New research from IFS, provider of enterprise cloud and industrial AI software, reveals that manufacturers know digital transformation is essential, but they are falling behind due to “option paralysis” and are unable to capitalize on advancements in their industry.

The study surveyed 815 global manufacturing leaders and found that while they all admit their businesses cannot survive without the right technology, fewer than 10% qualify as digital leaders. Nearly two-thirds (65%) of respondents labeled themselves as “laggards,” falling dangerously behind and stalled at the early stages of digital transformation with no firm plans in place.

The IFS research sounds an alarm: 82% of manufacturers say their business won’t survive more than one to three years without a stronger commitment to technology. Market turbulence, supply chain disruptions and the impact of climate change make digital transformation a necessity for survival.

By contrast, digital leaders are confident they can weather future storms with over a quarter (28%) believing they can last up to five years without new investments. And while 39% are developing ESG initiatives, most manufacturers (71%) lack a credible ESG strategy, even though 28% identify climate change as a top concern.

When asked to prioritize technologies, more than 80% of respondents listed every option as essential, underscoring the confusion that prevents decisive action.

The “option paralysis” experienced by manufacturers is exacerbated by each job level pulling in a different direction. Almost all (94%) C-suite executives believe that cloud computing is the most important technology to digital transformation efforts. However, operations personnel saw digital twins (85%) and AI (84%) as their priority technologies. Those at the VP level were most likely to believe that IoT (81%) is the most important technology on which to focus digital transformation efforts. This indecisiveness is widening the gap between digital leaders and laggards.

“The manufacturing industry is at a crossroads,” says Maggie Slowik, industry director, manufacturing, IFS. “Many understand the urgency but remain immobilized by indecision, waiting for proven results or guidance from a trusted partner before committing to action. The longer manufacturers delay, the further they fall behind. In today’s volatile market, resilience and digital maturity aren’t just advantages—they’re essential for survival.”

Digital leaders invest 45% of their budget on digital transformation, driven by clear strategies and ROI-focused investments. Meanwhile, laggards continue to fall deeper into the digital abyss, paralyzed by too many choices leading to the inability to evaluate new technologies.

A fifth of respondents said that change management (22%) and IT complexity (21%) are the major barriers. Without overcoming these hurdles, manufacturers are setting themselves up for failure.

Despite the challenges of embarking on digital transformation projects, manufacturers remain optimistic about their future prospects with the benefit of next-generation tools. When looking at supply chains, for example, almost all (98%) of manufacturers are considering geographic strategies to optimize supply chain resilience, opting for closer or politically stable sourcing destinations. In this regard, digital leaders use advanced strategies, such as advanced scenario simulation, while laggards rely on stand-alone risk assessment tools.

On the topic of carbon footprints, manufacturers are particularly hopeful about the impact of ESG on their businesses. With the sentiment shifting from ESG being just a compliance-driven activity to one that can drive significant positive changes in lead time and quality while enabling new business models, like circularity.

The research was conducted by Censuswide, among a sample of 815 senior managers in manufacturing with a company turnover of £150 million+ ($189.45 million) across the U.S., Canada, UK, Germany, Austria, Switzerland, Netherlands, Norway, Sweden, France, Japan, Poland, Czech Republic, Singapore, Australia, Saudi Arabia, UAE, Belgium and Indonesia.

Censuswide surveyed a minimum of 50 respondents overall in the following sub sectors: Automotive, Chemicals, Food & Beverage, Industrial Manufacturing, High-Tech (including medical devices), and Life Sciences, specifically in the following departments: Manufacturing/Production, Supply Chain, Procurement, Finance, Operations, R&D, Corporate Strategy, Logistics—equal split overall. The data was collected between June and July 2024.