The Taxonomy of Digital

Digital transformation is the profound transformation of business and organizational activities,

processes, competencies and models to fully leverage the changes and opportunities of a mix of digital
technologies and their accelerating impact across society in a strategic and prioritized way, with
present and future shifts in mind. Hence, Digital transformation is not just about disruption or
technology.

Digital transformation is a journey with multiple connected intermediary goals, in the end, striving
towards continuous optimization across processes, divisions and the business ecosystem of a hyper-
connected age where building the right bridges (between front end and back office, data from ‘things’
and decisions, people, teams, technologies, various players in ecosystems etc.) in function of that
journey is key to succeed. Therefore, taking a step back and holistically looking at and questioning
the many ‘digital’ changes and initiatives at several levels within various departments across the
extended organization is key for digital transformation success.

Concept

Technological evolutions and technologies, ranging from the cloud, Big Data, analytics, artificial
intelligence and mobile/mobility to the IoT and more recent emerging technological realities are:

a. enablers of digital transformation and/or,

b. causes of digital transformation needs (among others as they impact behaviour of consumers
or reshape entire industries, as in the digital transformation of manufacturing), and/or
c. accelerators of innovation and transformation. Yet, technology is only part of the equation as
digital transformation is by definition holistic.

Concept

It’s important to emphasize that digital transformation is not just about:

a. Digital marketing, even if that’s an important part of the business activities and if it’s the
context in which digital transformation is often used.
b. Digital customer behaviour, although it plays a role and customers are increasingly ‘digital
and mobile’.
c. Technological disruptions because the disruptions are always about customers, workers,
markets, competitors and stakeholders, even if related to technological evolutions and
knowing that ’emerging’ technologies indeed can have a ‘disruptive’ effect.
d. The transformation of paper into digital information as originally meant nor the digitization
of information (flows) and business processes.

This is for a very simple reason that in real business terms customers, for instance, don’t think in
these terms at all, nor in the terms of channels or omni-channel. Most of the discussion on Digital in
often inward to the business designed to deliver an impact to customer, for example. Hence, the
focus, for a strategist, should always be on how digital changes current “ways of working” and is it
more meaningful for the participants in the larger ecosystem.
Debunking myth and reality

Understanding the basic differences in the taxonomy:

Concept

Digitization: Digitization is creating a digital (bits and bytes) version of analog/physical things such as
paper documents, microfilm images, photographs, sounds and more. So, it’s simply converting
and/or representing something non-digital (other examples include signals, health records, location
data, identity cards, etc.) into a digital format which then can be used by a computing system for
numerous possible reasons.

Digitizing doesn’t mean replacing the original document, image, sound, etc. Sometimes it gets
destroyed (after having digitized a paper document you can destroy it or keep it, depending on, for
instance, legal requirements), sometimes it disappears anyway (if we capture the sound and images
in the form of video of your presentation at an event, the digital format continues to exist while your
voice and physical presentation during that presentation are gone forever) and sometimes it is
transformed but that’s not that much about digitization in the strictest sense (if you take a picture of
a building you have a digitally born representation of the building but the building is not digitized or
you might have an analog picture which you scan so it is digitized).

Let’s take an example in context of “business process” - The document scanners create a digital
representation (document imaging) of a scanned document, a photograph, etc. But it doesn’t stop
with document imaging in most cases. After all, why scan a document if you don’t use the data it
contains (except for archiving or, as many companies still do, for real capture after the scan)?
Normally and in most business cases it’s far more important that the data which capture software
can retrieve from the scanned image, by using all sorts of intelligent and less intelligent capture
technologies, are extracted in a digital form and leveraged to feed a workflow, a business process, a
system, whatever is needed to achieve an outcome. This is where we start drifting from
“Digitization” to “Digitalization”
Concept

Digitalization: Digitalization means turning interactions, communications, business functions and

business models into (more) digital ones which often boils down to a mix of digital and physical as in
omnichannel customer service, integrated marketing or smart manufacturing with a mix of
autonomous, semi-autonomous and manual operations. In business, digitalization most often refers
to enabling, improving and/or transforming business operations and/or business functions and/or
business models/processes and/or activities, by leveraging digital technologies and a broader use
and context of digitized data, turned into actionable, knowledge, with a specific benefit in mind.

For example, consider the digital workplace. Often you strive towards a minimum use of paper. But a
digital workplace is about other things as well. It also means that your workforce works differently,
using digital tools such as the mobile devices and technologies that make them mobile and/or using
social collaboration and unified communication platforms, which are digital systems, enabling them
to work in a more “digital way”. This, in turn, creates new opportunities to engage differently. And it
requires more than just digitized data.

Digitalizing your business leads to digital business. The list of what you can digitalize is quite long
such as supply chains, leading to digital supply chains etc.

Digitalization is seen as the road of moving towards digital business and digital transformation, as
well as the creation of new – digital – revenue streams and offerings while doing so. And that
requires change. This is why many people interchangeably use digitalization and digital
transformation. Having understood the difference – we should avoid using them interchangeably.

Concept

Digital Transformation: Taking a step back, digitalization means the use of digital technologies and
of data (digitized and natively digital) in order to create revenue, improve business,
replace/transform business processes (not simply digitizing them) and create an environment for
digital business, whereby digital information is at the core of the business – “this last part of the
statement is the key to internalizing the wider concept to appreciate the concept”.

Ideally, digital transformation as an enterprise-wide phenomenon. But some only look at specific
aspects, thus often creating silos or having a view that’s too technological or too much focused on
one aspect of business.

In summary - digital transformation requires digitalization ‘en route’ to digital business

(capabilities) and requires digitization, since the glue and a core business asset of digital
transformation (and of digitalization) is obviously (digital) data, leading to information, knowledge,
intelligence, and action and business model changes.

Therefore, you would notice that – focus should be on “Digitalization” and build the theory of
transformation by bringing in the concepts of process taxonomy, value chain, customer, employees,
and business model, new revenue streams.