Preserving old documents and books in Malayalam in digital formats is very important for the language. The most active effort in this front is lead by Shiju Alex with little support from Government Institutes who are yet to recognize its importance.
Shiju Alex's efforts are well documented in his website. It also has links archive.org where the digitized documents are saved.
Digitization often starts with scanning the old documents as good quality images. The conversion of content in these documents to text is also part of digitization. It is mostly accomplished using a combination of Optical character recognition and manual transcription. Malayalam Wikisource did some efforts on this front for copyright expired documents.
KSSP Publications Online
Eureka Archive: 50 വർഷത്തെ യുറീക്ക സൗജന്യമായി വായിക്കാം