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Digitization: Harness the Benefits, Data Formats & Techs of 2024

Updated on Jan 11
7 min read
Written by
Cem Dilmegani
Cem Dilmegani
Cem Dilmegani

Cem is the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per Similarweb) including 60% of Fortune 500 every month.

Cem's work focuses on how enterprises can leverage new technologies in AI, automation, cybersecurity(including network security, application security), data collection including web data collection and process intelligence.

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Digitization: Harness the Benefits, Data Formats & Techs of 2024Digitization: Harness the Benefits, Data Formats & Techs of 2024

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Digitization is the crucial first step in the digital transformation process. ~90% of firms have a digitization strategy or plan to incorporate it into their business operations as it is cost-efficient and future-proof. However, more than half of digital transformation attempts fail. 

Lack of digitization, or a digital infrastructure deficit, is causing digital transformation failures, preventing data flow across networks and edge entities. Digitization can be important for solving data integration problems since it is the step that converts analog information to digital format.

Without a concrete understanding of digitization, executives can waste resources and fail to build future-proof systems. This article explains digitization and related technologies to assist them.

What is digitization?

Digitization, also known as digital enablement, is the conversion of analog data, such as: 

  • Printed text
  • Photographs
  • Analog audio 

into a digital format that can be processed or stored by computers. This procedure entails breaking down the analog signal into a series of discrete values, which are then represented using a binary code (i.e., the digits 0 and 1). 

The process is usually conducted through:

  • analog to digital converters (ADC) 
  • scanners 
  • other hardware, such as cameras 

that converts the analog form into a digital one, thus, the data can be changed, stored, and shared electronically. Digitizing physical materials produces digital data. 

What are the properties of digital data?

Data can be stored in formats like:

  • Audio (e.g., MP3 files)
  • Numbers (e.g., Microsoft Excel sheets)
  • Photos (e.g., JPEG documents)
  • Text (e.g., Microsoft Word files)
  • Videos (e.g., MP4 files)

These files can be saved on hard drives, flash drives, or on the cloud. Software like: 

  • database management systems (e.g., SQL)
  • spreadsheets (e.g., Microsoft Excel)
  • word processors (e.g., Microsoft Word)

Can allow access to digital items to read or manipulate data. Text, spreadsheets, databases, and multimedia assets are digitally created, saved, and transmitted. Through networks, data can be shared between devices like computers, smartphones, and/or tablets.

data can be categorized into two kinds:

  • Structured data, such as a database table or an Excel spreadsheet, is predefined.
  • Unstructured data such as a text document or an image.

The worldwide volume of data is above 64 zettabytes (ZB), where one ZB equals 1 billion terabytes (Figure 1), and 90% of it is unstructured data that requires advanced analytical tools to make sense of it.

The figure illustrated that the size of digital data was ~64 zettabytes in 2020 and it is expected to be ~181 zettabytes in 2025.

Figure 1. The volume of digital data is increasing.1

Progression from digitization to digital transformation

The image illustrates the role of digitization in digital transformation and summarizes the bullet points below.

Figure 2. Digitization’s role in digital transformation.

Digitization, digitalization, and digital transformation are conceptual terms that are closely related, frequently used interchangeably, and sometimes confused. Here is an explanation of their distinction:

Digitization

The primary purpose of digitization is to make information more accessible, searchable, and long-lasting. This is where a paper document like a contract, insurance bill, or photo is converted. The process typically involves the following digitization practices:

  1. Preparation: In preparation for digitization, this stage cleans, fixes, and organizes analog material.
  2. Scanning: This step involves scanning analog material into a digital format like an image.
  3. Data capture: Digital materials are extracted using specialist software in this process, like optical character recognition (OCR).
  4. Quality control: This stage verifies data accuracy and completeness.
  5. Data management: Data is stored digitally and maintained for long-term access in this stage.

Digital transformation requires digitization and digitalization.

Digitalization

It is a subset of digital transformation, frequently followed by the step of digitization. “Digitalization” is a major change in company operations through digital technology, resulting in new business models.2. It can involve: 

  1. Data processing: using:
  1. Software integration with:

Digital Transformation

The digital transformation uses digital technologies to change a business’s operations and customer value. It puts digital technology into every part of a business to meet market requirements and business needs. It can entail adopting a business model that is:

  1. customer-centric
  2. data-driven
  3. platform-oriented

Which digital formats to choose?

Digital formats represent and store digital information, while digitization turns analog information digital. Digital formats can: 

  • Compress (e.g., ZIP files)
  • Protect (e.g., password protection for PDF documents)
  • Encrypt (e.g., encrypt passwords for files)
  • Add metadata to digitized data. (e.g., date and location metadata for JPEG images) 

Data accessibility, preservation, and quality depend on the digital format. For example, image and audio forms are digitized into particular formats. TIFF and FLAC are larger than lossy formats like JPEG and MP3, but they produce higher-quality digital files. Choosing a format that is open and widely used makes it easier to share data. For example, typically, photos are scanned into JPEG, and text documents into PDF.

