Understanding Digitization, Digitalization, and Digital Transformation: What’s the Difference?

Technology is changing so fast that we can barely keep up. Everywhere we go, people talk about #DigitalTransformation a very famous buzzword. But before we know about it, we must first understand Digitization and Digitalization as well. Let us break it down in simple terms on how do they differ.

Digitization: The First Step (People call it “Let us Stop Using Paper in our company”)

Imagine opening a dusty antique cupboard stuffed with piles of paper in a old office. Every time you open it, there is that loud screech, and papers threaten to fly out like they have been waiting for freedom. Now, one fine day, the office administrator decides enough is enough. They scan those papers into a computer and save them as PDF files. That for me is digitization.

In simple terms, this means converting physical things into digital format. No complex science here. Examples?

• Scanning documents into PDFs.
• Turning VHS tapes into MP4s (so your awkward school dance videos can live online forever).
• Typing handwritten notes into a Word file.

That’s it. No fancy stuff, just a simple shift from paper to screen. But trust me, this first step is important. Without it, we will still be living in the 90s, shuffling through papers and using floppy disks.

Digitalization: The Next Step (People call it “Let Us Make Things Work Faster with Computers”)

Alright, now that we have turned paper into digital files, what is next?

The office administrator, who proudly scanned all those papers and saved them as PDFs. But now, every time someone needs a file, they must manually open each PDF, search for information, and send emails back and forth. It is still slow and painful.

Then, someone has a brilliant idea: “Why not create a system where we can search, edit, and share these files easily?”. A breakthrough moment, that is the beginning of digitalization.

Simply put, digitalization means using digital tools to improve how we work. It is not just about converting things into digital format but actually making the process smoother and faster.

In the Product Lifecycle Management (PLM) world, digitalization is a game-changer. Instead of engineers storing CAD models in local folders or emailing product changes to different teams, PLM tools like Aras Innovator, Siemens Teamcenter, and Dassault 3DEXPERIENCE help companies manage everything in one place.

Here is how:

• Centralized Product Data: Instead of scattered files, PLM systems store all product data (CAD files, BOMs, requirements) in a structured database.
• Automated Workflows: No need to manually track approvals. PLM tools automate engineering change processes, ensuring approvals happen in the right order.
• Version Control: Say goodbye to “final_final_version3.doc.” PLM tools track changes so you always work on the latest version.
• Collaboration Across Teams: Whether it is design, manufacturing, or quality control, everyone gets access to real-time data, avoiding costly errors.

However this still makes these PLM tools a mere Data management System. We can just call it as a PDM system. But wait, there is still one more step… Digital Transformation. And that is where things get really interesting.

Digital Transformation: The Big Leap (People Call It “Let Us Change the Way We Work”)

Now that we have digitized our data (converted paper into digital files) and digitalized our processes (made work faster with digital tools), what is next?

Well, here is the thing—just using computers to do old tasks faster is not enough. What if we could change the way we work entirely?. That is where Digital Transformation comes in.

It is not just about scanning documents or using software. It is about rethinking how we do things using digital technology. It is about new ways of working, new business models, and new opportunities.

For example, let us think about a company that manufactures car engines.

• Before digitization: Engineers store paper blueprints in filing cabinets.
• After digitization: They scan blueprints into PDFs.
• After digitalization: They use PLM software like Siemens Teamcenter or Aras Innovator to manage CAD models, automate approvals, and track changes.
• After digital transformation: They stop making paper blueprints altogether and switch to cloud-based Digital Twins.

With digital twins, they can simulate how the engine will perform before they even build it. They can predict failures, test designs in real time, and even connect engines to the Internet for live monitoring.

This is not just “working faster.” This is a whole new way of doing business.

How Does This Work in PLM?

PLM tools like Aras Innovator, Siemens Teamcenter, and Dassault 3DEXPERIENCE help companies go beyond digitalization. They help companies enable,

• Digital Twins: Instead of making real prototypes, companies create virtual models that act like real products. This helps them test and improve designs before building anything.
• AI & Automation: AI can study product data and warn about problems before they happen. This helps companies fix issues early and avoid big failures.
• Connected Factories (Industry 4.0): Machines, sensors, and PLM systems talk to each other and make automatic adjustments. This keeps production smooth and efficient.
• Supply Chain Transparency: With blockchain or cloud-based systems, companies can track every part from the factory to the customer. This means no lost parts and 100% clear records of where everything comes from.

However one must never forget, Digital transformation is not about using technology and PLM tools for the sake of it. It is about changing how companies create, deliver, and improve products in a smarter way.