As we head into 2025, UK businesses are making strides in their digital transformation efforts. But with rapid evolutions in technologies such as AI, businesses are under increasing pressure to keep up.
Economic turbulence, driven by factors like inflation and rising interest rates is putting a strain on budgets and many companies are facing higher operational costs, reduced consumer spending, and tighter access to capital. Over a quarter (28 per cent) of UK businesses responding to Zoho’s Digital Health Study * reported having ‘good’ digital health.
Meanwhile, customers, feeling the financial squeeze themselves, are becoming more discerning, demanding greater value and efficiency from the businesses they interact with. In this landscape, companies that fail to accelerate their digital maturity risk losing competitiveness, struggling with inefficiencies, and ultimately falling behind more agile competitors.
Managing Director at Zoho UK.
The impact of digital maturity on AI adoption
AI is a hot topic in business and boardroom discussions, from the AI Actions Summit to regular government investments and governance debates. However, not all businesses are reaping the benefits of AI equally.
Businesses that are lagging in digital health will struggle to gain any return from investment in AI as it demands a foundation of digital maturity. As a result they will, miss out on its potential to drive innovation and productivity. The benefits and efficiencies that AI systems can deliver are no secret, and the businesses that are struggling, or even neglecting to adopt, risk missing out on a competitive advantage.
For example, when it comes to customer experience, many businesses are deploying AI to provide detailed insights in order to deliver personalized experiences, and boost efficiency through tools such as AI agents or chatbots. These systems increase the likelihood of a business anticipating customer needs and creating a smooth, seamless customer journey, all of which is built on the foundation of good digital health.
Navigating integration complexities
Integration complexities typically arise from fragmented IT ecosystems, outdated legacy systems, and inconsistent data structures that prevent smooth communication between platforms.
Legacy ERP systems, for example, can struggle to integrate with modern cloud-based applications, which results in inefficiencies and data silos. The complexity also extends to customer-facing systems, where disconnected platforms lead to inconsistent user experiences.
Businesses are increasingly turning to cloud platforms to overcome these integration hurdles.
To address integration challenges, companies should adopt strategies like application programming interfaces and middleware solutions that promote interoperability, or should seek to use vendors who provide these, or provide easy ways to customize integration points.
Additionally, consolidating platforms can streamline processes, reduce complexity, and enhance efficiency. However, with larger companies, it is usual that several platforms are in place, so more work needs to be done to optimize interoperability.
Beyond technology, businesses should also invest in robust change management strategies and upskill their workforce to maximize the benefits of integration and ensure adoption.
Ensuring that teams are equipped to work seamlessly across new digital ecosystems, as well as to understand how the changes can help them in their roles as well as the business overall, is just as critical as the technology itself.
Overcoming infrastructure management challenges
Managing digital infrastructure remains a significant challenge for business and technology leaders, with the difficulty lying in balancing scalability and cost-efficiency while maintaining high system performance. Traditional infrastructure does not have the flexibility for modern digital demands, which leads businesses towards cloud-based models.
The rapid growth of IoT devices adds another layer of complexity, as businesses must manage a growing network of connected devices while maintaining data security and integrity.
To maintain compliance and ensure data privacy, businesses need solutions that are transparent, user-friendly, and easily governed by technology leaders. Simplified tools should offer automated compliance monitoring and centralized dashboards, while robust security measures include encryption, access controls, and threat detection.
Good digital health means good digital transformation
Businesses that navigate the obstacles of digital transformation tend to see significant benefits and improvements in areas such as customer experience, operational efficiency, and employee engagement.
Those with good digital health are more likely to be able to automate workflows effectively, integrate AI systems, and adopt cloud platforms to boost data-driven decision-making and overall employee productivity. These transformations drive agility and resilience, allowing businesses to adapt quickly to market shifts and competitive pressures.
On the flip side, for businesses with poor digital health, resistance to change, skills gaps, and budget restraints are among the common barriers hindering the progress of digital transformation. These challenges, coupled with fragmented IT infrastructures, make integration complex and limit agility.
Addressing them requires strategic investment in scalable technology and workforce upskilling, not just to modernize operations, but to optimize costs in an unpredictable economy and ensure resilience against evolving market demands.
The real driver of digital transformation success lies in aligning technology with business goals. Consolidating platforms and fostering strong vendor partnerships are not just efficiency plays; they reduce operational complexity, enhance compliance with regulatory shifts, and position businesses to stay ahead of rapid technological advancements.
Equally important is cultural alignment, which ensures that digital tools are not only implemented effectively but also fully adopted by users. Vendors play a crucial role in this process, as they must take a long-term view of their relationships with customers, providing the necessary support, education, and guidance to help businesses unlock the full value of their investment.
Ultimately, digital transformation is a journey, not an immediate fix. Businesses must move away from the notion that simply switching on a tool will yield instant benefits. Instead, they should embrace a comprehensive, strategic approach to drive adoption, overcome challenges, and realize the significant opportunities that effective digitization can offer. With this, by next year, they’ll be far more likely to have good digital health.
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