Toyota Astra Motor

Wilbertus Darmadi

The phrase digital transformation has already become a ‘mantra’ in recent years. Many experts say every company that does not run digital transformation might endanger their business sustainability. But how well do we know about digital transformation? We might mix up the definition of digitalization with digital transformation or even with digitization.

Digital transformation is not digitization or digitalization. Many businesses or companies claim they have run digital transformation, but they might only run digitization or digitalization. What’s the difference between digitization, digitalization, and digital transformation?

Digitization is the move from analog to digital, the process of converting information from analog to digital. Since the digital era was started, digitization has also started. All information was converted from analog to digital. At that time, the job of “data entry clerk” was introduced. If your business/company only converts all your information from analog to digital, you are only doing digitization, not digital transformation. For example, the salesman converts all sales data that was previously recorded on notes/book, become recorded into the computer, helped by a ‘data entry clerk/admin.’ Today, the condition where all data is recorded in hardcopy form should have passed. The analog era is over. But sometimes, we still found many analog modes. Digitization has occurred until now. Digitization could be one of the ways that are used in digital transformation

Digitalization is using digital data that was converted in the digitization process to simplify how you work. Digitalization is the process of using digitized information to make ways of working simpler and more efficient. Digitalization is one step advanced compared to digitization. For example: equip the salesman with mobile phone and mobile apps that enable themselves to enter sales data directly. The job of data entry admin slowly eliminated. In fact, digitalization is one that many companies do, not digital transformation. Like digitization, digitalization could be one of the ways that is used in digital transformation

“Many examples we can learn from history, that some big name in business was ‘disappeared’ because late to transform.”

Digital transformation is bigger than digitalization. Digital transformation is the process of creating a new—or modifying existing—business model (processes, culture, and customer experiences) to face changing business and market requirements, to make the business sustain, or to increase business profitability using digital technologies. Digital transformation triggered by business challenges, led by the business side and helped by the IT side as a critical supporting function. Digital transformation starts with defining the business target and corporate objectives. Digital transformation is company-wide scope.

For example, Your business now is as an education provider (university). Your business challenges: due to COVID-19, the mass gathering was hindered. Your business objective: how to sustain after COVID-19, adapt to new norm after COVID. Your simple digital transformation example: prepare and implement a business roadmap to convert from an in-house education provider to be an online academy using digital technology. Identify all aspects that should be changed, i.e.: the teaching method, tools, curriculum, exam, teacher, etc. If you don’t transform, it might endanger your business sustainability.

Many examples we can learn from history, that some big name in business was ‘disappeared’ because late to transform. So, do you really need digital transformation or what you need only digitalization? If you really need digital transformation, you better start now. Digital transformation is a journey, needs several years to be implemented. The success of digital transformation depends on vision of the top management of the business/company.