The global manufacturing software market is entering a new phase as factories move away from rigid legacy systems and toward modular platforms built for cloud computing, connected machines and artificial intelligence. ABI Research now forecasts that the Manufacturing Execution System market will grow from about US$22 billion in 2026 to US$43 billion by 2036, highlighting how deeply software is becoming woven into everyday industrial operations.
The forecast arrives at a moment when manufacturers are facing pressure from several directions at once. Factory operators need better visibility into production, stronger control over costs, faster responses to supply disruptions and practical ways to introduce artificial intelligence without putting dependable production systems at risk. The result is a growing demand for software that can connect machines, people and operational data without forcing companies to replace every system they already use.
MES Market Growth Signals a Major Manufacturing Software Shift
ABI Research says the Manufacturing Execution System market will expand at a 7.6 percent compound annual growth rate between 2025 and 2036. The research points to sustained demand for execution layer software as manufacturers modernize their facilities and prepare operations for AI supported workflows.
That growth is significant because MES software sits close to the heart of factory operations. These systems can help organizations monitor production, track materials, manage work instructions, record quality information and connect activities on the factory floor with wider business systems.
For a production manager, this technology is not simply another software purchase. It can determine how quickly an operator sees a production problem, how accurately a plant records output and how easily management can understand what is happening across multiple facilities.
ABI Research’s wider research shows that MES has become a foundational part of Industry 4.0, supporting real time production visibility, factory floor control and digital information flows. More details on its manufacturing technology research are available through ABI Research.
SaaS Is Changing How Factories Buy and Deploy Software
One of the strongest forces behind the forecast is the increasing use of Software as a Service. Instead of relying entirely on large software installations that require extensive local infrastructure and lengthy upgrade cycles, manufacturers are increasingly looking toward subscription based platforms and cloud connected applications.
This shift can be especially meaningful for companies operating several plants. A modern cloud architecture can make it easier to share information across locations while allowing individual facilities to maintain workflows suited to their own production requirements.
The attraction is not simply lower infrastructure responsibility. SaaS can also support faster software updates, centralized data management and easier access to new capabilities. For manufacturers operating under tight margins, the ability to introduce improvements without rebuilding an entire technology environment can be valuable.
ABI Research has previously identified SaaS as an important direction for industrial software, with cloud based models supporting collaboration, shared data and connected workflows across areas such as ERP, product lifecycle management, digital twins and industrial IoT.
Modular Composability Is Becoming More Important
The latest ABI Research analysis also places strong attention on modular composability. The concept is straightforward even though the technology behind it can be complex. Manufacturers increasingly want software components that can work together rather than a single enormous platform that attempts to control every part of factory operations.
A modular approach can allow a company to introduce a production scheduling application, quality management function or machine monitoring capability without replacing unrelated systems. Application programming interfaces can help these different components exchange information while preserving existing investments.
This matters because factories are rarely built from a single technology generation. A modern production facility may contain equipment purchased years apart, machines from different vendors and software that was designed for very different environments. Replacing everything at once is usually unrealistic.
Modular software gives manufacturers another path. They can modernize individual areas while gradually creating a more connected operational environment.
AI Readiness Is Moving From Experiment to Requirement
Artificial intelligence is another major factor behind the changing MES market. Manufacturers are increasingly interested in using AI to identify production problems, analyze operational data, support maintenance decisions and help employees respond to unexpected events.
Yet industrial AI presents a different challenge from consumer AI. A factory cannot simply accept an automated recommendation without considering safety, quality, regulatory requirements and the consequences of an incorrect decision.
ABI Research’s research on AI in MES shows that current industrial AI adoption remains focused heavily on practical use cases and human oversight. The progression can range from AI providing information and recommendations to systems capable of taking increasingly autonomous actions.
This distinction is important. The most useful AI system on a factory floor may not be the one making the most decisions. It may be the system that helps an experienced operator notice a developing problem earlier, identify the likely cause and choose an appropriate response.
Data Context Could Become the Real Competitive Advantage
Artificial intelligence depends heavily on the quality and context of the data it receives. A factory may generate enormous amounts of information from machines, sensors, quality systems, maintenance records and enterprise applications, but raw data alone does not necessarily produce useful intelligence.
Manufacturing software therefore has an increasingly important role in turning disconnected information into meaningful operational context.
Consider a machine that begins operating outside its normal temperature range. A basic monitoring system may simply issue an alert. A more connected manufacturing platform could combine that signal with production schedules, maintenance history, material information and quality records. AI could then help determine whether the change is likely to affect production and what action deserves attention first.
This is where the connection between MES, industrial IoT, analytics and AI becomes particularly powerful. The value comes not from any individual technology but from the information flowing between them.
