Understanding the difference between digital optimization and digital transformation can help you make the right decision for your business.
Today people are talking about ‘digital optimization’ and ‘digital transformation’; in some cases even using the terms interchangeably. The reality is that many people don’t understand that there is actually a difference between ‘digital optimization’ and ‘digital transformation’.
Companies that adopt new digital capabilities and introduce technologies such as artificial intelligence-based chat bots, apps, or analytics to help enhance or expand services and generate new revenue are typically on a ‘digital optimization’ path. For example, introducing a company specific app for order processing can speed up order taking and delivery. And, while it can increase revenue and improve the customer experience, it doesn’t fundamentally change the business.
At the heart of a ‘digital transformation’, however, is an extensive foundational change in the way the business operates. Digital transformation requires a company to re-visit the business model, how it functions and the value it delivers to customers. It is supported by a strategy to integrate digital technology that may include new technologies to streamline processes as well as create a customer-oriented organizational shift.
Newspapers and magazines that continue to prosper today, have in many cases, undergone a digital transformation. It wasn’t that long ago that people had their print subscriptions delivered to their mailboxes. Today those subscribers open their smartphones for the latest news, fashion and celebrity updates. But it’s not just the app that has changed things. In the back office, business models have changed, and processes have changed. The way in which the piece was put together for online consumption has changed. New interactive features enabled by new technology have been added. Trust that was earned is kept, and customers are happy.
So while ‘digital optimization’ can certainly enhance a business, improve productivity and boost workflow processes, ‘digital transformation’ attends to the inner-workings of the company to address shifting customer attitudes and behaviours, and that can be the difference between thriving and surviving.
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