Digitalization, or the use of digital processes to alter and improve business operations, is a crucial, increasingly relevant component of business modernization, revenue growth, and future success. According to Mariana Mazzucato, Ph.D., Director of the Institute for Innovation and Public Purpose at University Chicago, London, “Digitalization is no longer an option. It is a necessity.”
Here, we break down digitalization, its effects, and how it’s disrupting several key industries.
Digitalization is the process of leveraging digital technologies to transform how business is being conducted. This involves converting business processes into digital formats and then analyzing data to identify trends and gather business insights.
Digitization and digitalization, although often used interchangeably, are distinct terms. Digitization is the process of converting non-digital things into digital formats. This often makes it easier to save, share, and search for information. Examples of digitization include:
Digitalization, on the other hand, refers to a broader transformation that leverages digitized information to alter operations. Examples include:
So: if a photographer scans all of their photographs into digital copies, that is digitization; if they then create online collections of these photographs that people can view or purchase, that is digitalization. Similarly, if a company converts all of their policies and resources into a digital format, that is digitization; if they then upload those policies into a mobile risk management platform that employees can use for other on-the-go needs, that is digitalization.
Digitalization has a range of benefits that can help businesses modernize and improve operational efficiency. For example, if a company offers goods or services online, they can create an automated workflow (ex: once an order is placed, an invoice and shipping label is automatically created and sent to the warehouse for processing). This streamlines operations and improves productivity and efficiency.
For workers specifically, efficiency can be increased by digitizing and modernizing processes and workflows, simplifying supply chains, and quickly and frequently communicating workplace best practices and policy updates.
Digital operations also enable companies to review data and identify new opportunities for lead generation and growth (ex: if many people are ordering the same two products, this can indicate that a good opportunity for cross-sell marketing). In manufacturing, for example, digitalization can help organizations forecast product demand, track inventory, and improve worker efficiency to increase profitability.
More broadly, using digitalization to spur digital transformation indicates organizational ability to adapt and address evolving customer needs. It can also simplify and automate business operations. This helps companies stay competitive, tap into new markets, and improve communication and growth.
Research has also indicated that effective digitalization can improve customer satisfaction, as it can improve modernization and self-service capabilities. Effective technological integration is a priority for fast-growing businesses, and organizations that fail to adapt may lose success or become obsolete.
In recent years, many companies have begun to digitize (ex: saving files digitally instead of in hard copies, or using electronic document signing); now, they are moving toward digitalization. This has not only been in an effort to modernize, but also in response to a changed business environment.
Digitalizing has become an increasing focus in the past year since many companies relied on digital operations during the COVID-19 pandemic. As employees transitioned to working from home, telecommuting and virtual meetings became part of daily operations. At the same time, data integration and privacy became increasingly important. Although many companies are now returning to in-person operations, many are planning to make remote or hybrid work a part of their ongoing business model.
As a result, they must implement technologies that will keep their workforce informed, productive, and safe. This involves using technology to provide easy access to resources, broadcast pertinent information, and facilitate effective employee feedback loops.
Digitalization’s effects can be seen in almost every industry, including commercial real estate, health care, manufacturing, sports and entertainment, and utilities. Examples include:
Commercial Real Estate:
Sports & Entertainment:
Although these updates can improve recordkeeping, modernization, and data-based innovation, they also put companies at risk for significant cyber threats and data breaches, which can be incredibly damaging and costly. In fact, the average cost of a data breach in the U.S. is $8.19 million. To digitalize safely, it’s important to invest in cybersecurity resources and training. Privacy is critical for safe digital experiences – for both organizations and their customers.
For many companies, an early step toward digitalization is streamling communication using mobile technology, such as mobile risk intelligence communications platforms. These platforms help implement technologies to improve safety by enabling intuitive two-way communication and allow users to easily access pertinent resources. To learn more about these platforms, download our free Mobile Risk Intelligence Communications Platform Buyer’s Guide.