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Let's explore the similarities and differences as well as examples of digital transformation, digitization to easily distinguish them.
1. Concept of digital transformation and digitization
Before delving deeper into the similarities and differences, let's understand the definitions of digital transformation, digitization.
Digitalization involves transforming real values into numerical values or converting information from physical, analog form to digital form (represented by binary numbers 0 and 1). The information is input into computer systems and processed using software, facilitating easy storage and retrieval.
Digital transformation is the process of applying digitization and digitalization of processes to business operations. At the same time, business leaders need to change their mindset to apply digital technology to operational processes, aiming to efficiently manage organizations and create new value.
2. Differentiating digital transformation and digitalization
Similarities
Both concepts involve applying technology to develop organizational processes, thereby increasing efficiency and work quality.
Differences
Differentiating digital transformation and digitization
We can differentiate digital transformation and digitization based on the following criteria:
Digitalization serves as the initial step in the digital transformation process, acting as a crucial preparatory phase in organizing data and establishing a foundation.
Once collected, businesses utilize data for analysis to optimize operational processes, enhance customer experiences, or devise new strategies and business models, depending on each enterprise's direction.
Here are some examples illustrating digital transformation and digitalization.
To help distinguish between digital transformation and digitalization, Vntrip provides illustrative examples of Netflix's digital transformation and digitalization processes.
Initially, Netflix's business model (1997) revolved around DVD rental and sales via mail, entirely reliant on manual operations.
Digital transformation:
Netflix integrated television networks and production studios to build an extensive content library. Following a systematic digital transformation roadmap, digitalization (information, processes) serves as the foundation for comprehensive digital transformation.
Digitalization:
Netflix leverages internet-connected devices and cloud storage technology to create a vast repository of films. Through digitalization, Netflix can bring film products to online platforms, completely transforming customer interaction from search, selection, to payment.
Above are the criteria for distinguishing digital transformation and digitalization as well as their relationship. Digitalization serves as a crucial foundational step in the digital transformation process. Digital transformation is a necessary journey for businesses aiming for long-term, sustainable development.
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