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 a third (33%) rated as having good digital health. Fourteen percent of medium UK businesses receive a good digital health rating and just 11% of small UK businesses have good digital health.

In contrast, Spain and Germany performed better, with a quarter (25%) of businesses surveyed in each market rated as having good digital health.

Digital transformation progress – work to be done

Over a third (35%) of UK businesses surveyed claim to run at least half of their business using digital tools. 30% of UK businesses say under half, and around a fifth (17%) run the majority of their business using digital tools. Notably though, UK respondents are over three times more likely to say they are right at the beginning of their digitisation journey (14%), than those who claim to be 100% digital (4%). Those with good digital health are much more likely to be 100% digital than those who have average or poor health (14%, 2%, 2% respectively), demonstrating the positive impact digital transformation can have on business.

Over half (53%) of UK digital transformation leaders surveyed say their business uses two to three cloud platforms, around two-fifths (39%) use one to five applications, and just over a third use six–10 applications (36%). Only one in 16 (6%) UK respondents don’t use any cloud platforms and only one in 20 (5%) don't use any cloud applications.

Almost a fifth (16%) of UK businesses with poor digital health don’t use any cloud platforms, compared to just 2% of those with average digital health and none (0%) of those with good digital health. Similarly, a much higher percentage of those with poor digital health don’t use any cloud applications (13%), compared to those with average (1%) or good (2%) digital health.

Over nine in 10 (92%) UK businesses surveyed have faced problems with digital transformation so far. The most common problems faced include that they have had to take outside help/resource to help their digital tools work together better (36%), followed by it not delivering the costs savings they thought it would (32%), and it not delivering the benefits the vendor told them it would (27%).

Benefits and making digital decisions

The most common benefits of digital transformation seen by UK digital transformation leaders surveyed are improved customer experience (43%), efficiency (38%), and improved employee experience (32%), 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 integration with their other digital apps as one of the most important considerations when introducing a new cloud software application. This is followed closely by how it fits with their overall digital strategy and infrastructure (40%), and price (36%).

"It's clear to see that the UK has a lot of progress to be made in terms of business digitisation and to meet the UK Government's target of becoming the leading global tech hub, 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."

"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."

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 (39%), compared with just over one in six (17%) of businesses with average digital health, and 13% with poor digital health. In fact, nearly half (47%) see AI playing a very big role in their business and are planning to invest heavily in it.