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Digitalization is a profound transformation of a business achieved by adopting digital technologies to support business activities and objectives. By changing the way work gets done across all areas of the business, digitalization reveals new opportunities to provide value. This can change the business model and introduce new opportunities to provide value to customers.
Digitalization improves the efficiency of operations and makes automation possible. This provides important advantages including streamlined workflows, fewer human errors, reduced operational costs and the ability to capture data, which enables analysis, also known as data analytics.
Consider the ability to automatically generate an invoice after a customer purchase, which has become the standard for most businesses. This capability, which is faster, more accurate and improves the customer experience, is the direct result of digitalization. The data captured through ordering and billing software can also be used to better understand correlations between products purchased, providing an opportunity to suggest additional products that may be of interest to customers.
By changing the way work gets done across all areas of the business, digitalization fosters innovation and opens new ways to interact with customers as well as new opportunities for revenue generation.
Digitization, in which information is converted from analog to digital formats, is necessary for digitalization. But digitalization goes much farther by using digital information and technologies such as software and data analytics to transform operations and activities, ultimately changing how a business interacts with and provides value to customers.
A business achieves digital transformation through the cultural changes that come about through wide adoption of digital technologies that empower employees to reach business goals and KPIs, leveraging technology and data as well as the organizational and workflow changes brought about by digitalization. Digital transformation requires leadership vision and commitment to ongoing improvement and change using the tools adopted through digitalization.
Digitalization provides essential benefits for any business, including improved workflows, production efficiencies and data-driven insights, which transform customer interactions, reveal new ways to deliver value to customers, help businesses achieve KPIs and open new revenue generation opportunities. The profound changes businesses experience through digitalization have become essential to remaining competitive and can even drive competitive advantages for businesses who successfully adopt and adapt to digitalization.
