The manufacturing industry is increasingly adopting observability practices to enhance security, support the integration of artificial intelligence (AI) and the Internet of Things (IoT), and improve overall operational efficiency, according to a recent report by New Relic. The 'State of Observability for Industrials, Materials, and Manufacturing' report provides a comprehensive overview of how manufacturers are leveraging observability to navigate the challenges and opportunities presented by the Fifth Industrial Revolution.
Shift To Industry 5.0
As manufacturers transition from Industry 4.0, which focused on technologies like robotics, digital twin simulation, and virtual reality, to Industry 5.0, the emphasis has shifted towards AI, human-machine collaboration, and sustainable product development. This evolution necessitates more sophisticated monitoring and management of complex, tech-driven operations. Observability, which provides comprehensive visibility into system performance, has become a critical tool in this new landscape.
Key Drivers Of Observability Adoption
The report identifies several key factors driving the adoption of observability in the manufacturing sector:
Security and Compliance: A significant 50% of respondents cited an increased focus on security, governance, risk, and compliance as the primary driver for adopting observability tools. As manufacturers handle sensitive data and complex supply chains, the need for robust security measures has become paramount.
AI and IoT Integration: The adoption of AI technologies is driving the need for observability in 44% of organisations, while 43% highlighted the integration of IoT technologies as a crucial factor. These technologies are central to the operations of modern manufacturing, requiring real-time monitoring and data analysis to ensure optimal performance.
Operational Efficiency and Uptime: Observability is also being used to enhance operational efficiency, with 40% of respondents noting improvements in this area. Additionally, 38% reported that observability helps improve system uptime and reliability, which is critical for maintaining production schedules and meeting customer demands.
Challenges & ROI
Despite the clear benefits, manufacturers face several challenges in fully implementing observability. The report highlights budget constraints as the most significant barrier, with 26% of respondents citing a lack of budget and 25% indicating that observability tools are too expensive. Additionally, 23% of respondents noted that having too many monitoring tools creates complexity, further complicating the implementation process.
However, the return on investment (ROI) for observability is compelling. Manufacturers report a median annual ROI of 100%, with those achieving full-stack observability seeing even higher returns of up to 114%. The report also found that organisations with more mature observability practices, defined by the number of capabilities deployed and the extent of monitoring, achieved a median annual ROI of 250%.
Future Trends
Looking ahead, the report suggests that manufacturers are likely to continue expanding their observability capabilities. By mid-2026, the majority of respondents expect to have deployed advanced monitoring tools, including AI and machine learning (ML) model performance monitoring, with over 78% planning to implement these technologies. Additionally, 46% of organisations intend to consolidate their observability tools within the next year to maximise the value of their investments.
As manufacturers continue to integrate AI, IoT, and other advanced technologies into their operations, the role of observability will only grow in importance, helping to ensure security, reliability, and efficiency across the board.