AI, Integration Speed Manufacturing Modernization

Manufacturers are embedding digital systems in design, production and service operations to address multiple business and technology challenges, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.

The 2025 global ISG Provider Lens Manufacturing Industry Services and Solutions — Mid-Tier and Specialist IT Firms report finds that enterprises are shifting from isolated digital initiatives to coordinated programs that modernize legacy environments while delivering measurable operational gains. Manufacturers face mounting pressure from supply chain volatility, regulatory mandates and skills shortages, prompting investments to enable faster decision-making, improved asset utilization and tighter integration across IT and operational technology (OT) systems.

“Manufacturers are moving decisively toward digital operating models that balance innovation with control,” said Bob Krohn, partner at ISG. “Mid-tier and specialist IT providers have the agility and domain expertise to support these efforts with modular solutions that can be integrated with legacy systems.”

AI deployment in shop floors, engineering operations and supply chains is moving beyond experimentation and delivering enterprise benefits, the report says. AI-powered analytics, digital twins and predictive maintenance are increasingly embedded into core workflows to reduce downtime and improve the accuracy of forecasts. Manufacturers that adopt them can respond more quickly to shifts in demand while containing costs and operating more consistently.

Smart factory modernization is advancing as enterprises integrate IoT, robotics and real-time monitoring into production environments, ISG says. Manufacturers are replacing fragmented legacy systems with interoperable platforms that link together design, manufacturing and business processes. This approach strengthens quality control and shortens production cycles, providing the agility to navigate volatile market conditions.

Sustainability is becoming central to manufacturing technology strategies, especially in Europe, the report says. Enterprises are adopting digital platforms to implement carbon tracking, energy optimization and circular economy initiatives. These capabilities help organizations meet rising compliance requirements while aligning environmental goals with efficiency, risk management and long-term profitability.