Is Industrial AI the New Engine for Manufacturing Growth?

A global study from IFS, a provider of Industrial AI software and Accenture has highlighted a key transformation within the manufacturing industry.

The report indicates a sector-wide change towards service-driven revenue models, with industrial AI emerging as a central component for delivering more intelligent and personalised customer service.

The findings suggest that while the intent to modernise is present, significant hurdles remain in achieving comprehensive AI integration.

The research, detailed in ‘The State of Service 2025: Manufacturing Transformation Report’, surveyed 800 manufacturing leaders across seven global markets.

It explored how companies are navigating disruption and applying new tools to enhance their operations. According to the data, servitisation is becoming increasingly mainstream, with 94% of leaders reporting that new service models have impacted their operations.

A quarter of those surveyed have already fully embedded these models into their business.

Furthermore, 39% of leaders cited servitisation as central to long-term company growth. This move sees traditional warranty and break-fix models being replaced by outcomes-based contracts and tiered service models.

“Manufacturing is undergoing a defining transformation,” says Mark Moffat, CEO of IFS.

He adds: “Service has evolved from a support function into a core profit engine, with 94% of manufacturers reporting that new service models are already impacting operations. Industrial AI and sustainability are now central to delivering smarter, faster and more personalised service.”

AI adoption and operational hurdles

Despite a clear focus on technology, with 63% of manufacturers prioritising cloud infrastructure, AI, IoT and AR for operational growth, a notable gap in AI adoption persists.

The study found that while 96% of leaders use AI in some capacity within service delivery, nearly 75% have not yet applied the technology across their entire operations.

This could indicate that although there is an appetite for AI, many manufacturers are still in the early stages of enterprise-wide integration.

Several barriers are slowing this progress. Leaders point to issues with data quality governance, cybersecurity and data privacy as key concerns when implementing new AI systems.

When examining these barriers by region, the report found specific local challenges:

• In the UK, 41% of leaders are most likely to cite data quality and governance issues.
• Cybersecurity and data privacy are the highest concerns in the Middle East and DACH region, cited by 44% of respondents.
• In Japan, 43% of leaders identify workforce resistance to change as the primary barrier.

Building resilience with technology

The manufacturing sector continues to face numerous challenges, with supply chain disruption affecting 95% of respondents over the past year. Factors such as tariffs, climate change and geopolitical tensions have contributed to this volatility.

Confidence in future resilience is mixed, with only 32% of respondents feeling ‘very confident’ about navigating future disruption. In response, 97% of leaders have stated sustainability is a strategic priority, with many adopting circularity practices to reduce waste and improve asset lifecycles.

Technology alone cannot build resilience; it must be complemented by a skilled workforce. The report highlights that 98% of manufacturers are experiencing labour shortages and skills gaps.

These issues lead to increased workloads, operational inefficiencies and slowed adoption of new tools. To address this, companies are turning to solutions like internal training academies and selective automation.

“Manufacturing today is about innovating faster, optimising smarter, and delivering service with intelligence at every touchpoint,” says Gert Müller, EMEA Intelligent Asset Management Lead, Accenture.

He adds: “Service has reached a tipping point: it is no longer a support function but the front line of competitive advantage. With Industrial AI maturing rapidly, manufacturers can anticipate needs, personalise experiences, and extend service value like never before.”