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Digitization, Digitalization, and Digital Transformation: Meanings and Importance  

Digitization, Digitalization, and Digital Transformation: Meanings and Importance

This article explores the value as well as the pros and cons of digital transformation vs. digitalization vs. digitization. We'll discuss how different types of businesses develop a successful strategy for integrating technologies and show how both companies and customers benefit from such digital changes.

What is the definition of digital transformation?

Digital transformation for companies involves comprehensive integration of digital technologies in all ongoing processes, product operations, strategic changes, building customer relationships, marketing, production, and other business-specific activities.

It helps companies create, automate and optimize the production of goods and services. Such technology allows all kinds of organizations to be more agile and to provide more customer-friendly services today in the age of all-pervasive digitalization. In addition, digital transformation takes advantage of modern methods to increase brand awareness of a company and its product and helps increase sales through online marketing campaigns, which is impossible if the business is offline. The results of this digital transformation can be seen on many levels, such as employee efficiency, the quality of business processes, and the data collected and analyzed.

Examples of digital transformation

The implementation of digital solutions can significantly impact different aspects of the business for any type of company. Take customer experience, for example - a retail store that has an app with configured push notifications and interaction through email and messengers is more likely to be remembered by consumers than competitors, which, consequently, increases its profits.

Internally, digitalization in business can improve operations and save more money and time. For instance, a digital agency works according to a well-established workflow. With so much work, where many processes depend on each other, it is crucial to have a management and synchronization system to track efficiency and progress. Specialists will not need to communicate directly with each other and spend time on it because the necessary information is automatically put into the system, and things go on according to a well-established framework.

Digital transformation also allows businesses to create new products that may previously have been unrelated to its services. For example, when creating a real estate marketplace or a website with real estate listings, the company can take the initiatives to provide an online guide tool inside the property. With today's technology, creating a 3D home tour can give the customer a more emotionally rich experience.

Learn more about digital transformation from our podcast:

What is digitalization?

The answer to the question “What is the meaning of digitalization” is fairly simple. In a nutshell, digital technology means transforming an existing company model to create new revenue and profit-generation opportunities. This definition is closer to the previously described digital transformation.

Among the benefits of digitalization is that it reforms existing company processes and makes them more straightforward and efficient. Nowadays, more and more customers from absolutely different fields are looking for services and products over the internet. So if your company is not strong enough in the digital arena, there is always a chance of being outflanked by competitors who have a more robust digital presence even if they offer a noticeably worse quality product.

Examples of digitalization

There are countless examples of how digitalization has already been implemented and will continue to be adopted in various fields and industries. The financial sector will never be the same after the introduction of blockchain technology, cryptocurrencies, and everything related. As a result of this digitalization, a new payment method - crypto payments - has appeared in many stores, retail companies, and other businesses. Furthermore, a new kind of investing, cryptoinvesting, has been developing widely over the past five years.

It also affects other professions. Healthcare institutions are developing various electronic medical applications for doctors to interact with patients and diagnose diseases more efficiently and easily. The legal sector will also undergo changes as digital tools replace human mechanical work and reduce costs while eliminating human errors. We are already seeing digitalization gain more and more attention in all spheres of private or public life and even government affairs. Every day, new digital startups appear and launch all over the world, and more and more businesses are going digital. The trend shows no signs of slowing down.

Learn more about digitalization from our podcast:

What is digitization?

There is often confusion about the difference between digitization and digitalization. So digitalization vs. digitization, let's draw a line between the two. The process of digitization refers to the automation of business operations by converting physical documents and other data into digital format and eliminating manual labor when it is impractical or inefficient.

Why is digitization important? This is one of the first radical company changes in the vector of digital transformation. While it may be tempting to stick with a traditional tries-and-true business model, it is potentially disastrous to maintain such a system, as today's business environment requires radical and continuous changes from almost every enterprise. Therefore, the main benefit of digitization is that it serves as a solid kick-start, leading to fundamental changes to drive further business success.

