Only 28% of UK businesses are starting 2025 with good digital health
Just over a quarter (28%) of UK businesses surveyed had good digital health in 2024, around a third (36%) had average, and (36%) had poor health, according to a European digital health study from Zoho, a leading global technology company.
The study rated businesses surveyed on their practices within digital transformation. Large UK businesses tend to perform better when it comes to digital health, with almost two fifths (40%) rated as having good digital health. 27% of medium UK businesses received a good digital health rating, and just 18% of small UK businesses had good digital health.
In contrast, Germany performed better, with a third (33%) of businesses surveyed rated as having good digital health. Spain performed similarly to the UK, with 27% of businesses having good digital health, while 20% of businesses in France and 19% of businesses in The Netherlands having good digital health. The Netherlands also had the most businesses surveyed having poor digital health (45%).
Compared with the previous year, the results demonstrate some progress with most digital health indicators in all markets.
AI increasingly playing a part in UK businesses
UK businesses surveyed with good digital health are most likely to see AI as critical and are already seeing the benefits from using it (46%), compared with just under a quarter (24%) of businesses with average digital health and 6% with poor digital health. In fact, over half of UK businesses (54%) see AI playing a very big role in their business and are planning to invest heavily in it – a rise of 7% compared with the previous year.
Digital transformation progress – improvements, but still work to be done
Around a third (33%) of UK businesses surveyed claim to run at least half of their business using digital tools, similar to the previous year at 35%. Those who run the majority of their business using digital tools has jumped 8% YoY to 25%, and also a quarter (25%) of UK businesses say under half, compared with 30% the previous year. Notably, UK respondents are twice as likely to say they are right at the beginning of their digitisation journey (12%) than those who claim to be 100% digital (6%).
Those with good digital health are much more likely to be 100% digital than those who have average or poor health (15%, 2%, 2% respectively), demonstrating the positive impact digital transformation can have on business.
Over half (57%) of UK digital transformation leaders surveyed say their business uses 2 to 3 cloud platforms, just under half (47%) use 1 to 5 applications, and a third use 6-10 applications (33%). Only 2% of UK respondents don’t use any cloud platforms, and only 3% don’t use any cloud applications.
Cloud platform use has increased YoY in UK businesses with poor digital health as only 4% don’t use any cloud platforms, compared with 16% the previous year. While only 1% of those with average digital health and 1% of those with good digital health don’t use any cloud platforms.
Similarly, a much higher percentage of those with poor digital health don’t use any cloud applications (7%), compared to those with average (2%) or good (0%) digital health.
Almost 9 in 10 (87%) UK businesses surveyed have faced problems with digital transformation so far. The most common problems faced include that they have had to spend too much effort (more than expected) to implement digital tools successfully (33%), followed by that they have had to take outside help/resource to help their digital tools work together better (28%), and that their infrastructure has become very complicated to manage (27%).
Benefits & making digital decisions
The most common benefits of digital transformation seen by UK digital transformation leaders surveyed remain the same year-on-year, but are deemed important by more respondents in 2024. These are improved customer experience (51% versus 43% the previous year), efficiency (46% versus 38% the previous year) and improved employee experience (36% versus 32% the previous year), all critical factors for business competitiveness and success today.
When evaluating cloud software applications to potentially introduce, around two fifths (41%) of UK businesses surveyed rank how it helps them serve their customers better as one of the most important considerations. This is followed closely by how it helps improve employee experience (35%) and jointly (34%) whether it integrates with other digital apps they already use, and how easy it is to use / user experience.
“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, comments Sachin Agrawal, managing director, Zoho UK. “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 in 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.”