Digital Transformation Jargon Made Simple: Explaining the Real Meaning

April 12, 2021


Jan Madsen


Let’s avoid the confusion of abstract terms.

I find it quite interesting how confusion can be a powerful weapon against igniting meaningful, positive change. The human brain developed over hundreds of thousands of years, but it’s still triggered in the same way it was when humans had to hunt or be hunted.

Therefore, our job is to teach our brains that the unknown, the risks, the changes are not a factual matter of survival and don’t require so much aversion, but rather a bit more courage to face the challenges to succeed.

To begin doing that and finding some relief, you have to understand the basics. 

That is why, in today’s blog post, we are going to take every essential term around digital transformation and simplify it to provide a better understanding of what this entire situation means. 

A quick glossary

Every time a new concept arises, thousands of articles do it, too. Trying to navigate a sea of content in hopes you finally unravel the meaning of that concept is overwhelming. Let’s change that. 

  • Digitalization = adding more smart tech to existing processes, improving their functionality, but only at surface level. Think about it as adding glazing on the cake – looks nice, but doesn’t change anything underneath.
  • Digital Transformation = the process of building new solutions with technology at its core. It’s about radically rethinking a concept, making profound changes in its “how”, often destroying the traditional ways and starting from scratch. It leads to an incredibly innovative and potent opportunity to make your customer’s life better.
  • Industry 4.0 = a period in time. We are right now in the middle of the 4th industrial revolution. Bernard Marr explains it like this: 

“From the first industrial revolution (mechanisation through water and steam power) to the mass production and assembly lines using electricity in the second, the fourth industrial revolution will take what was started in the third with the adoption of computers and automation and enhance it with smart and autonomous systems fuelled by data and machine learning.”

Bernard Marr

In short, the 3rd industrial revolution, starting in the 1960’s, was a transformation, that made it possible to collect heaps of data from different processes.

The 4th Industrial revolution, the period we are currently living in, is all about turning these lakes of data into meaningful information, enabling us to make better decisions.

Essentially, the 4th industrial revolution brings new transformational technology that dramatically changes the way we do business and serve our customers. It provides faster and more accessible opportunities to produce and deliver products and services.

  • Internet of Things (IoT) = every device you use can be connected to the Internet, providing data stored in a cloud-based database, accessible immediately and from everywhere. 
  • Industrial Internet of Things (IIoT) = you guessed it: the Internet of Things, but for manufacturing companies. Every machine in a factory can be connected to a system or platform, forming an incredibly efficient network that will ultimately allow you to visualise and analyse real-time, insightful data in a holistic manner. Automation is at the core of the entire process, saving a lot of time, effort, and money while boosting productivity.
  • Smart factory = a factory that implemented intelligent technologies that connect the machines (intelligent robots, interconnected supply chains), provide enormous amounts of data (Big Data), and enable the system to make decisions and alerts autonomously. Basically a factory where IIoT is in place and the Digital Transformation has happened.

A simple analogy

When I have to explain to someone what IIoT means, I have a favourite analogy I use to make sure they understand:

Have you ever really thought about your iPhone, for example? 

I can make phone calls, text, listen to music, browse the Internet, navigate the world, keep notes, write, read etc. It also keeps track of present and historical data for me to view anytime, anywhere. 

Moreover, it’s connected to my Apple Watch, which monitors my health and can provide important data about it. 

And the best thing about it? Your iPhone is a platform – a vessel if you will. It stores the apps and the data, and it connects all the information, making it available at all times, from everywhere. Moreover, it’s specifically tailored to your needs.

This small device you can fit in your pocket is your access to every information ever created by humankind. How amazing is that?

IIOT is similar to my iPhone: a situation where everything is connected, and everybody in your business has access to everything at all times and from anywhere. Why settle for less?

A reflection

The 4th industrial revolution already started. And its accelerated growth won’t stop because the benefits are remarkable. 

Therefore, all types of businesses of all sizes have to seriously consider integrating the new technologies to remain competitive. Not only will the digital transformation of your business spike your productivity levels, but it will also improve customer satisfaction, cost-effectiveness, and revenue growth because you will have extremely valuable real-time data you can use to broaden your knowledge.

Here’s an important reminder, though: 

It’s a marathon, not a sprint. 

Taking small steps towards this massive goal will allow you to adjust quickly and solve problems efficiently along the way. It’s crucial to recenter yourself and remember what truly matters constantly.

As always, we are here to fully support you through all of it.

PS: This is the 2nd in a series of 5 blog posts on IIoT: You can read:

The 1st post: A New Era: Is The Digital Transformation A Curse And A Blessing?

The 3rd post: We Have Done This Before: How We Can Use History To Thrive In Industry 4.0

The 4th post: Why Open-Source Is The Future-Proof Solution For Success In Manufacturing

The 5th post: How Your Company Can Thrive In The Digital Transformation Era

Written by Jan Madsen,
founder of Enuda

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