Manufacturers Are Rethinking the MES and MOM Debate
ABI Research also argues that the industry has spent too much attention debating the labels Manufacturing Execution System and Manufacturing Operations Management. Different vendors use these terms in different ways, and their products do not always fit neatly into one category.
For manufacturers, however, the practical questions are often more straightforward. Can the software connect with existing equipment? Can employees access the information they need? Can production data be trusted? Can the system support multiple plants? Can it accommodate AI applications without creating unnecessary complexity?
These questions are likely to become more important as software purchasing decisions move closer to operational leadership. A manufacturer may not care whether a vendor calls its platform MES, MOM or another term if the system can reliably solve production problems.
Discrete Manufacturing Shows Strong Investment Interest
ABI Research also reports stronger near term investment intentions among discrete manufacturers. About 31 percent indicated increased intent to invest in or upgrade MES software over the next 12 months, compared with 26 percent previously.
Discrete manufacturing includes industries where individual components and finished products are assembled or produced, including areas such as automotive, electronics, machinery and industrial equipment.
These environments can benefit significantly from better production visibility because even a relatively small disruption can create delays across multiple stages. A missing component, machine fault or quality issue can quickly affect schedules, labor utilization and customer deliveries.
Modern MES platforms can provide a common operational view that helps managers identify where problems are developing rather than waiting for them to become visible through delayed output or missed deadlines.
What This Means for Manufacturing Technology Vendors
The projected growth creates opportunities for established software providers as well as newer companies focused on specialized industrial applications. ABI Research identifies companies including Dassault Systèmes, Siemens, AVEVA, Tulip Interfaces, MachineMetrics, MPDV and several other providers across the broader MES and manufacturing operations market.
Competition is likely to focus increasingly on interoperability, data quality, deployment flexibility and practical AI capabilities. Vendors that can demonstrate useful results without demanding a complete replacement of existing technology may find strong interest among manufacturers.
At the same time, manufacturers will need to examine the total cost of ownership carefully. Subscription pricing can simplify budgeting, but long term software commitments can also become substantial. Integration, training, cybersecurity, data governance and employee adoption all influence whether a technology investment delivers meaningful value.
The Human Side of Factory Software Modernization
Behind every manufacturing software decision are people standing beside machines, checking production lines, reviewing quality reports and responding when something goes wrong. The technology may look sophisticated from an executive presentation, but its success is ultimately measured on the factory floor.
That makes usability especially important. An operator should not need to fight with a complicated interface while a production line is waiting. A maintenance worker should be able to find useful information quickly. A supervisor should be able to understand what is happening without sorting through endless disconnected dashboards.
AI can support these workers, but it should not automatically be treated as a replacement for their experience. Experienced employees often recognize subtle production changes that are difficult to capture in structured data. The strongest manufacturing systems will likely combine that human knowledge with better software and more accessible information.
Why the $43 Billion Forecast Matters
The expected expansion of the MES market from approximately US$22 billion in 2026 to US$43 billion by 2036 represents more than growth in software spending. It reflects a broader change in how manufacturers think about their operational technology.
Factories are increasingly being designed around connected information. Machines generate data, software provides context, cloud platforms make information accessible and AI helps people interpret complex patterns. MES sits close to the center of that ecosystem because it connects production activity with the digital systems surrounding it.
We should therefore view the forecast as a signal of a larger industrial transition rather than simply another market size projection. The next generation of manufacturing software is likely to be more modular, more connected and increasingly prepared for AI supported workflows.
The Factory Software Market Is Moving Toward Connected Operations
By 2036, the manufacturing software environment could look considerably different from the systems many factories rely on today. Companies are likely to operate with more cloud connected applications, greater use of machine generated data and broader integration between production systems and enterprise software.
The transition will not happen overnight. Manufacturing facilities must balance modernization with reliability, cybersecurity, employee training and the reality that production cannot simply stop while technology is replaced.
That is why the strongest opportunity may belong to software architectures that allow gradual change. Manufacturers can modernize one process, connect one group of machines, introduce one AI supported workflow and expand from there.
ABI Research’s US$43 billion forecast captures the financial scale of that transition. More importantly, it highlights a practical reality facing manufacturers around the world: software is no longer simply supporting factory operations from the background. It is becoming part of the operating structure itself.
As SaaS adoption grows and AI becomes more closely connected to production data, manufacturers will have to make careful choices about architecture, integration and human oversight. The companies that approach those decisions with patience and a clear focus on measurable operational needs will be better positioned to make useful technology investments as the manufacturing software market moves toward its projected US$43 billion future.
