Enduring ‘digital deficit’ puts UK’s economic growth hopes at risk, new research finds
- A new report by ArvatoConnect finds digital transformation across the private sector is growing at scale, with three-quarters (76%) now delivering organisation-wide projects.
- However, significant implementation gaps remain as businesses roll out new technologies without proper planning or performance measurement.
- As the UK targets tech-led growth, more than half (51%) of firms view concerns about AI safety, security and ethics as the leading barrier to successful implementing digital initiatives.
Digital transformation is booming across the UK’s private sector but an enduring ‘digital deficit’ could impact future economic growth, according to new research by ArvatoConnect.
In an annual survey of British businesses’ approach to digital transformation, including AI implementation, the customer experience and business optimisation specialist found that more than three-quarters of firms (76%) are now rolling out organisation-wide initiatives. Less than a third (32%) were doing so 12 months ago – highlighting a 137% increase.
Notably, almost all (95%) of respondents said they are confident that their digital transformation projects will achieve their objectives, with the most significant areas of focus being IT (cited by 90%), customer services (51%), finance and admin (50%) and marketing (43%).
Despite this confidence rating – which has grown from 74% in 2024 – the findings point to an enduring ‘digital deficit’ with firms across the board failing to implement basic planning, process or impact measurement. In doing so, businesses are putting at risk the estimated £550bn boost to GDP that new technologies including AI have the potential to deliver1.
Just one in two (53%) of the businesses surveyed said they had gathered end-user insight before making changes, and over half (53%) haven’t sought feedback on how well new systems or technologies are delivering once in place. As many as three in five (60%) have failed to gain colleague buy-in for their project, while only half (56%) had trained employees on new the technologies and processes being rolled out.
Critically, more than a third (38%) had yet to implement any form of performance monitoring, with half (50%) yet to set KPIs to track success.
The research comes as the UK continues to invest significantly in digital transformation, including the creation of new AI Growth Zones as part of the government’s AI Opportunities Action Plan. However, the research points to the need for regulatory guardrails, with firms deterred by potential risks in relation to AI. More than half (51%) cited concerns about the technology’s safety, security and ethical risks as the biggest barrier to successful rollout within their business. These concerns lead other organisational issues, including legacy systems (40%), technical skills gaps (40%) and budget constraints (35%).
The findings are published in ArvatoConnect’s latest white paper, The UK Digital Transformation Report: From deficit to delivery.
James Towner, chief growth officer at ArvatoConnect, said: “AI and digital transformation represent a once in a generation opportunity for the UK economy – unlocking productivity, powering innovation and setting new benchmarks for customer experience. But businesses are putting that potential at risk if they don’t close the gap between ambition and execution.
“Our research shows clear momentum, with more organisations embracing digital at scale. But too many are pressing ahead without the strategies, safeguards or performance measurement needed to make transformation stick. Without this, they risk falling short of their goals and losing ground to more agile competitors.
“What’s more, successful transformation isn’t just about adopting AI – it’s about deploying it safely and ethically. That means putting guardrails in place to encourage innovation but protect against bias, hallucinations and misinformation, and also ensuring solutions build trust with both customers and colleagues.
“This is a critical inflection point. Businesses that move decisively, with clear plans, strong governance, and a focus on responsible innovation, will be the ones to turn this moment into lasting growth.”
About ArvatoConnect
ArvatoConnect partners with leading brands and organisations to transform customer, colleague and citizen experiences, while delivering measurable, lasting outcomes. By embedding innovative technologies and placing AI at the core, we help clients move further, faster, and unlock real operational and business impact.
With a tech-agnostic approach, we integrate the right platforms, data and customer journeys into intelligent, cohesive ecosystems, powered by deep partnerships and our own evolving digital capabilities. From highly regulated industries to the public sector, we deliver secure, ethical and compliant transformation at pace.
A division of Bertelsmann, ArvatoConnect employs approximately 800 people in the UK and is headquartered in Datchet, with other offices in Swansea, Newcastle and Willerby. For more information, visit: https://www.arvatoconnect.co.uk
About the survey
The research was conducted on behalf of ArvatoConnect by Censuswide, among a sample of 200 UK private sector, and local and central government senior decision makers in customer experience, transformation or IT, in organisations currently engaged in digital transformation. The data was collected between 17th April and 22nd April 2025. Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council