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WHAT IS DIGITIZATION, DIGITALIZATION, AND DIGITAL TRANSFORMATION?

What is Digitization, Digitalization, and Digital Transformation?

MARCH 24, 2020 BY MARK SEN GUPTA

CATEGORY: INDUSTRY TRENDS

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Accuracy in communication is one of the most critical communication skills.   It sounds so obvious
and simple, yet this essential aspect of communication is often overlooked.   The impact can be
massive, for better or worse.  This applies to both verbal and written communications.  Accuracy in
communication puts you and your listeners on the same page.   Your message is clearly and
accurately delivered.   It is clearly and accurately received.   The possibility of misunderstandings,
misinterpretations and even poor decisions, is radically reduced.   Consistent communications also
make future conversations easier, because the de nitions are concrete, discussions about
misunderstandings and ambiguities are avoided, and trust is built.

Digitization, Digitalization, and Digital Transformation Explained

Many people have begun to con ate terminology either out of ignorance or for their own bene t,
which creates confusion, because suddenly we’re talking about di erent things but calling them the
same.  Some have begun labeling digitalization as digital transformation to appease management,
get a project approved, or to 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

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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 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 increases productivity and e ciency while reducing costs.  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 has created the need for a more uniform governance due to cybersecurity concerns,
data ow 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 though to your
company’s raw material vendors, thus integrating the supply chain for greater e ciency and
response.

So, what is Industry 4.0 then?  You can think of Industry 4.0 as being European for the combination
of Digital Transformation and Digitalization, which kind of leads to a confusion all its own.

I would like to take a moment to share with you that there is a user community focused on topics
similar to this.  Please take this opportunity to check out and join this community called the Digital
Transformation Council (https://www.arcweb.com/digital-transformation-council).  This is a
collaborative group of end user professionals who meet to exchange ideas and learn how digital
transformation a ects their companies, how to a ect change within their companies, learn about
failings and successes, etc.  It is free to join and open to anyone in your organization.

Summary:

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

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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 de nitions are
di erent, you’ll need to translate your ideas for them.

Hopefully, you’ve found this short explanation helpful.  Feel free to check out the ARC Advisory
Group website (https://www.arcweb.com/) for a comprehensive list of products and services we
provide to help clients like you understand automation trends and solidify winning strategies moving
forward. 

DO YOU DIGITIZE OR DIGITALIZE? DIGITAL KNOWLEDGE ACCELERATES

 BENEFITS OF DIGITAL TRANSFORMATION
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ESSENTIAL ELEMENTS OF DIGITAL

TRANSFORMATION
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