Rockwell report says digital transformation now essential

Rockwell Automation has published its 2026 State of Smart Manufacturing report, which found that 90% of manufacturers surveyed globally now see digital transformation as essential to staying competitive.

The research covered more than 1,500 manufacturers across 17 countries, including 85 companies in Australia and New Zealand. It suggests a shift away from pilot projects towards broader use of digital tools in day-to-day operations, with 59% of manufacturers globally actively using smart manufacturing technologies and 18% still in pilot mode.

In Australia and New Zealand, manufacturers appear to be placing digital investment near the centre of operating strategy. Businesses in the region said they allocate an average of 29% of operating budgets to technology investment, while 95% said digital transformation is necessary in response to recent changes and challenges in industrial technology.

Artificial intelligence featured strongly in the findings. Among local respondents, 53% identified artificial intelligence and machine learning as the smart manufacturing feature delivering the biggest business outcomes, while an average of 34% of operations are currently augmented by AI or machine learning.

Manufacturers in the region expect that share to rise. Separate survey data showed 71% plan to increase AI and machine learning use over the next 12 months, and businesses expect AI augmentation to grow from 34% of operations now to 54% by 2030.

Global results pointed in a similar direction, with 34% of operations already AI-augmented. Manufacturers reported using the technology in areas including quality, cybersecurity and process optimisation, and expect more than half of operations to be AI-supported by 2030.

Blake Moret, Chairman & Chief Executive Officer of Rockwell Automation, said the findings showed how manufacturers were responding to mounting pressure on operations.

"Across the industry, manufacturers are facing more complexity and pressure than at any point in the last decade. What stands out in this year's research is not just the challenges, but how leaders are responding - by making digital transformation a core operating priority. The organisations that are seeing results are those that connect technology, people and processes to turn insight into better decisions, stronger performance and greater resilience," Moret said.

Data limits

The report also highlights a gap between data collection and practical use. Globally, manufacturers said only 43% of collected data is being used effectively. In Australia and New Zealand, companies estimated they use an average of 43.85% of the data they collect effectively, while only 38% said they use more than half of their data.

The issue appears to be as much a management problem as a technical one. Among leadership obstacles identified by respondents in Australia and New Zealand, 36% cited access to useful data for real-time decisions, 33% pointed to identifying and implementing new technologies, and 29% said managing the next generation of workers and leading meaningful change would be major challenges over the next year.

Cyber focus

Cybersecurity remains a prominent concern as factory systems become more connected. Globally, 46% of manufacturers said they had experienced at least one cyber incident in the past year. In the Asia-Pacific figures provided with the study, 50% of industrial organisations reported at least one cyberattack over the same period.

Even so, confidence in response measures was relatively high in Australia and New Zealand. The survey found that 83% of businesses believed they could prevent or contain a cyber incident that disrupts operations, while 42% identified IT systems and enterprise networks as the most vulnerable part of their organisations.

The findings also suggest companies see returns from cybersecurity spending. Respondents said cybersecurity platforms and generative AI or causal AI had delivered the highest return on investment over the past 12 months, at 37% and 32% respectively.

Workforce pressure

Workforce issues continue to shape investment decisions. In Australia and New Zealand, 40% of organisations identified change management as a leading workforce-related obstacle for the coming year, while another 40% pointed to rising labour costs and skills shortages.

At the same time, manufacturers said technical knowledge alone was not enough when hiring younger workers. Communication and teamwork were rated very or extremely important by 84% of respondents, ahead of knowledge of smart technology at 81%, cybersecurity practices and standards at 78%, and applying AI at 75%.

Reskilling is already under way in many businesses. Companies in the region said an average of 41% of their workforce had taken part in reskilling programmes over the past year.

Manufacturers said they were targeting smart manufacturing initiatives at clear commercial goals. In Australia and New Zealand, 46% identified quality improvement as a key objective, 40% pointed to cost reduction, and 38% to risk mitigation. The two features most often linked to business outcomes were artificial intelligence and machine learning at 44%, and real-time asset performance visibility and in-line quality at 41%.

Most businesses said they had deployed manufacturing execution systems, although only 22% reported full integration to support advanced analytics and automation. While 88% said they were confident MES would support future growth, integration with ERP, PLM and other systems was identified by 40% as both the biggest modernisation challenge and the most sought-after improvement.