applied interchangeably, the reality is that while they are inter-connected and complimentary, they also have very distinct meanings.  While for many executives, understanding the definitions and nuances of these terms may be an exercise in lexical semantics, for others the differences are at the fundamental core of their digital transformation frameworks.

What is Digitisation?
Digitisation is fundamentally the process of converting any information into a digital format, in which the information is organized into bits. The original format of the information will be classified as analogue or paper-based, before it is encoded and converted into machine-readable zeroes and ones so that computers can transmit, process, and store it. This results in the representation of a document, image, object, sound, or signal by generating a series of numbers that describe a discrete set of points or samples. Common examples of digitisation would be converting hand-written notes into a digital file such as an Excel spreadsheet or scanning a paper document and saving it on the computer’s hard drive as a digital document, such as a PDF. The critical differentiation here is that only the information is being digitised, not the actual workflow which processes this information. That is where digitalisation comes into the picture.

What is Digitalisation?
Digitalisation is the process of leveraging the digitisation of information to greatly improve, streamline, and automate business processes. With digitalisation, companies are making the digitised information work for them as they embed digital tools and technologies into various workflows in their business to improve employee productivity, generate revenue opportunities, and optimize costs. The objective of digitalisation is to automate repetitive, tedious, and time and cost-intensive manual tasks that free-up resources, and allow employees to focus more on mission critical KPI’s. A common example of digitalisation would be production line workers in manufacturing environments replacing their hands-on tools with computer-controlled robotics.

What is Digital Transformation?
Digital transformation goes beyond the digitisation of information and the digitalisation of specific workflows and business processes, and is not something that companies can implement as individual projects. Transcending the adoption of digital technologies to facilitate operational change, digital transformation also encompasses cultural and organizational change as well. By focusing on the mindset of people and organizational culture, the vision and strategic objectives of the company drive the technology, not the other way around. This smart integration of digital technologies, competencies, and culture across all levels and functions of the company creates value for all stakeholders (especially customers) facilitating innovation and adaption to rapidly changing circumstances.

In the final analysis, we therefore digitize information, digitalize processes and workflows that make up the operations of a business, and we digitally transform the company’s overall strategy. Each one is distinct, yet complimentary and inter-connected, with digitization and digitalization essentially about technology, and digital transformation about the customer.