UK firms show mixed results in digital health by 2025

A new study conducted by Zoho has revealed that only 28% of UK businesses are entering 2025 with good digital health, indicating significant room for improvement in their digital transformation efforts.

The European digital health study evaluated businesses on various metrics related to digital transformation. Larger UK businesses were found to be more digitally advanced, with 40% achieving a good digital health rating compared to 27% of medium-sized companies and 18% of small businesses. In comparison, Germany also demonstrated stronger results, with 33% of businesses rated as having good digital health.

In addition to assessing digital health, the study highlighted differing attitudes towards artificial intelligence (AI) in UK businesses. It found that firms with good digital health were most likely to view AI as critical, with 46% in this category acknowledging its importance, compared to 24% of those with average digital health and 6% with poor digital health. The uptake in AI interest also includes a reported 54% of UK businesses planning to invest significantly in AI, marking a 7% increase over the previous year's figures.

Progress in digital transformation is evident but remains incomplete. 33% of British businesses operate at least half of their processes using digital tools, similar to 35% in the previous year. Meanwhile, the proportion of businesses conducting most of their operations digitally increased by 8% to 25%. However, 12% of UK firms still describe themselves at the start of their digital journey, and only 6% are fully digital.

Cloud adoption has improved, particularly among firms with poor digital health. The percentage of firms not using cloud platforms dropped from 16% to 4%. Among those with average or good digital health, only 1% do not use cloud platforms. However, challenges remain, with 87% of surveyed UK businesses encountering issues during their digital transformation efforts. Key issues include the complexity of integrating digital tools and the unexpected effort required for successful implementation.

Businesses cited improved customer experience (51%), enhanced efficiency (46%), and better employee experience (36%) as the main benefits of digital transformation. When evaluating new cloud software, 41% of UK companies prioritise how it serves their customers, with integration capabilities and user experience also significant considerations.

Sachin Agrawal, Managing Director, Zoho UK, commented, "It's clear to see that the UK still has a lot of progress to be made in terms of business digitisation, but it is encouraging to see progress since last year. Benefits are clearly understood, but there needs to be a lot more education and training from businesses and from vendors providing digital solutions to help companies overcome challenges and realise the full potential of their investment in digitisation as we begin 2025. Good digital health is a critical foundation in order to realise ROI from investment in digital tools and technology."

"Businesses must think more clearly about creating long-term partnerships with the right vendors for their digital transformation journeys. We advise taking a strategic approach where aligning tools, consolidating platforms, and closely mapping to business goals is critical to avoid some of the challenges raised in the study and to improve the digital health of UK businesses."

"Cultural alignment must also be highly considered. To achieve success with digital transformation, it is critical that vendors take a long-term view of their relationship with customers and help them implement tools in the right way, educate users, drive adoption and realise significant ROI. Digital transformation is a journey, and users of digital tools must understand they cannot just 'switch on' a tool and hope to see immediate and ongoing benefits."