Examples of digitization

It is first necessary to outline the information that can be digitized to illustrate the digitization of business processes more broadly. This can be textual information such as documents, contracts, articles, guidelines, reviews, etc. It can also be visual information, such as images, reports, presentations, or medical images. It can be audio data, such as speeches from directors, interviews on topics, or even music in those businesses where it is applicable. You can digitize financial data, numerical data, customer data, and other.

All this information is essential for business processes such as hiring and training new employees, setting up operations within the company, managing internal collaboration models, and so on.
It is hard to overstate the importance of digitization in a business striving to achieve new results through digital transformation.

Main benefits for different industries.


manufacturing linkup studio

Digitalization in the manufacturing industry affects every party involved: manufacturers, suppliers, customers, and others. What is the role of digitization in manufacturing?

  • It minimizes paperwork, red tape, and time delays in the process caused by lots of printed documents and physical contact with people.
  • It helps to spend less time reporting and allows access to all necessary documents online from available mobile and computer devices.

The digitalization of the manufacturing process leads to several benefits, including:

  • Increased efficiency and productivity
  • Better tracking and analysis of production data
  • Improved quality control and reduced waste
  • Enhanced supply chain visibility and collaboration
  • Enhanced customization and personalization of products
  • Increased flexibility and faster time-to-market
  • Enhanced ability to predict and prevent equipment failures
  • Better decision-making through real-time data analysis
  • Increased profitability and competitiveness.

Finance & Banking

finance and banking linkup studio

Digitalization in the banking industry is becoming increasingly important as part of the current trend to move all vital services for users online. This implies a 100% digitalization of all internal and external processes of customer interaction with banking institutions (also known as full digitization in the banking industry). It means the provision of all possible banking services online to customers, who are increasingly willing to use new ways of online banking daily. A potential obstacle to digital transformation in banking is preserving the necessary level of customer security. It is the cause why banks face difficulties when launching their applications or other digital financial solutions.

Digital transformation in financial services is also fundamental in today’s world. A survey conducted by Gartner in 2020 found that 67% of senior financial services executives, see the urgency of digitalization and believe their organizations need to become much more digitized. That was two years ago, and the trend is likely to continue. Digitalization in finance includes fully digitalizing all current processes within the company and communicating with the customer (full-scale digitization in finance companies). Without the digitalization of financial services, companies may stop attracting new customers because they will not be able to meet the demand of the target audience and, consequently, lose out to the competition.

Examples of digital transformation in finance and banking:

  • It is crucial for banks to implement mobile banking solutions (web and especially mobile applications) for a better customer experience.
  • This includes a need for banks and financial companies to implement payment options on phones and watches, rings, and other modern devices that have such functionality.
  • Cryptocurrency and blockchain evolving every day, letting customers link their crypto wallet to your financial service, or online bank will be worthwhile to increase the number of potential users.
  • Both your company and customers will benefit if your business incorporates powerful customer data analytics and even artificial intelligence technologies to monitor user experience. You'll be able to fix bugs more quickly and remove bottlenecks from imperfect processes. Customers will have a better user experience, their loyalty will increase, and you'll be able to cross-sell and complete more up-sales.


retail linkup studio

One of the main catalysts for a comprehensive digital transformation in the retail industry was the COVID-19 pandemic. After that all-encompassing challenge, only those companies that went digital survived and gained a stronger market position. Since then, retailers on all levels levels, from small stores to large national retailers, have discovered and adopted proven and effective methods of digitalization in retail, such as building mobile apps, strengthening the website, and connecting big data analytics and location-based technologies.

