Physical Operations vs Digital Operations

Hello there!

Even though we often use these phrases, they can sound confusing: physical operations and digital operations.

Before we jump in, if you want a quick refresher on what “operations” means, we explored the concept here.

Now, let’s begin.

First, digital operations. They are basically the use of modern technology, automation, and data to run and improve business processes. Physical operations on the other hand deal with real-world stuff such as managing tangible assets, people, material, vehicles, and buildings in a physical environment across physical locations.

Simple? Confusing? Wait.

Don't digital operations also manage tangible assets like factory equipment? And don't physical facilities also involve the use of automation technology?

Your confusion is valid because in modern businesses, the physical and the digital rarely operate in complete isolation.

However, there’s still a fundamental difference. Physical operations are defined primarily by “what” is being operated. Its focus is a physical entity such as a human worker, a delivery truck, a turnstile, a HVAC unit, or a warehouse floor.

Digital operations are defined primarily by “how” operations are enabled, executed, or managed through digital technology. Its core subject is a digital asset such as code deployments, data processing, cloud infrastructure.

Purely physical operations still exist all around us. Example: a truck pulls up to a factory gate. The guard notes it on a paper register. No digital footprint.

And purely digital operations exist. Example: an automated cloud server spins up a database backup at midnight.

Most modern operations live right in the middle. Let’s go back to our example of a truck entering a factory.

• a truck arrives
• the driver steps out
• heavy materials are unloaded

The digital layer:

• an ANPR camera identifies the vehicle
• parking system is updated
• a facial recognition authenticates the driver
• an automated gate pass is generated
• the inventory system is updated
• notifications are triggered

And yet, our example here is still fundamentally a physical operation. They don't become digital operations simply because you add technology. The software didn’t unload the heavy materials. People did. Or a forklift did, if they were steel beams. The digital tools created a digital layer around a physical event.

This is why physical operations are so challenging. Software can run perfectly in a pristine data center, but as soon as it meets the physical world, well—hello chaos.

Hope it’s clear now.

I have a very physical operation of my own to perform: flying down to grab a seed snack. Off I go!