Digitization has become an important component for companies to remain marketable, as it is no longer possible to imagine our everyday lives without it. It encompasses ways of communicating and can also be deeply applied at the business level. This makes it all the more important for companies and organizations to always keep up to date.
Digitization Definition: What is digitization all about?
In order to clarify the significance of digitization for companies, it is important to clearly define what specifically lies behind the term. What is digitization consequently ?
Digitizing encompasses all the ways and means that can be used for virtualization and also for networking reality. The term also refers to the sharing of non-physical data. The platform-based organization of value chains also plays an important role. The resulting possibility for several people to access data from different locations offers users an efficient and time-saving transfer of data. Digital technology has become an indispensable part of our everyday lives and can have a major impact on the success of a company when used sensibly. Entrepreneurs who keep up to date with the latest technological possibilities and establish new approaches in their business models have a considerable advantage over the competition.
The four fields of digitization
Four dimensions can be distinguished from one another that represent components of digitization in companies. These four dimensions are called:
- digital products
- digital networking
- digital processes
- digital business models
The field of digital products comprises the data-based services that create benefits for customers on their own or as an integration into physical devices. In most cases, they are automated.
The digital networking sector focuses on connecting different processes in overall digital systems. These systems are not limited to the respective company, but also extend to other players such as customers or suppliers. Consequently, it is not merely internal company processes that are affected. It is much more important to consider the processes in holistic systems.
In digital processes, the focus is on data-based representation. This representation is used to support the control and organization of processes. This is exemplified when companies maintain a digital database from which processes for the procurement of resources can be seen. Many processes can be automated by appropriate software. The use of digital processes is essential to modern everyday life in companies and it is no longer possible to imagine the working day of employees without them.
The fourth field, digital business models, refers to the sale of digital products in return for an economic fee. Customer processes are digitized and the customer is involved via the process data. Digital business models thus cover all transactions and sales made online with direct or third-party providers.
Digitization vs. digital transformation
If digital transformation is compared with pure digitization, it is quickly apparent that digital transformation is a direct consequence of digitization. Consequently, digital transformation results from digitization. Digital technology refers to the use of digital technology that is used to change internal company processes as well as the user experience and also the culture. At the same time, digital transformation enables the introduction of new business models. It enables companies to meet requirements for operations in the digital age and remain competitive.
Advantages and disadvantages of digitization and consequences of digitization
The consequences of digitization bring both advantages and disadvantages for organizations and companies. However, the advantages clearly outweigh the disadvantages.
The benefits of digitization in organizations and companies include improved manufacturing processes and reduced response times to customer feedback. In addition, products can basically be made available on the market more quickly. Costs can also be significantly reduced, as physical working materials wear out or deplete over time. Digitally captured data, on the other hand, is preserved over the long term and can also be accessed regardless of location. Costs can also be reduced, as communication via the digital route does not incur any costs, whereas the postal route not only takes longer, but also generates shipping and paper costs. All of these benefits result in the company being able to work more efficiently, thus maintaining competitiveness. Furthermore, digitization in organizations and companies offers new ways to acquire customers.
There are few disadvantages of digitization. One disadvantage is that there are employees who are closed to digital opportunities because they feel insecure about new ways of working. Furthermore, digitization is always evolving. It is therefore essential that companies keep up to date with the latest digital issues.
Digital technologies can also be used in organizations and companies to improve work processes. But which technologies are there?
Virtual reality encompasses many factors. Often, aspects include a 360-degree environment, a 3-D effect, and spatial audio. Thus, this technology offers a high level of interaction.
In German, augmented reality is also referred to as “erweiterte Realität”. The concept of these technologies has become increasingly popular in recent years. Augmented reality serves to extend perceived reality through technical devices.
The metaverse should not be ignored when it comes to technologies for companies, as it is currently gaining in importance. It is used as a collective term for digital, three-dimensional worlds of experience that makes it possible to interact in this digital world. Companies can use this technology for meetings, for example, by having employees meet in the metaverse even though in reality they are at different locations within the company. This simplifies and improves communication by significantly reducing the need for business travel. This conserves resources and economic funds of the company.