First, to understand the definition of DX, let’s read the section of the METI DX Report, “The Direction that Companies Should Aim for”.

DX is “the transformation of products, services, and business models based on the needs of customers and society, as well as the transformation of operations themselves, organizations, processes, and corporate culture and climate to establish competitive advantage, as companies respond to rapid changes in the business environment and leverage data and digital technologies.”
https://www.meti.go.jp/press/2020/12/20201228004/20201228004-3.pdf

Despite this definition of DX (Digital Transformation), there is much confusion on the topic.

What is a clear definition of DX?

To understand why there is confusion between DX and incorrect DX, let’s look at what DX is in the first place and what topics are similar to DX and often confused with it.

In the West, DX tends to be defined as something much more vague than in Japan.

There are no specific guidelines like in Japan, but the general consensus seems to be that “as long as the method of producing positive results is technology-based, it should fall somewhere in the realm of DX.

Some of the most common things we see with regard to DX are the following technologies

• Digitization: the use of technology, usually from analog to digital. For example, it could be as simple as moving from flyer distribution to online marketing. 
• RPA (robotic process automation): the use of bots to automate repetitive tasks and improve efficiency. For example, using or developing software to collect sales data from reports, enter it into documents, and automatically calculate it is one example of what can be accomplished with RPA.
• Automation: This is a higher level version of RPA. The goal is to use machines to replace manual work exactly as it is, with a focus on machine learning and AI. An example would be replacing self-driving cars with AI.

Using technology to create innovative value is spoken of as DX.

It seems that people often talk about DX with an emphasis on creating new products and services in order to respond to new trends or to provide services in areas that are being price-competitive.

Is the DX situation in Japan unique?

Perhaps the way DX has been lifted up in Japan has been a bit peculiar.

In almost every country, the topic of DX is discussed among those involved in business.

In Japan, however, it has been booming through the media, especially with the METI “DX Report.

As it started out, the academic theory was too strong, and it must have seemed difficult for the general public.

SIers and other consultants tend to talk about the practical level, because they are expected to produce results, not to submit papers.

At the implementation level (practical), it is almost meaningless to separate where automation comes from and where DX comes from.

It would be very difficult to get a small or medium-sized company with a limited budget to do something spectacular to adhere to the definition of DX.

It is up to the client to decide whether the consultant’s proposal will be accepted.

The consultant may be able to achieve results by proposing more RPA or systemization to improve the efficiency of employees’ work.

Since it is more acceptable to clients to conduct sales in the name of DX promotion, such things are probably explained collectively as DX.

Reasons for the Gap

In Japan, many people who are interested in DX do not really understand what DX (as defined in the METI DX Report) is.

In the real world, people are more interested in IT rather than DX, so this topic is inevitably conveyed to the public with a shift to IT.

Most people are not DX consultants, and the fine definition of DX will still not be an issue.