Digital Transformation In Manufacturing: From Ambition To Baseline

What the data is showing

According to Australian Manufacturing, 90% of manufacturers now view digital tools as a baseline operational requirement. A shift from it being seen as the differentiator that uber-motivated companies (or those with a lot of funding) strictly undertook. In fact, 60% of manufacturers are actively using smart capabilities in their daily operations, while only 18% of them remain in pilot mode.

These data points demonstrate a new reality, one where businesses that are still running proof-of-concept projects on tools their competitors have already operationalised are behind. And those who have simply opted out of adopting digital tools, are now at the cusp of being left behind.

Next Move Strategy Consulting notes that the Australian ERP software market reflects this shift in concrete terms, growing from USD $1.65 billion in 2025 to USD $1.91 billion in 2026. What we've found is that businesses are committing capital to operational infrastructure because they've decided it is no longer optional. In fact, according to ERP.today, 61%t of manufacturers say they plan to increase digital spending further.

Most manufacturers are speaking about wanting to adopt new digital operational tools and following through by investing money and time into it.

Where transformation gets more complicated

The reality is that high adoption numbers don't automatically mean high execution quality.

The manufacturers pulling ahead today aren't necessarily the ones with the most sophisticated technology. They're the ones who have done the less glamorous work of connecting core operations (sales, operations, inventory, and finance) into a single picture. The ones who can answer "did we make money on that job?" without opening three spreadsheets and waiting for the accountant to run numbers.

This is true across all manufacturing types. For discrete manufacturers, it's job costing and scheduling visibility. For batch and process manufacturers (food, beverage, and chemicals) it's recipe and formulation control, compliance traceability, and yield management. The underlying problem is the same: disconnected systems that can't give you a complete picture when you need it.

Legacy system integration remains the slowest part of most digital programmes. Ageing shop-floor equipment wasn't designed to talk to cloud platforms, and the integration work required to bridge that gap is messier and more expensive than most technology roadmaps admit upfront. High energy costs are squeezing the capital available for the next wave of investment. And organisational resistance (the human side of change) is a bigger challenge than most vendors will admit.

On the other side, federal backing has expanded significantly for Australian manufacturers. RSM Global found that AUD $22 billion-plus Future Made in Australia agenda and DISR Industry 4.0 Testbeds programmes have given manufacturers real policy cover and more pathways to modernise. That support matters. It doesn't, on its own, fix integration debt or change-management fatigue, but it is significant support that drives technological adoption.

The question worth asking

The shift from ambition to baseline changes the question manufacturers need to be asking. It's no longer "should we invest in digital tools?" In this market, that debate is settled. The question now is "how well connected are our systems, and what blind spots are we still carrying?"

Businesses with fragmented data, production in one system, finance in another, and workforce on paper, are making decisions without a complete picture. They're winning jobs without knowing if those jobs are profitable. They're planning capacity without reliable visibility into labour costs. They're growing, sometimes, without understanding what that growth is actually costing them.

The practical opportunity isn't another pilot project, but rather the initiative to close the gaps that already exist.

What this means for the rest of 2026 and into 2027

Digital transformation in manufacturing has crossed a threshold where the businesses that treated it seriously in the last two years now have a foundation to build on. The ones that didn't are playing catch-up against peers who've already moved on to the next problem.

The second half of 2026 isn't the moment for more ambition; it's instead the moment for real execution. 

If you're not sure where your business' gaps are, our Manufacturing Performance Assessment is a good place to start.

For the full picture on where Australian and New Zealand manufacturing stands so far this year, see the full report.