What is digitalization?

At a glance

• Digital technologies create new business models, products, and value creation potential.
• Digitalization provides more transparency and control over processes, data, and resources.
• A central driver of innovation through AI, IoT, cloud solutions, and automation.
• The foundation for business intelligence, data-driven decisions, and modern corporate management.

Digitalization definition

Digitalization is understood as the process of converting analog information, workflows, and business models into digital form. However, the term digitalization is not unambiguous and is used in different contexts. Originally it referred to the technical conversion of analog information into digital formats – for example, when a printed document is scanned and thus processed electronically. In this narrow sense, the English term often used is digitization.

With the increasing spread of digital technologies, however, the meaning of the term has broadened. Today, digitalization is usually understood as an umbrella term for technological and societal transformation processes that are enabled or accelerated by the use of digital systems. It thus goes far beyond mere data conversion and includes, among other things, the virtualization and networking of processes, the automation of workflows, the development of new business models, and the comprehensive penetration of the economy and society by digital technologies.

In this broader sense, the megatrend of digitalization describes the fundamental shift toward a world in which data, algorithms, and digital infrastructures drive innovation and value creation. It changes not only processes within companies, but also communication, culture, and everyday life – and thus forms the foundation for many innovative developments.

What are the 4 types of digitalization?

Digitalization can – depending on the perspective – be divided into four central dimensions. They show how digital technologies fundamentally change processes, data, interactions, and business models.

• Digital products comprise data-based services and offerings that are provided in an automated way. These include, for example, apps, online courses, or software solutions that customers can use directly.
• Digital processes refer to the data-based representation and control of workflows. Companies can first make information about inventory levels, orders, or resource usage visible. At a higher level of maturity, processes such as production, procurement, or customer service can be represented in integrated data models and even controlled automatically, for example through digital web shops and intelligent ERP systems.
• Digital connectivity describes the extent to which individual processes within a company and beyond are connected with customers, suppliers, or partners. One example is the end-to-end digital supply chain, in which orders, production, and shipping are networked in real time.
• Digital business models emerge when digital products and services are monetized and the customer is actively integrated into digital processes. Classic offerings are thus extended with digital services, such as streaming platforms that make classic films and series available digitally, provide personalized recommendations, and are monetized through a subscription-based model.

What are the benefits of digitalization?

Digitalization creates numerous benefits for companies. Overall, the digitalization of business processes creates new possibilities, increases efficiency, and makes workflows more convenient. The following benefits show that digitalization can be a decisive success factor for companies:

• Time and cost savings: The automation of routine tasks and digital workflows accelerate processes. This makes it possible to increase efficiency and reduce costs at the same time.
• Better decisions: Through real-time digital data capture and the use of business intelligence tools, companies gain deeper insights that enable efficient analysis, understandable presentation, and well-founded, agile decisions.
• Location- and time-independent work: This flexibility in accessing information facilitates collaboration and communication within companies while increasing the flexibility and self-determination of employees.
• Motivated teams: Routine activities are reduced through automation, leaving more room for creative and value-adding tasks.
• Innovation: Digital technologies enable the development of new products, services, and business models, as well as the opening up of new markets.
• Faster responsiveness: Companies can, for example, implement feedback more quickly, bring products to market faster, and respond more flexibly to changes.
• More transparency & control: Digital processes make workflows more measurable and traceable – from production to the supply chain.
• Competitive advantages: Companies that digitalize early often secure market share, innovation leadership, and the retention of skilled workers.

What are the disadvantages of digitalization?

Although digitalization offers numerous benefits, problems can also arise if planning or implementation is inadequate. These can affect companies, employees, and customers and require careful management in order to minimize risks. Possible disadvantages of digitalization include, among others:

What all belongs to digitalization? – Distinguishing the terms

Digitalization encompasses a broad range of topics – from cloud computing and [Internet of Things]https://www.bissantz.de/en/glossary/what-is-iot/) to business intelligence. In the Bissantz glossary, several key terms are explained in an understandable way and examined in their relationships. The distinction between digitalization, digital transformation, and automation in particular often causes confusion – which makes a clear definition and classification of these concepts all the more important.

Digitalization vs. digital transformation

Digitalization describes the conversion of analog information and processes into digital formats. Digital transformation goes beyond this: it refers to the holistic transformation of companies, business models, and ways of working through the use of digital technologies. While digitalization thus concerns the technical implementation, digital transformation also encompasses strategy, organization, and culture.

Digitalization vs. automation

Digitalization means representing analog processes and data digitally, while automation is the use of this digital data to carry out processes independently and without manual intervention. Digitalization creates the foundation; automation applies these digital possibilities in a targeted way – for example, through automatic invoice processing or workflow management in companies.

Practical example: digitalization in controlling

A mid-sized manufacturing company still works with monthly Excel reports that are compiled manually from various systems. The consequence: data is outdated by the time it arrives – and decisions are based on a picture from yesterday.

As part of a digitalization project with Bissantz, DeltaMaster is introduced as the central controlling platform. Data from ERP, production, and sales is integrated automatically, KPIs are calculated according to a uniform logic, and the results are presented in graphical tables and dashboards. Variances are detected and highlighted automatically – the controller immediately sees where action is needed, without searching through tables for hours.

The result: the monthly close, which previously took a week, is now completed in a single day. Managers make decisions based on current, reliable data. Here, digitalization is not understood as an IT project but as the basis for better corporate management.

Application examples: where digitalization changes the most

Digitalization permeates almost all areas of a company. The following examples show typical fields of application in which analog workflows are transformed into digital processes and data models.

Summary

Digitalization is far more than the technical conversion of analog data: it is the fundamental shift toward a data-driven economy and working world – with new business models, better decision-making foundations, and higher efficiency. Those who use digitalization strategically create competitive advantages and innovative strength. With DeltaMaster, Bissantz makes digitalization operationally effective in controlling and corporate management – automated, transparent, and decision-oriented.