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Digitization or Digitalization? What the Difference Is, and Why It Matters

Digitization or Digitalization? What the Difference Is, and Why It Matters

Digitalization and digitization are spelled nearly identically, and they sound nearly alike. They must mean pretty much the same thing, right? Not quite. Although the two terms are often used interchangeably, there’s a significant difference, and it’s one that will help you make the most of your business’s digital transformation.

Digitalization is the utilization of digital technology to reshape business processes. When a business builds a digital database of customers, or installs an RFID system to manage its physical assets, or uses robotics in a manufacturing process, it is engaged in Digitalization.

By contrast, digitization is the act of transforming an object – a document or a photo, for example – from analog (physical) format to digital format. Digitization is a component of an organization’s overall Digitalization. Just as you’d say that not all cars are Fords, but all Fords are cars, you can say that all digitization is part of Digitalization.

And of all the process transformations that Digitalization makes, digitization is one of the top two or three most valuable. Here’s why:

  • Digitization enables remote work. The explosive growth of hybrid offices and 100% remote work has been possible because workers have remote access to information contained in digital documents. Everyone can log in and get what they need to get the job done, wherever they are. Productivity is preserved and employees are happy. It’s a win for everyone.
  • Digitization improves security. Paper documents are impermanent. Fires, floods, and insects destroy them. They’re easy to damage, easy to lose, and easy to pilfer. Digitized documents, however, are access-controlled and backed up on multiple digital drives. Your business saves all the costs associated with lost documents.
  • Digitization saves storage space. File cabinets take up a lot of real estate – 9 square feet per standard cabinet, to be precise. How many does your business have? You can eliminate the cost of all that real estate, or reassign the space for more productive activities. Either way, your bottom line is the beneficiary.

Digitalization is about transforming business processes. Digitization is about transforming the information needed for processes. Now that you know the difference, talk to a digitization expert and add document digitization to your organization’s Digitalization plan.

Photo © Andrey Popov / AdobeStock