Rootstock Software announced the results of its 2026 State of Manufacturing Technology Survey. Responses reveal an industry making progress in AI adoption and digital transformation. The progress is a response from manufacturers as they deal with economic uncertainty, global trade pressures and workforce constraints.
The survey also found AI has become commonplace with 94% of manufacturers now utilizing some form of AI. However, the data also revealed the execution of digital transformation initiatives is becoming more complicated. Manufacturers are trying to balance progress with uncertainty around customer demand, concerns about supply chain reliability and tariff-driven cost pressures. As a result, manufacturers are prioritizing tech investments that can streamline operations and improve business agility.
“Manufacturers aren’t slowing down on digital transformation, but they’re being more selective about the initiatives they move forward with, ensuring projects will help improve performance and results,” says Rick Berger, CEO of Rootstock Software in a press release.
The survey also points to a growing emphasis on platform and process consolidation, particularly using ERP to help reduce complexity, connect business domains, and better support workforce challenges.
“Manufacturers are increasingly looking to ERP as a way to consolidate platforms and bring fragmented parts of the business together,” says Ohad Idan, VP of product at Rootstock, adding, “As AI adoption continues to expand, having a unified foundation becomes essential for improving forecasting, decision-making, and employee productivity.”
AI, Digital Transformation Findings from the Survey
Key findings from the 2026 State of Manufacturing Technology Survey include:
- AI maturity is rising as adoption expands into higher-impact applications. 73% of manufacturers now believe they are “on par” with or “ahead” of peers in AI adoption. Predictive AI saw the largest adoption gain, rising 12 points to 48%, while AI investment shifted most sharply toward supply chain planning (+19 points to 35%) and process optimization (+11 points to 36%), signaling a move toward execution-focused applications.
- Manufacturers are backing digital transformation with increased enterprise software investment. 61% of manufacturers plan to increase spending on enterprise software over the next 12 months, with the largest share planning on increases of 11 to 25%, demonstrating continued commitment to modernization despite economic uncertainty.
- Digital transformation projects are increasingly constrained by internal organizational factors. 33% cite lack of the right talent as a primary barrier, while 31% report insufficient cross-department collaboration, highlighting that people and operating-model challenges are key inhibitors to progress.
- Platform consolidation has become a leading ERP priority. Nearly half of manufacturers (49%) now cite simplifying infrastructure and standardizing application platforms as a key ERP outcome, which signals a growing push to reduce data silos and improve cross-functional alignment.
- Manufacturers face economic uncertainty and trade volatility. Manufacturers enter 2026 with a mixed outlook: 31% expect customer demand to decrease, compared with 19% anticipating growth. Tariffs represent another cost pressure: 39% of manufacturers expect higher raw material or component costs due to tariffs, while 29% anticipate greater difficulty with cost forecasting, driving focus on tariff-related planning and sourcing strategies.
What This Means for ERP Insiders
Platform consolidation is becoming a strategic imperative. Rootstock’s 2026 survey reveals manufacturers shifting ERP investment toward unifying fragmented business domains across sales, operations, and supply chains rather than adding point solutions, with AI adoption reaching 94% requiring unified data foundations for forecasting, decision-making and productivity. ERP vendors must architect platforms as consolidation engines reducing data silos and enabling cross-functional alignment.
AI investment is shifting toward execution-focused applications. Predictive AI adoption rose 12 percentage points to 48%, with sharpest increases in supply chain planning (+19 points to 35%) and process optimization (+11 points to 36%), demonstrating manufacturers prioritizing technologies that streamline operations and improve agility amid customer demand concerns and tariff-driven cost pressures. Companies are turning to AI implementations that provide measurable operational outcomes rather than experimental use cases to justify modernization.
Internal organizational factors are the biggest constraint for digital transformation. Despite 61% planning enterprise software spending increases, 33% cite talent gaps and 31% report insufficient cross-department collaboration as primary barriers. This shows people and operating-model challenges are inhibiting progress even as economic uncertainty persists. System integrators must restructure engagement models prioritizing workforce readiness, change management and organizational design as core deliverables.
