What Is Digitalization?

By moving from analog to digital tools and workflows, companies can streamline work and unlock new opportunities for efficiency

If your company relies on paper business processes, it may be time for an update. An increasing number of businesses are moving more of their functions to the digital space. This process is known as digitalization, and it encompasses more than just going paperless. It takes the transition one step further as part of a full digital transformation. So what is digitalization, and how does it fit into the modern business environment? Why are so many businesses pursuing it? And how are they doing so successfully?

Digitalization isn’t just a buzzword — it’s the present for industries around the world. Read our comprehensive guide to make sure your business is on track.

What is digitalization?

Digitalization is the process of transforming analog workflows into digital ones. This process often includes changing business models to provide new revenue and value-producing opportunities.

Digitalization is closely related to the term digitization. But the two are distinct. Digitization refers to converting physical materials — papers, photos, CDs — into digital data. It’s often the first step in a larger digital transformation for a business. An example would be scanning a paper document into a computer. This serves as a foot in the door for digital transformations.

Digitalization is the second piece of the puzzle. It provides the tools and framework for working with digital data. If a worker edits that scanned document with Microsoft Word rather than a pen, that would be digitalization. Emailing the edited document to receive approval would also be digitalization. So would the application of an electronic signature. The process has wide-reaching applications.

Many parts of a business can undergo digitalization. Document management and sharing, internal communications, project management, accounting, and payroll to name a few.

What is digitalization good for?

Improved operations

There can be many advantages to digital technology and workflows. Improved operations may be the most noticeable. Take digital document management as an example. Workers can use this to correctly organize documents more quickly. They can tag documents with key information. That information can then create an index, which powers search. Suddenly, they have near-instant access to any materials they need. The risk of lost materials can plummet. Sharing files goes from walking them across the office or building to a few clicks. Workers can collaborate on the same documents simultaneously from different locations. In short, new efficiencies abound.

Tighter security

So do new privacy and security capabilities. As safe as lock and key cabinets feel, digital protections can be even safer. Consider this system: All data on your network is encrypted. Only those with login credentials can view it. Even those with credentials can only see the sections they need to do their jobs. Any changes they make are tracked automatically in audit trails. Plus, they can be rolled back at the push of a button. These measures can help keep your business safe and compliant.

Reduced costs

There are also material costs to consider. Digitalization of workflows can reduce your reliance on more than just paper products. It also means spending less on supplemental materials. Think of all the paper clips, file folders, file cabinets, printers, ink cartridges, staples, envelopes, and more your business uses. Shifting to digital solutions can bring about significant savings. With the price of paper high and climbing, there’s never been a better time to leave it behind.

Advanced benefits

The more your business implements digitalization, the larger the pool of potential benefits:

• Templates and automations can streamline repetitive tasks. That accelerates work and boosts productivity.
• Marketing analytics can drive a deeper understanding of your customers. That enables more precise targeting, more personalized creative, and more measurable results.
• Customer relationship management software can optimize your sales funnel. That can lead to better-personalized nurture content, more conversions, and more revenue.
• Labor reporting can provide insight into employee performance. That can reveal the most essential tools, where workers need support, and more.
• Chatbots and automated communications can improve customer support. That can shorten response times and raise customer satisfaction. It can also project a forward-thinking image that customers respond favorably to.
• Cloud computing can offload computing and maintenance costs and allow greater flexibility.

What to consider when undergoing digitalization

It’s vital to pursue digitalization with care. Doing so can prevent employee confusion, business disruptions, and damaged client reputations. You may wonder, “What is digitalization going to look like at my company?” The answer will vary according to the digital technology you need and the business processes it slots into. But there are common themes most businesses should consider.

Audit current workflows for digital solutions

If you plan to go digital, ensure digital solutions exist for all of your workflows. Getting halfway through the transformation only to realize the tool you chose won’t work can sow chaos. One way to prepare is to diagram your current workflows. Map where digital solutions might fit in or replace them. Then conduct thorough research on each tool. Consider not just the tool’s function but also its cost, ease of use, and whether it would be compatible with other tools you’re researching. Investigate free trials and accumulate hands-on experience before committing.

Create a digital transformation roadmap

Overhauling your company’s approach may take time. Creating a digitalization plan can help you stay on track. Your plan should include each step in the process, from research through implementation. Assigning ownership of each stage to specific employees can ensure accountability. Setting a timeline can help identify when aspects of the transition need more attention.

Transition at a sensible pace

Trying to implement a business-wide digital transformation all at once is a recipe for confusion. Instead, transition elements of the business one by one, or a couple at a time. Doing so can help safeguard against catastrophe. If one part of the transition takes longer than expected, the repercussions should be contained. This can help minimize disruption to the business.

Train employees

Systems only work as well as their constituent parts. Clever workflows and powerful tools have their limits. And those limits begin precisely where training ends. If employees don’t understand something, they will likely not perform as intended. Digital transformations bring lots of new information for employees to learn. Educating and supporting them as much as possible is in your best interest. Ensure workers have access to experts on new tech. Encourage those who understand best to help their coworkers. That will promote a culture of mutual assistance, lifting employees up together.

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