Digital transformation vs. digitalization
Jonas Reuter
The digitalization of processes and digital transformation are two terms that are often used interchangeably. However, they have different meanings and objectives.
Digitization
Digitalization usually refers to the use of digital technologies to optimize and automate existing business processes. The aim is to improve the efficiency and performance of processes by replacing manual steps with digital tools or workflows.
One example of the digitalization of processes is the automation of payroll accounting. Instead of employees filling out time cards manually and these then being evaluated by an accountant, employees can record their working hours using a digital time recording app. The app automatically transfers the data to the accounting system, which speeds up payroll accounting and avoids errors.
Digital transformation
In contrast, digital transformation refers to a comprehensive change in business models and processes that is made possible by the use of digital technologies. The aim is to place the company holistically on a digital platform and adapt its business strategy to changing requirements and opportunities.
One example of a holistic digital transformation is the transition from a traditional cab company to an app-based platform for transportation services. Instead of just providing cabs, the company now offers transportation services with private vehicles operated by independent drivers. This change requires not only the digitalization of processes such as booking and payment, but also the adaptation of business processes and structures to the new business model. For example, the company will have to deal with liability and insurance issues and possibly also adapt its brand and marketing strategy.
Digitalization is part of the digital transformation
It is important to understand that the digitalization of processes is only one part of the holistic digital transformation. The digitalization of processes can be seen as an enabler for the holistic digital transformation, as it paves the way for far-reaching changes in the company. However, the digitalization of processes is not an end in itself and cannot be seen as a substitute for a holistic digital transformation.
Digital transformation affects the entire company
Another important difference between the digitalization of processes and holistic digital transformation is the scope of the changes. The digitalization of processes usually affects individual processes or departments within a company, while digital transformation affects the entire company. It requires a comprehensive overhaul of business models, processes and structures in order to make the company fit for the digital future.
New business models are driving change
Another difference is the focus. Digitalization usually aims to optimize and automate existing processes, while digital transformation also aims to open up new business opportunities and position the company for the future. This often requires the development of new products and services based on digital technologies.
Changing the business model is an important part of the holistic transformation as it enables the company to become more flexible and resilient to changes in the business world. In today's rapidly changing world, it is important to regularly review and adapt the business model to adapt to new market conditions and customer needs.
The business model in the SME sector is hardly changing
The SME sector has hardly changed in recent decades and many companies have relied on their traditional business models. However, the digital landscape has developed rapidly in recent years and many companies, especially in the SME sector, are struggling to adapt to these changes. In order to remain successful in the future, it is important that SMEs embrace digitalization and adapt their business models to the changing market conditions. The development of new digital business models can be an important step towards holistic change.
About us:
MORGEN is a specialized management consultancy that focuses on the development of new business models for medium-sized companies. In particular, it supports owner-managed companies in their future-proof transformation. Knowledge transfer is at the heart of its consulting activities, which is why the MORGEN Blog regularly publishes articles on key topics such as digitalization, transformation, customer centricity and sustainability.