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Why HR needs to move from digitization to digitalization

By John Kostoulas | July 03, 2017 | 0 Comments

HCM Tech

How digital is HR? Many CHROs and CIOs would argue “a lot”, referring to the many technology projects they have recently completed or have underway.

And it is true that the scope and adoption of digital technologies around HR processes has vastly increased in the last 5 years, fueling the growth of the Human Capital Management applications software market (see our 2017 Snapshot for Human Capital Management software – Gartner client access required).


But digital comes in numerous colors and shades. Look at the following two terms which, despite their almost identical spelling, best define the two ends of the spectrum:

  • Digitization: The widespread definition is “the conversion of analog to digital”. The transition from LPs to CDs, if you recall. In HR, examples are job boards replacing newspaper job postings, performance management systems replacing paper forms or self-service case management systems replacing employee calls to the HR department. New (or improved) technology but same old process.
  • Digitalization: The Gartner definition is “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities”. It is the transition to become a digital business – from CDs to Spotify. This transition cannot succeed unless organizational practices and processes and culture revolve around the new business model.

HR still largely invests its technology budget in digitization. Digitization benefits are functional and process-specific: their value cannot exceed the range of thousands or (best case) millions of $. Often times, these benefits are detached from or invisible to the business.

What HR needs is an immediate shift towards digitalization. Competition with successful digital businesses already valuated at billions of $ requires action now, not tomorrow: talent, organizational structures, diversity and inclusion, and data-driven workforce decisions are few topics requiring profound change in the way HR thinks about, plans, selects, implements and operates its technology.

This week, I am speaking at the Beyond HR forum in Amsterdam about how HR can embrace digitalization. How to optimally blend the digital business and workforce aspects into technology needs. How to select solutions based on target outcomes, not abstract features. How digital is your HR?


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