Business automation

Automation vs Digitalization vs Digitization – what's the difference?

Jesse Meijers

The terms digitization, digitalization, and automation often get thrown around interchangeably. However, understanding the differences between them helps plan and implement strategies that truly improve your business efficiency. Let's break down what each of these terms really means.

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Digitization – physical to digital, the most basic level

Digitization is the process of converting information from a physical format into a digital one. This is the most basic level of bringing your business into the digital age. Think of it as the transition from analogue to digital. For instance, when you scan physical documents and save them as PDF files, you are digitizing those documents. They’re no longer just pieces of paper; they’re now digital files that can be easily stored, accessed, and shared.

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Example: Imagine you have a stack of paper invoices. By scanning these and storing them digitally, you've performed digitization. The information remains the same; it’s just in a digital format now.

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Digitalization – transforming processes

Digitalization takes things a step further. It's about converting a traditional business process into a digital one. This isn't just about making digital copies of documents but transforming entire processes to be digital. With digitalization, a process that used to involve physical steps is now done entirely digitally.

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Example: Instead of hand-signing and mailing invoices, they are not only stored, but also generated digitally and fed directly into the bookkeeping system. There are no physical documents involved.

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Automation – removing human interaction

Automation is when you take a process, usually already digitalized, and remove the need for human intervention. This is about using technology to perform tasks automatically, reducing the time and effort required from your team. Automation can streamline processes, increase efficiency, and reduce the potential for human error.

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Example: Instead of manually creating digital invoices, have them automatically generated and emailed once per month. On the other side, these emails can be automatically read and matched on purchase orders. If they match, they can automatically be handled, reducing the amount of manual work considerably.

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To take it up a notch, the level that comes after automation is autonomy. Autonomous processes adjust actions within preset parameters, depending on external input.

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Putting it all together

To sum up:

Digitization = converting physical information into digital format.

Digitalization = transforming processes to be fully digital.

Automation = using technology to perform tasks without human intervention.

Our earlier blog post on how the Rolodex was digitalized is an illustrative example of these concepts in action. By understanding how a simple contact storage system evolved through digitization, digitalization, and automation, you can see the tangible benefits each step offers.

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Traditionally, Rolodex was a physical device where you stored business cards and contact information. Digitalizing this concept led to platforms like LinkedIn, where contact information is stored and managed online. No more physical business cards; everything is done digitally.

Not only is LinkedIn a digital version of the Rolodex, however, it also incorporates automation. When a contact updates their information on LinkedIn, your contact list is automatically updated. There's no need for you to manually change anything – it happens instantly.

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Digitization, digitalization and automation all have a practical impact. Digital processes and automation reduce time and effort, automation minimizes human error, and digitized information is easier to store, access, and share.

Leveraging these processes can give you a competitive edge. Recognizing where you are on this journey is the first step toward greater efficiency and success.

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