The image summarizes the digital formats listed below in rectangle boxes. In boxes, there are the names of digital formats vertically and horizontally.

Figure 3. Some digital formats examples.3

Choosing the appropriate digital format can be important to: 

  • digital preservation and protection of digitized information. For example, PDF has “fixed-layout” and supports encryption. Fixed-layout documents can be viewed on any device or software. This matters for shared papers viewed by multiple people.
  • make it accessible and shareable. Content services platforms (CSPs) can store and manage digital content from a centralized location. These platforms integrate with data storage and analysis technologies like SAP.
  • data integration. For example, workload automation tools can automate PDF conversions from Word or Excel.

Here are the digital formats to inform businesses: 

Archive formats

  • 7z: This open-source format, like ZIP and RAR, can enable superior compression rates, password security, and encryption.
  • RAR: This format is similar to ZIP and compresses and archives files. It offers password protection and encryption and can split the archive into numerous pieces.
  • ZIP: This format is commonly used for compressing and archiving files, allowing password protection and encryption.

Audio formats

  • AAC: This is a lossy audio format comparable to MP3, except it provides higher sound quality at lower bit rates.
  • MP3: This is a widely supported lossy audio format suitable for most forms of music. It compresses the audio data to reduce file size, which can result in poor sound quality.
  • WAV: This is a lossless audio format for high-quality audio. It has a greater file size than MP3 but keeps the original audio quality.

Document formats

  • Adobe Illustrator (.ai): Professional graphic designers use this format to create and edit vector-based images and illustrations, but it requires Adobe Illustrator to open.
  • Microsoft Word (.doc, .docx): Microsoft invented this text document format. It has many formatting and layout choices, but its proprietary format may not work with other software.
  • PDF: This portable document format (PDF) is widely used to send and receive papers because it is easy to read, keeps formatting, and supports password security, digital signatures, and interactive parts.

Image formats

  • GIF: This image format, which allows transparency and a palette of 256 colors, is primarily used for animated images and simple graphics.
  • JPEG: This lossy image format is used for photography. The format compresses image data to minimize file size, however, numerous compressions can reduce the image quality.
  • PNG: This lossless image format is appropriate for transparent and uniform-color images. It has a greater file size than JPEG but retains image quality, making it an excellent format for graphics, logos, and other applications.

Text formats

  • Extensible markup language (XML): This format has a standard procedure to mark up and identify document components, including headings and paragraphs. This makes sharing data between systems and applications easier, but it takes technical knowledge to comprehend and use it.
  • Plain text (also known as ASCII text): Simple text with no formatting. It is tiny and universally editable by any text editor. Plain text cannot use bold, italics, or underlining.
  • Rich text format (RTF): Most word processors can open this format, which supports bold, italics, and underlining. Unlike Microsoft Word or Adobe InDesign, formatting possibilities are limited.

Video formats

  • AVI: This older video format is still used for some videos, but MP4 is more popular. It supports several codecs and resolutions.
  • MKV: This container format can hold numerous video, audio, and subtitle tracks. It is commonly used to store movies and TV episodes with several language or subtitle options.
  • MP4: This widely supported video format is suited for most sorts of videos. It employs the H.264 compression standard, resulting in high video quality and reduced file sizes.
  • WMV: This video format created by Microsoft is commonly used in video recording and streaming on Windows-based systems.

12 digitization technologies

The image summarizes the digitization technologies listed below.

Figure 4. A figure summarizing digitization technologies.

The following technologies are capable of digitizing analog materials:

Audio digitization

This software can digitize analog audio recordings:

  • Digital audio workstations (DAWs)
  • Audio editing software

Data entry digitization

  • Automation tools: Data entry can be automated using robotic process automation (RPA) to speed up digitization and eliminate errors.
  • Barcode and QR code scanning: Barcode and QR code scanning systems can digitize tangible items, such as warehouse merchandise, by scanning their barcodes or QR codes.

Image recognition, processing, and digitization

  • 3D scanning: 3D scanning can transform physical items into digital representations that can be manipulated, examined, and shared.
  • Intelligent Document Capture (IDC): IDC processes automatically capture, process, and extract data from scanned documents. It can digitize various information, including invoices, purchase orders, resumes, and other business documents. IDC uses technologies like optical character recognition (OCR), machine learning, and natural language processing (NLP) to automatically extract data from documents and make it available in digital systems.
  • Mobile capture: Information can be digitized using mobile devices with cameras and barcode scanners to collect data from a variety of sources, such as:
    • Form or survey responses 
    • Barcodes 
    • QR codes 
    • Photos
    • Locations

This can be beneficial in field-based data collection scenarios.

