Benefits of Digitalization and drawbacks

Digitalization is the practice of utilizing technology to enhance business operations. While product standards and marketing have been core for the performance of any business, digitalization cuts the latency and improves real-time performance. Businesses depend on data to realize demand and performance potential. Data helps understand the various parameters that can cut redundancies and develop better solutions to dispense their services.

What is the difference between Digitization and Digitalization?

Digitization is transforming information from a physical format to a digital version. In contrast, digitalization is utilizing technology to enhance business processes. In a nutshell, digitization relates to data, whereas digitalization relates to processes.

Digitization refers to creating a digital representation of physical objects or attributes. For instance, we scan a paper document and save it as a digital document. Computerized systems can use digital document for various uses. An example is in manufacturing the conversion of a manual or mechanical reading measurement to an electronic one.

Digitization is foundational. It's the connection between the physical world and software. We've been doing this since the 1960s. It's an enabler for all processes that provide business value.

Digitalization enables or improves processes by leveraging digital technologies and digitized data. Therefore, digitalization presumes digitization.

Digitalization increases productivity and efficiency while reducing costs.  Digitalization improves existing business processes but doesn’t change or transform them.  That is to say; it takes a process from a human-driven event or series of events to a software-driven.

What are the benefits of Digitalization?

Digitalization helps streamline organizational structure by synchronizing closely related processes and increasing overall efficiency. It helps in processing and understanding the real-time data of a business. Digitalization helps improve inter-process communications and thus converting into less turnaround time and less demand-supply gap. Digitalization helps organizations easily take their businesses to the consumer and simultaneously understand consumer needs and usability with IoT data. Any business can improve the service experience by understanding digitalization's data, which helps growth.

What are the drawbacks of Digitalization?

Every process comes with a set of risks associated with deployment and a lack of user awareness. Digitalization is not physical data; hence, safe storage and secure data exchange are of paramount importance so that it doesn't fall into the wrong hands or face situations of data loss. Downtime associated with maintenance and various upgrades could affect time-sensitive businesses.

Is Digitalization worth the effort?

Digitalization has proved to be the silver bullet for organizations to improve and grow. Following best practices helps reduce mishaps while handling sensitive data, while privacy issues are addressed based on customer relations, regulations, and the law of the land. But overall, the efficiency and cost savings brought in by digitalization negate the drawbacks it poses overwhelmingly.

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November 20, 2023
Digital Transformation