The Path to Digital Transformation
Is your insurance business working on digitization, digitalization or digital transformation? It’s easy to use these terms interchangeably, but while they are related, they refer to different concepts.
They differ in various aspects – in terms of their purpose and focus area, their intended outcome, their challenges, their technologies.
In a recent technology leaders’ meeting at Exdion, we discussed the terminologies that we use all the time when working with our clients to build end-to-end, comprehensive solutions leveraging AI techniques including Reg Ex, ML, NLP, CV and generative AI.
Digitization:
Encoding data by converting various sources into a digital format. Eg., PDFs for insurance policy documents, MP3 forms of music recordings, digital images instead of photographs.
Digitalization:
Using digitized data to improve workflows by process automation. Automating business processes through the use of digital technologies to extract efficiency improvements. Eg. Automated payment systems, automated customer service claims.
Digital transformation:
Business transformation enabled by digitalization. A global and strategic change, leveraging digital technologies to drive an end-to-end business model transformations across all aspects of the business. Driving profound changes in the business models, company culture and bringing in new revenue streams and new products. Digital transformation starts with a vision driven by the CEO, and when successfully executed results in competitive advantage, sustained growth, a future-proofed business and higher Shareholder return.
How they work together
Digitalization is an essential prerequisite for digital transformation but by itself, it does not bring about digital transformation. Digital transformation is about doing things differently as well as doing different things.
The key word is not ‘digital’ but rather ‘business’ enabled by digital. It requires operational, organizational and cultural changes, through the integration of digital technologies into day-to-day thinking and doing. Digital transformation enables businesses to create an ecosystem revolving around ‘digital’, that is adaptive and agile in responding to changing external environments, events and emerging trends. If you are
just using advanced digital technologies like ‘Cloud computing’, and ‘Artificial Intelligence’, to optimize existing business processes, you are still probably doing digital business optimization. True digital transformation is when firms “pursue new revenue streams, products and services, and business models” (IDC – International Data Corporation’)
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