  • Optical character recognition (OCR): This technology recognizes text in photos and converts it into editable, searchable text using machine learning algorithms.
  • Photography: Photographs of tangible objects, such as artwork, artifacts, or three-dimensional objects, can be captured with digital cameras. This is very helpful in the preservation of art and cultural heritage.
  • Remote capturing: Using specialized cameras and image capture devices, remote capturing can be used to scan difficult-to-reach or delicate things such as:
    • Manuscripts 
    • Maps
  • Scanners: These include flatbed scanners, document scanners, and other scanners that can digitize paper documents, photos, and analog information.

Video digitization

This includes digitizing analog tapes and film reels into a digital format. Digital frame-by-frame captures can get rid of artifacts and keep videos’ quality.

4 digitization benefits

 Digitization can provide the following benefits:

  1. Improved collaboration: Document management systems can help organize, store, and find digital documents, enabling easy access and sharing within an organization. CSPs, for example, allow users to share, save, and alter documents on a single platform (Figure 5).
  2. Improved document search: ~31% of office workers had problems finding documents in tense situations. Digitization produces a digital file that:
    1. can be searched using keywords. 
    2. can be stored in content services platforms. CSPs can arrange electronic files using metadata information.
  3. Improved document processing: Digitization can enhance efficiency in document processing. Thanks to digitization, for example, Central Nacional Unimed (CNU), an insurance company:
    1. Enabled to process ~1.3 billion bills and ~120,000 supporting documents monthly. 
    2. Reduced the time for bill analysis by ~35%.
    3. Administrative costs by ~90%.
  4. Reduced storage costs: Document storage can be more expensive for paper documents. Estimates put the cost of storing one terabyte (TB) of paper documents at $450 for two filing cabinets. Keeping the same data in the cloud costs $75.
Search properties, permanent redaction, scriptable searches, video bookmarking, export properties, and retaining documents are all capabilities of content services platforms.

Figure 5: CSPs features.4

How are industries affected by digitization and data?

Digitization and digital data are changing many industries, including:

  • Manufacturing: Industry 4.0, the internet of things (IoT), and artificial intelligence have made manufacturing more efficient, competitive, and sustainable. For instance, with IoT technology, Gestamp reduced CO2 emissions by ~15%.

For more information on digitization best practices, do not hesitate to contact us :

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This article was drafted by former AIMultiple industry analyst Yılmaz Doğukan Özlü.

Cem Dilmegani
Principal Analyst

Cem is the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per Similarweb) including 60% of Fortune 500 every month.

Cem's work focuses on how enterprises can leverage new technologies in AI, automation, cybersecurity(including network security, application security), data collection including web data collection and process intelligence.

Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE, NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and media that referenced AIMultiple.

Cem's hands-on enterprise software experience contributes to the insights that he generates. He oversees AIMultiple benchmarks in dynamic application security testing (DAST), data loss prevention (DLP), email marketing and web data collection. Other AIMultiple industry analysts and tech team support Cem in designing, running and evaluating benchmarks.

Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised enterprises on their technology decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.

He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.

Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.

Sources:

AIMultiple.com Traffic Analytics, Ranking & Audience, Similarweb.
Why Microsoft, IBM, and Google Are Ramping up Efforts on AI Ethics, Business Insider.
Microsoft invests $1 billion in OpenAI to pursue artificial intelligence that’s smarter than we are, Washington Post.
Data management barriers to AI success, Deloitte.
Empowering AI Leadership: AI C-Suite Toolkit, World Economic Forum.
Science, Research and Innovation Performance of the EU, European Commission.
Public-sector digitization: The trillion-dollar challenge, McKinsey & Company.
Hypatos gets $11.8M for a deep learning approach to document processing, TechCrunch.
We got an exclusive look at the pitch deck AI startup Hypatos used to raise $11 million, Business Insider.

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1 Comments
shirleyfeldman
Apr 04, 2023 at 01:42

I just finished reading your article on digitization, and I have to say, it was incredibly insightful. I particularly enjoyed your analysis of the benefits and challenges that come with digitization. You made some excellent points about how digitization can lead to increased efficiency, improved data management, and greater customer satisfaction. However, as you also pointed out, there are some challenges associated with digitization, including the need for significant investments in technology, training, and cybersecurity.

One thing I would have loved to see in the article is a more detailed exploration of how digitization is impacting different industries. While you touched on a few examples (like banking and healthcare), it would be fascinating to see how digitization is transforming other sectors, such as manufacturing, retail, or hospitality. Additionally, it would be great to see a discussion of the potential social and economic implications of digitization, such as the impact on jobs, income inequality, and access to technology.

Overall, I thought your article was a great overview of the topic of digitization. You clearly have a deep understanding of the subject, and you presented the information in a clear and concise way. I look forward to reading more of your work in the future!

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