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Digitization: Buzzword or Brilliant Business Strategy?

By Melissa Thompson, Last Modified
Aug 19, 2016
> Technology

For years now, businesses have heard of the trend of digitization.

Crowding business news pages and tech blogs are tales of companies deciding to ditch analog processes and go digital to make business more efficient and earn bigger profits faster.

Yet, there is one question most entrepreneurs fail to ask before buying into the digitization trend: What is digitization, anyway?

Understandings of Digitization

The short answer is, no one seems quite sure. Most online sources for explanations such as Wikipedia explain digitization as the process of converting analog signals into digital ones, which is most commonly associated with radio, phone, and television services. However, even businesses completely divorced from the communications industry are going wild about digitization, so obviously that definition can’t be right.

More broadly and more closely related to widespread business practice, digitization seems to be transfiguring offline business processes into computer-supported, network-capable ones. To be clear, this has been occurring for decades. Since LEO I ran its first business application in 1951, companies around the world have been digitizing their processes, though admittedly, the trend only really picked up in the 21st century once network technology truly blossomed.

The question, then, is why the term digitization has become such a phenomenon now and whether businesses need to worry about digitizing any and all processes in existence.

Related Article: Finance First: How the Financial Industry Goes Paperless and Stays Compliant

Evidence in Favor of Digitization

By and large, digitization’s proponents assert that digitization is worthwhile if only because it increases access to information. Indeed, when information is stored digitally, it is much easier to access and use. You might consider a web page or a file stored on the cloud, which can appear on any web-connected device. When digitized, a rare folio can be viewed by anyone on Earth instead of just those few who can visit the museum that displays it.

Therefore, when businesses digitize their information and processes, employees can work from anywhere at any time, which surely increases productivity. Further, consumers have equally ubiquitous access to businesses through digital means, allowing for more profits.

Additionally, digitization works to preserve information better than traditional methods. Paper is subject to all sorts of damage, from nibbling pests to water and fire. Meanwhile, digitized information doesn’t rot or decay; it doesn’t burn or bleed; it is subject to malware, but security-smart businesses should be able to prevent that with employee policies and digital protections. Thus, digitization keeps business data safer than analog methods, such as filing cabinets and locked doors.

Finally, digitization is an effective strategy because it standardizes a business’s processes better than analog means. Computer programs function the same on every device, which means all workers using digital processes must undergo the same steps to achieve the same goals. Efficiency and productivity are rooted in uniformity, which means digitized companies have a leg-up on comparatively blundering businesses mired in analog. Considering these benefits, it makes sense that so many businesses are racing to be digital-ready.

Related Article:Why You Need End-to-End Encryption for Your Mobile App

Digitization Strategies

Younger businesses, especially those begun within the last 10 years likely find the process of digitization more than easy; for them, it is natural and essential to compete with other tech-savvy startups. However, older companies could very well flounder without clear guidelines for achieving more efficient digitized processes.

A good first step in digitization is obtaining more digital assets. Creating a user-friendly website and managing appropriate social media pages as well as any other online content establishes a brand as somewhat digitized. Then, businesses can go a step further to offer digital services, such as online ordering through a web-based shop. Taking the business mobile is a larger leap in digitization, but practical apps have been shown to oust less-digitized competition; see Uber and taxis or Airbnb and traditional hotels.

Any moves toward digitization that occur behind the veil that is, not for customer use will depend entirely upon businesses’ methods and practices. Relocating data and processes to the cloud is generally beneficial, as it allows a company’s workers to access their projects anywhere and anytime. To do this, businesses must have a reliable cloud services provider. Undoubtedly, more digitization options will appear in the coming years, so businesses should stay abreast of the changing digital landscape for more opportunities to digitize.

Concerns About Digitization

Yet, several experts have raised very real concerns about the current digitization frenzy. For one, it creates unnecessary competition and unrealistic comparisons. If Company A is 54 percent digitized while its main competitor, Company B, is 71 percent digitized, which company is better? Should Company A devote more time and resources toward additional digitization, even if its profits are already healthy?

Some studies have found a correlation between high-performing companies and money spent on digitizing, but as yet there is no evidence to suggest digitization was a cause. More important than digitization is performance, but thanks to the buzzword, many businesses focus on their digitization rate rather than their productivity or profitability.

Related Article:Workplace Takeover: Say Hello to Robotic Process Automation

It is the responsibility of business leaders to determine which digital processes are right for their companies. Undoubtedly, the future will bring even more opportunities to digitize traditionally analog processes, but just as undoubtedly is the fact that some processes will remain analog forever.

Digitization is more than a buzzword it is a logical business strategy that offers many benefits, and it has been such for decades. However, digitization is only beneficial when business leaders understand what it means and why it works. For those unwilling to analyze the effects of digitization in their business, it will remain pointless techno jargon.

Melissa Thompson
Melissa Thompson
See Melissa Thompson's Profile
Melissa Thompson is a freelance producer at CNN and a contributor at Technorati and NewsBlaze. She lives in Utah with her 2 children and enjoys skiing, hiking, working out, and sushi.
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