3 different functions for digital transformation and digital optimization
In business sometimes we use both of the above functions - digital transformation and digital optimization, as the same but as a result, they are far different from each other.
The focus of digital optimization is making internal processes less expensive or/and faster or/and more reliable but it doesn't guarantee to take the entire business to the next level which means serving the customer more efficiently while digital transformation in one word makes the life of the customer easier with solving his/her problems.
For example: in online shopping, your customer doesn't care if your warehouse is run by robots and an automized system or it is managed by operators. Customers need fast and accurate delivery either by humans or robots. If your warehouse processes are digitalized without having any effect on your customers' needs then you have digital optimization which is good but it doesn't take your business to the next level. But if customers can track their parcels in each step and if they can digitally have control over each procedure then you have helped them to see the entire process and also you have made their life easier by knowing the delivery time and monitoring their parcel. This is a digital transformation.
2. Product or service:
If the new digital function is leading you to produce new and cheaper products/services then you've done digital transformation. A famous example can be the apps used to order food. You use the app without calling anyone by phone or going to restaurants directly.
Some digital programs help employees to be more productive. For example in issuing invoices, we can use different AI solutions to increase the level of productivity but if the productivity has no impact on the entire process including the satisfaction of the customer, then we have digitally optimized our internal processes.
Digital optimization is a platform for digital transformation.
In many cases, it is necessary but not enough. The decision is yours as a decision-maker on how to approach these concepts and how to bring the change to your business. Just before starting any change we should deeply study the objectives and ambitions to know which one we need to pick.