Here's what has changed with the advent of digital transformation and digitization in the retail industry:

  • Marketing campaign execution, advertising goals, new metrics, and new interactions with customers.
  • The way products and services are sold. Many new features have appeared, leading up-sales and cross-sales to generate more revenue.
  • Optimization of roles and responsibilities in company management for greater efficiency.
  • More accurate data to rely on. In an offline store, tracking the effectiveness of merchandise placement and the quality of salespeople takes a lot of work, while the data on-site and in-app is very accurate. Businesses can run A/B tests to verify and determine which solution works better.
  • Radical changes in inventory management. The retail business includes many products and processes. Digitalization automates and optimizes them. As a result, a lot of employee time and energy is saved, and management becomes more efficient.
  • Digitalization also helps train staff and provides more training courses to improve results offline.
  • All of the above ultimately improves the customer experience, providing increased usability of the mobile app or the company website.


healthcare linkup studio

Digital transformation in the healthcare industry is only now gaining momentum. According to Grand View Research, the US digital health market is expected to reach the $1.5 trillion mark by 2030.
Modern technologies provide patients with more profound and attentive care from clinics, labs, and other medical providers. Patients will receive higher quality care, a more personalized approach, a better experience during treatment, and improved results.

Digitization in healthcare is the first step in this reformative process. When there is an established digital interaction system between the clinic and the patient, physicians can easily access all the necessary data about a person and provide better care. Such a digitized system is also more convenient for keeping appointments and other interaction aspects.

Many progressive countries are conducting digitalization in healthcare facilities, where companies are investing in scalable and flexible solutions, applications, and platforms with big data embedded to provide better patient care.

Some key areas of focus for digital transformation in the healthcare industry are:

  • Utilizing an integrated big data system with information about all patients to determine the best treatment based on previous medical history and outcomes.
  • Creating personalized treatment plans for each patient.
  • Strengthening the security of personal data through the use of blockchain and encryption technologies.
  • Enhancing telemedicine. It is a way to improve healthcare quality and make it more accessible to vulnerable populations.


education linkup studio

Digital transformation in education is efficient and beneficial for different tasks and people involved in the learning process. Institutions like schools, colleges, and universities can provide a better experience for their students with online learning solutions. It boosts the younger generation's engagement and keeps them involved in the process.

Digitization in education also makes it easy to share the process and results remotely. After the COVID-19 pandemic in some regions, live class attendance is more flexible than it used to be. So having paper books and homework done on paper is inconvenient for students and teachers alike. Online services for assignments and messengers for communication came as salvation in these circumstances.

In terms of administrative tasks, the digital transformation of education includes automating all activities, such as lecture and lesson scheduling, recruitment tasks, attendance tracking, and parental notification.

Digitalization of education improves student learning in the following ways:

  • Promotes self-management through a user-friendly and well-structured interface.
  • Allows for more personalized and tailored learning experiences, as students can access resources and materials at their own pace and on their own terms.
  • Lets students engage with educational content in a more interactive and dynamic way.
  • Tracks progress with online quizzes and special tools in e-courses.
  • Facilitates collaboration and communication between students and teachers, which can help create a more supportive and interactive learning environment.


marketing linkup studio

Digitalization in marketing has become not just an additional company asset but an ultimate imperative. It includes the proper use of all digital channels, operational work, and optimization of the business model, ultimately leading to an improved and full digitization of customer experience.

These are possible ways of digital transformation in the marketing department of your company:

  • First, the company needs to determine its direction and make decisions according to it.
  • Next, optimization of all the company's digital resources, such as the website, social media platforms, analytical instruments, and customer databases. Everything needs to work cohesively, and every tool needs to perform at its best to ensure a better digital transformation of the customer experience.
  • It's worth connecting all the tools. For almost every business, its systems must work seamlessly together to provide a holistic picture of the client experience and the results of targeted actions.
  • If you collect individual pieces of data from disparate sources and services or use them sparingly, the data will be scrappy. Customer data platforms may be a solution to tackle this issue.
  • With all the information you need from reliable data, you'll be able to know and plan steady improvements for customer journeys and set up new quality marketing funnels. Your company will also be able to create personalized experiences for new customers and generate leads.
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