UK manufacturing remains one of the most important sectors in the economy. With over £156 billion in output in a single quarter of 2025, the sector continues to drive innovation, exports, and employment across the country.
But behind the scenes, many manufacturers are still running critical operations on legacy software systems and spreadsheets that were never designed for today’s data-driven, connected manufacturing environment.
For many SMEs, this isn’t simply an IT issue. It can directly affect productivity, cybersecurity, workforce challenges, and the ability to adopt advanced technologies.
The Extent of the Challenge
Research shows that 74% of manufacturing and engineering firms still rely on old systems or spreadsheets for day-to-day work.
While many businesses believe they are making good use of their data, the reality is often different. Information may sit across disconnected systems that cannot easily communicate with each other.
This creates hidden inefficiencies across operations—from production planning to stock management and reporting.
The Hidden Costs for SME Manufacturers
Legacy systems often appear to “work,” but the long-term impact can be significant.
Reduced Productivity
When systems cannot integrate, employees often fill the gaps manually. Teams may spend hours transferring data between spreadsheets, creating reports by hand, or tracking information across multiple systems.
This limits productivity and makes it harder for businesses to scale operations efficiently.
Increased Cybersecurity Risk
Older systems frequently stop receiving security updates, leaving known vulnerabilities exposed. In fact, cyber-attacks targeting manufacturing supply chains increased 20% year-on-year, many linked to outdated systems.
For SMEs handling sensitive designs, customer data, or intellectual property, this presents a growing business risk.
Workforce and Skills Challenges
The sector is already facing a skills shortage. Three quarters of manufacturers say finding the right people is their biggest barrier to growth, while tens of thousands of roles remain unfilled across the industry.
Legacy systems can make this worse. New talent often expects modern digital tools and data-driven processes. Businesses relying on outdated technology may struggle to attract and retain skilled workers.
Barriers to Adopting Advanced Technologies
Technologies such as predictive maintenance, automated stock control, AI analytics, and connected production systems rely on integrated digital infrastructure.
Legacy software often makes it difficult—or impossible—to integrate these tools effectively.
Why Many Manufacturers Delay Upgrading
Despite these challenges, many SMEs understandably hesitate to replace legacy systems.
Cost is a major factor. Research shows around 42% of manufacturers cite budget constraints as the main barrier to adopting new technology.
There is also the perceived risk of disruption. When production relies on a system—even an outdated one—changing it can feel risky without the right guidance.
In many cases, manufacturers also lack internal IT expertise to assess options and manage technology upgrades.
How Made Smarter Can Help
This is exactly where programmes like Made Smarter play an important role.
Made Smarter supports UK SME manufacturers in adopting digital technologies by providing:
- Independent technology advice
- Digital transformation roadmapping
- Access to technology grants
- Leadership and workforce training
- Connections to technology providers and innovation partners
For many manufacturers, working with an advisor helps them identify the biggest opportunities for improvement and create a practical plan for digital adoption.
Practical First Steps for SMEs
Digital transformation does not have to happen all at once. Manufacturers can start with manageable steps:
1. Review existing systems
Create a simple list of all software currently used across the business—including spreadsheets and workarounds.
2. Identify operational pain points
Focus on the systems that cause the most delays, manual work, or errors.
3. Explore integration opportunities
Sometimes connecting systems or upgrading a key platform can unlock significant improvements.
4. Engage the workforce early
Successful digital transformation depends on people as much as technology.
5. Seek external support
Programmes like Made Smarter can help SMEs reduce risk, access funding, and build a structured digital roadmap.
The Opportunity Ahead
Legacy software is quietly holding back many UK manufacturers. But the good news is that transformation does not require a complete overhaul overnight.
With the right advice and a phased approach, manufacturers can modernise systems, improve productivity, strengthen cybersecurity, and unlock the full value of their operational data.
For SMEs looking to remain competitive in an increasingly digital manufacturing landscape, the first step is often simply understanding where to start—and support is available to help them get there.
This blog is based on a report produced by Koderly.