Digital Transformation is one of buzzwords in 2020

Digital transformation had been one of megatrends all over the world before the pandemic. However, we could see and hear this phrase more in 2020. The question here is how we can define digital transformation.

In this article, we will see the difference between digitization, digitalization and digital transformation based on the homepage of Salesforce. Of course, digital transformation is a relatively new phrase. Thus, there are slight differences of its definition among quotations. In this sense, we do not discuss which definition is correct or not. The important point is to try to understand the difference between digitization, digitalization and digital transformation. As a result, we will be able to contribute to our businesses as well as society through digital transformation.


Digitization is the move from analog to digital.

Not so long ago, businesses kept records on paper. Whether handwritten in ledgers or typed into documents, business data was analog. If you wanted to gather or share information, you dealt with physical documents. They are papers and binders, xeroxes, and faxes.

Then computers went mainstream. Most businesses started converting all of those ink-on-paper records to digital computer files. This is digitization: the process of converting information from analog to digital.

Finding and sharing information became much easier once we had digitized it. However, the ways in which businesses used their new digital records largely mimicked the old analog methods. Computer operating systems were even designed around icons of file folders to feel familiar and less intimidating to new users. Digital data was exponentially more efficient for businesses than analog had bee. However, business systems and processes were still largely designed around analog-era ideas about how to find, share, and use information.


Digitalization is using digital data to simplify how you work.

The process of using digitized information to make established ways of working simpler and more efficient. This is digitalization. Note: Digitalization isn’t about changing how you do business, or creating new types of businesses.

Digitalization changed service forever by making customer records easily and quickly retrievable via computer. The basic methodology of customer service didn’t change. However, the process of fielding an inquiry, looking up the relevant data, and offering a resolution became much more efficient thanks to digitalization.

As digital technology evolved, people started generating ideas for using business technology in new ways. This is when the idea of digital transformation began to take shape. With new technologies, new things — and new ways of doing them — were suddenly possible.

Digital Transformation

Digital transformation adds value to every customer interaction.

Digital transformation is changing the way business gets done and, in some cases, creating entirely new classes of businesses. With digital transformation, companies are taking a step back and revisiting everything they do, from internal systems to customer interactions both online and in person. They’re asking big questions like “Can we change our processes in a way that will enable better decision-making, game-changing efficiencies, or a better customer experience with more personalization?”

Now we’re firmly entrenched in the digital age, and businesses of all sorts are creating clever, effective, and disruptive ways of leveraging technology. Netflix is a great example. It started out as a mail order service and disrupted the brick-and-mortar video rental business. Then digital innovations made wide-scale streaming video possible. Today, Netflix takes on traditional broadcast and cable television networks and production studios all at once by offering a growing library of on-demand content at ultracompetitive prices.

Digitization gave Netflix the ability not only to stream video content directly to customers, but also to gain unprecedented insight into viewing habits and preferences. It uses that data to inform everything from the design of its user experience to the development of first-run shows and movies at in-house studios. That’s digital transformation in action: taking advantage of available technologies to inform how a business runs.

Leadership is one of key success factors to execute digital transformation

There are clear difference between digitization, digitalization and digital transformation. However, realization of digital transformation is easier said than done.

For example, due to the pandemic, many companies introduced teleworking system and lots of employees work at home. They communicate each other by using digital tools such as Zoom, Teams, Slack and Google Workplace. However, can we say this is digital transformation? The answer would be “No”. This is because companies should add value to every customer interaction through digital transformation. Online communication among the same company does not add value to every customer.

Another example is that a B2B company had formerly persisted in face-to-face meetings with its customers. However, it introduced online meeting systems with them and has managed customer relationship through an IT tool. The company improves its homepage and makes use of social networking services for inbound marketing. As a result, the company manages every customer relationship digitally, and offers more values to customers. This is the example of digital transformation.

We learn that leaders should make several key decisions to realize digital transformation. For instance, leaders have to invest IT tools, to change organizational and business structure, and, of course, to understand how digital technologies affect its businesses. Chugai, which is a Japanese pharmaceutical company, shows the clear example that leaders make digital transformation happened.