Digitization, Digitalization, and Digital Transformation.

Many people have begun to conflate terminology either out of ignorance or for their own benefit, which creates confusion, because suddenly we’re talking about different things but calling them the same.?Some have begun labeling digitalization as digital transformation to appease management, to get a project approved, or make a sale.?In this discussion, I hope to clarify the terminology and attempt to bring some baseline for discussions.

Let’s start with the term?Digitization.?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 (e.g., PDF).?In other words, digitization is about converting something non-digital into a digital representation or artifact.?Computerized systems can then use it for various use cases.?An example from manufacturing would be when a measurement is converted from a manual or mechanical reading to an electronic one.

Digitization is foundational.?This is the connection between the physical world and software.?This is what we have been doing since the 1960s.?It is an enabler for all the processes that provide business value because of the need for consumable data.

Digitalization?refers to enabling or improving processes by leveraging digital technologies and digitized data.?Therefore, digitalization presumes digitization.?Examples of this could be as simple as PLC logic or PID control in a microprocessor-based system, sequenced logic for a batch process, automated shutdown logic, etc.?It could also be something more complex, like an error in a transmitter generating a work order in the ERP maintenance system for a maintenance tech.

Digitalization improves an existing business process or 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 software-driven.

Digital Transformation?is really business transformation enabled by digitalization.?The “digital” moniker is a little bit of a misnomer because the essence of digital transformation is the changing of business processes enabled or forced by digitalization technologies.?

One example of this is the convergence of IT/OT where the intersection and overlap of IT skills within the OT domain have created the need for more uniform governance due to cybersecurity concerns, data flow requirements, and skills.?Another example of digital transformation is a shift from local control of physical processes to remote monitoring and control of those same processes.?A more ambitious example would be the integration of your customer sales volumes feeding through to your company’s raw material vendors, thus integrating the supply chain for greater efficiency and response.

Summary:

Accuracy in communication is one of the most critical communication skills.

Digitization?refers to creating a digital representation of physical objects or attributes.?Digitalization?refers to enabling or improving processes by leveraging digital technologies and digitized data.?Digital Transformation?is really business transformation enabled by digitalization.?And,?Industry 4.0?is European for the combination of Digital Transformation and Digitalization.

It helps in communication to understand your audience’s frame of reference.?If their definitions are different, you’ll need to translate your ideas for them.