Versus Series: Digitalization or Digital Transformation

When it comes to taking your business to the next level, is digitalization or digital transformation the way to go?

What is Digitalization?

Digitalization is often a term that is used interchangeably with digitization. While they are similar, they are not the same. Digitalization involves the conversion of a process into its digital equivalent. Whereas digitization is merely converting something into bytes and bits. Digitalization is a step up from digitization. It is more than converting analogue methods into digital formats. Digitalization is defined by Gartner as “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities.”

Example of Digitalization

An example from The Straits Times is the digitalization of One Championship fights during the circuit breaker. For them to tide through the empty arenas, they turned to online streaming services to broadcast their fights. This allowed them to cater to their fans stuck at home. Digitalization took Singapore by storm and 75% of Singaporean firms accelerated their digitalization journey.

What is Digital Transformation?

Digital Transformation is digitalization on steroids. As this article from Salesforce puts it,  digital transformation is the “reimagining of business in the digital age”. The aim is to add value to every customer interaction. This transformation capitalizes on the technology available to inform how a business is run. The businesses that undergo digital transformation adapt their business to leverage on technology instead of just using technology to improve a process.

Example of Digital Transformation

DBS embarked on their digital transformation from 2014 to 2020. They deservedly won many best bank titles for the digital transformation of their services. Gone are the days of banking at a bank. Today, all your banking needs can be completed from your phone. This is an example of a highly successful digital transformation of a business.

Head to Head Comparison

Comparing the necessary investments

To digitalize you have to identify which process you want to improve. Then you will have to pay for the tools to digitalise the process you identified. This requires some investment in terms of time to strategize and cost of implementation. However, the investment needed for digitalization pales in comparison to what is needed for a digital transformation. As the name suggests, digital transformation requires you to transform your business model and involves a lot of investment and strategizing to get right.

Comparing the potential returns

Digitalization is also much less complex and has a higher chance of success compared to digital transformations. According to a study by Boston Consulting group, 70% of digital transformation initiatives end in failure. However, in an interview by Mckinsey with DBS CFO, Chng Sok Hui,  she mentioned that their digital segment had a cost-to-income ratio 20% less than the traditional segment. If done correctly, the digital transformation will be much more rewarding than the digitalization process.


One requires huge investment, has a lower chance of success but a great pay off. The other requires some investment, has a higher chance of success but less of a pay off. For both, you will only receive the pay off if you successfully complete the process. Like our previous article on outsourcing payroll, the answer depends on where you are on your journey right now. All we can say for certain is that the world is digitizing and you would be falling behind if you did not. If you have more questions about digitalization or digital transformation feel free to reach out to ask us.

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