Two similar terms, two very different business practices
Should you digitise your business? Or, do you need to digitalise? What’s the difference? Does it matter? Why does technology have to involve so many confusing terms?
If you have been asking yourself this question recently, you are not alone. Digitising and digitalising are two words that are increasingly being used as businesses look to counter the threat of digital disruption. But, as with all new buzzwords, not everyone understands what they mean. The two terms are often used interchangeably, when their actual meanings are wholly distinct. In fact, they point to two very different ways of responding to disruptive technology. This makes the choice between digitisation and digitalisation an important one to get right.
Digitisation: doing the same things, differently
To digitise is to convert analogue data into digital form. If you have ever turned physical papers into electronic files, switched from cassette tapes to MP3s, or moved from old style camera film to digital photos, then you have digitised your data. The advent of modern technology has firmly ushered us into the digital age, making most of the data we need accessible in digital form. We now browse the internet for information, take pictures with our smartphones, and send emails on our laptops. This is digitisation.
Digitisation has made communication faster and easier, and opened up new channels for information. In the commercial sector, digitisation has involved the application of new technologies to existing business models to make them operate better. From the advent of digital technologies such as email and electronic databases, we are now entering a world of machine learning, robots, and data analytics. Digitisation is doing what you have always done, but using technology to make it more efficient. The business model does not change, but operational efficiency is improved.
Digitalisation: transforming business activity with technology
Digitalisation is the process of changing existing business models in the light of new technology. Its purpose is value creation – using technology to generate new ways of thinking. Businesses can use digitalisation to expand into new markets, offer new products, and appeal to new customers. It’s about pursuing different kinds of opportunities, all made possible by new technology.
In order to stay relevant, it’s no secret that businesses must constantly adapt. Digitalisation enables the delivery of a digital experience to the digital savvy consumer. One company which embodies the principle of digitalisation is Thomas Cook, which understood that it needed digital transformation in order to stay relevant in the modern market. By focusing on social media, data and analytics, the travel agent has been able to offer personalised offers to its customers and maintain sales. It also collaborated with FinTech Ferratum Group to form Thomas Cook Money, providing mobile banking services expressly designed for the travel market.
Another prime example of digitalisation is Amazon and Apple’s move into healthcare. The entry of these tech giants into the sector would not be possible without digital technology – in particular the tracking and analysis of customer data. From the use of wearables to monitor biometrics, to an increasing reliance upon AI to diagnose disease, technology has opened up new business models in the healthcare industry. If businesses can use tech to deliver better service, greater value and an improved customer experience, then they stand to benefit from digitalisation strategies in the future.
On good terms with digital
It is clear that digitisation and digitalisation are two vital strategies for businesses to stay relevant in the modern age. A truly digital business requires not only the conversion of its processes to digital, but also the adaptation of its business operations to exploit the possibilities which stem from new technology.
Whilst they are sometimes connected, digitisation and digitalisation are two different terms which are often wrongly conflated. Understanding the difference between them is a crucial way for businesses to keep their digital strategies pertinent in the modern age. In this case, getting a good grasp on the theory can really benefit the practice.
Does your business distinguish between digitisation and digitalisation? Does this distinction really have an important business function? In what ways is your business benefitting from digitisation and digitalisation right now?
Research and Insights Manager
Sarah is renowned for her ability to communicate complex concepts with clarity. She plays a central role in managing the insights programme at Foundry4.