What is digitalization?

A brief explanation and introduction

digital transformation

Definition of Digitalization

Digitalization is the generic term for the Digital Transformation of society and the economy. It describes the transition from an industrial age characterized by analogue technologies to an age of knowledge and creativity characterized by digital technologies and digital business innovation

Alongside business innovation, digitalization – the development of digital innovations – is one of the most important business trends for the future of the economy. Companies need to develop digital strategies and focus on what are the key success factors of digital transformation.

Digitalization has many different aspects, which are explained in this article.

  • For example, the term digital transformation describes the gradual transition of existing economic and social systems into the digital age.
  • The term Digital Disruption describes the radical changes triggered by innovative digital business models.

What is the difference between
digitalization and digitization?

Digitalization is a generic term for the digital transformation of the economy. Digitization refers to the conversion of specific products – such as photos or records – from the analog to the digital format. In practice, these two terms are often confused with each other. Sometimes they are used as synonyms.

With the free Innolytics software for innovation and digitization, companies can develop ideas for projects and initiatives. Using structured innovation processes, digital innovation projects can be implemented in a fast and efficient way.

Fields of Digitalization

In recent years – since around the year 2000 – various digital technologies (mobile Internet, artificial intelligence, Internet of Things, etc.) have been drastically further developed and have made the transition from expert application to people’s everyday lives.

  • Just as the innovation of the steam engine and the spread of electricity have changed society, so has digitalization changed the economy and society.
  • Digitalization is technology-driven. Digital innovations are created on the basis of the new digital technologies: Innovative use cases driven on the one hand by established companies and on the other by start-ups and venture capital.
  • This leads to a digitalization of different speeds. While, for example, public administration is still often only accepting paper documents and working with files, markets are changing much faster. The music and media industries were the first to experience the effects of digitalization. The retail industry followed.

Virtually all industries are now affected by the different fields of digitalization and digital transformation.

Digitalization determines the future of the economy and society

What impact will digitalization have for the future? Digital change is a radical change in the economy and society that has occurs over a period of almost 50 years. It began in the early 1990s with the spread of the Internet and the emergence of services such as AOL and Compuserve. Digitalization was promoted by the increase in Internet connections at the end of the 1990s and the first hype around the turn of the millennium. It was further sparked by the high-speed Internet and mobile data access. In the future, an even faster mobile Internet (5G) combined with technologies of the Internet of Things and artificial intelligence will make applications such as the increased use of robotics possible. Digitalization will drastically change the future of the economy. Examples of the impact of digitalization on the future of different industries:

digitalization development

Digitalization changes economy and society


  • Digitalization will drastically change the future of the automotive industry through new mobility concepts. From autonomous driving to existing sharing models and completely new concepts such as the rental of electric scooters, digitalization will allow new models of usage in the future.

  • Digitalization influences the future of the financial industry. Technologies such as the blockchain enable new forms of corporate financing and participation in addition to the applications frequently discussed in the press such as the virtual currency Bitcoin. Today, for example, company investments are made possible via so-called ICOs (Initial Coin Offerings) or STOs (Security Token Offerings). These forms are only possible through digital technologies, which will continue to spread in the future.

  • Digitalization is changing the future of traditional professions. In the future, physicians will be supported more and more by applications of e-health, especially in diagnostics. Services in the legal sector (today primarily provided by lawyers) will be supplemented or replaced by digital services from the Legal Tech sector.


In the future, digitalization will create new challenges for schools and education, training and further education, public administration and associations. It is the responsibility of industry, associations and politics to prepare society for the changes that can be expected in the future from digitalization.

Digitalization and Enterprises

Digitalization has implications for enterprises of all sizes. On the one hand, enterprises have to digitize their internal processes and procedures, on the other hand they have to develop new services and digital business models. This is driven in part by digital transformation in companies that have defined a digital roadmap, and in part by start-ups. In digitalization, the challenge for companies is to identify new customer needs as a result of the growing adoption of digital services and apps.

New target groups have also emerged for companies with the so-called “Digital Natives”. To achieve this, a different marketing and sales strategy is often required.

Innolytics® CEO Dr. Jens-Uwe Meyer is one of the leading experts on digitaliziation

Digitalization makes it necessary for companies to focus their actions on the development of digital innovations in order to be successful in digital change. Typical fields of action are:

  • Establish a culture of innovation that promotes the development of digital processes and procedures and makes it possible to develop digital services and digital business models.

  • Development of digital innovation strategies, i.e. an action plan for the company’s handling of digitalization.

  • Training of employees to prepare them for the challenges of the digital age and to enable them to take part in digital change.

  • Alignment of a company’s marketing and sales activities to digitalization. Companies have to deal with this question: How do we want to reach our customers tomorrow? What role do trends such as content marketing and sales automation play? How do we deal with the ever more individual needs of our customers?

  • Development of digital procedures and processes: Saying goodbye to paper files by introducing processes and procedures in the company, some of which have to be radically rethought as a result of digitalization

  • Dealing with data that arises within the company, in connection with the activities of a company or with customers. New service and business models can be developed from data.


Digitalization confronts companies with the challenge of permanently changing and adapting. Competitive advantages from the past only exist to a limited extent.

Customers today are already much better informed than at times when the Internet was only just becoming widespread. New technologies such as artificial intelligence and the blockchain will continue to radically change business models and companies until 2040. Thus, digitalization in the company is a topic for top management. The Innolytics® innovation software helps companies to drive digital change. Within a company, different innovation networks can be founded and managed, which systematically advance digitalization within the company.

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