There is much confusion around the difference between digitization, digitalization and digital transformation, all of which are terms being used interchangeably within the industry. Just googling digitalization vs. digitization gets well over 100,000 results, many with conflicting responses.
Let’s focus on digitalization. For ISVs (independent software vendors) and IDVs (intelligent device vendors), digitalization is the journey towards improving or transforming business operations, functions and processes by accessing digital technologies in order to inject innovations and ideas (CIO Whitepapers Review).
What’s essential for ISVs and IDVs is to embark (yesterday already) on the digitalization journey, and to rethink and reshape the way they operate. Digitalization is one of the three key drivers (together with servitization and consumerization, which will be discussed in the next posts) for software monetization.
Digitalization is all about operational efficiency, focusing on:
- System consolidation to simplify operations, integrate to back office applications and manage all licensing from one place.
- Process automation to reduce operational costs, minimize manual procedures and eliminate human errors.
- Service delivery to provide seamless product distribution, efficiently deliver new software releases and updates and avoid sending physical delivery kits.
Today, digitalization is a strategic business initiative, and as such needs to take into account short- and long-term goals. Understanding that digitalization touches all departments, functions and people in an organization is only the beginning.
To drive effective digitalization, there’s a need to collaborate, simplify decision-making processes and facilitate quick executions, while fostering an agile work environment that permits trial and error. This will enable ISVs and IDVs to operate differently; and operating differently is fundamental for remaining competitive.
Clearly there is no out-of-the-box solution for digitalization. Companies should make the effort to find the ideal partners for the many stations they will need to pass on the way to successful digitalization. Smart players are already changing the way they operate and adopting new operational models that correspond with the era of digital transformation. Achieving operational efficiency is not only what keeps ISVs and IDVs relevant in today’s market, but also what empowers them to innovate and generate new revenue streams.
Want to learn more about the other drivers for software monetization? Read the upcoming blogs on servitization and consumerization.