The €10 Billion Question: Why 78% of European Enterprises Are Stuck in 'Mid-Stage Automation' (And What Changes in 2026)

European manufacturers poured €335 billion into software spending in 2025. IT automation budgets jumped 73% year-over-year. Factories installed new ERPs, deployed MES systems, and automated individual processes across OT and IT environments.

Then they hit a wall.

New research from Redwood Software reveals a troubling pattern: while 98% of manufacturers have invested heavily in operational technology, engineering technology, and information technology automation, the majority remain trapped in what researchers call "mid-stage automation maturity." They automate tasks within individual systems while critical workflows, data flows, and exception handling remain fragmented and manual.

The numbers tell the story. Gartner projects European software spending will surge another 15.6% in 2026 to exceed €335 billion, yet enterprises admit they're not getting the returns. Despite 36.6% reporting cost reductions of at least 25%, a staggering 61.3% acknowledge their automation tools are underutilized. The gap between investment and impact keeps widening.

This isn't a technology problem. The automation works—within its silo. The issue is what happens at the boundaries where one automated system hands off to another. That's where workflows stall, data gets trapped, exceptions pile up, and manual intervention becomes unavoidable. European businesses are discovering that isolated automation, no matter how sophisticated, doesn't deliver the operational transformation they paid for.

The Mid-Stage Automation Trap

Redwood's 2026 Manufacturing AI and Automation Outlook surveyed 300 manufacturing professionals across Europe and found a consistent pattern: companies have excellent automation within their OT, ET, and IT domains, but these automated islands don't talk to each other effectively.

A production scheduler automatically optimizes the factory floor. The ERP system automatically generates purchase orders. The quality management system automatically logs inspection results. Each system hums along efficiently—until something needs to cross the boundary.

When the scheduler detects a capacity constraint, someone manually updates the ERP. When quality flags an issue, a person walks data from one system to another. When a supplier changes delivery terms, operations staff spend hours reconciling systems. The automation stops at the system perimeter, and that's precisely where the value gets lost.

"Manufacturers aren't failing at automation—they're hitting the limits of siloed execution," says Kevin Greene, CEO of Redwood Software. "They have powerful automation across their enterprises, but it operates in fragmented workflows, slowed by friction at handoffs, unmanaged exceptions and delayed or unreliable data flows."

European manufacturers aren't alone in this struggle. The challenge appears across industries: financial services teams run automated close processes that break when data arrives in unexpected formats. Logistics companies have automated warehouse systems that can't coordinate with automated transport management. Wholesalers deploy AI invoice processing automation that still requires manual review because downstream systems can't handle intelligent exception routing.

The common thread: automation that was implemented department by department, system by system, without a layer to orchestrate across boundaries.

Why Siloed Automation Fails

The promise of automation in 2024 was straightforward: automate repetitive tasks, reduce errors, free up staff for higher-value work. European companies followed this logic religiously. They automated invoice data entry. They automated production scheduling. They automated inventory updates. They automated customer support responses.

Each automation project delivered on its individual promise. Invoice processing that took four hours now takes 20 minutes. Production scheduling that required three people now runs with one. The local ROI looks good. The business case for each project made sense.

The problem surfaces when you zoom out to the process level.

Consider a common scenario in European wholesale: a customer submits an order via email. An order processing automation system extracts the data and creates an order record. Separately, inventory management checks stock levels. Another system calculates pricing based on customer agreements. A different system assigns the order to a warehouse. Then logistics generates shipping documents.

Each step is automated. But who coordinates when the customer changes quantities after the order is entered? Who handles the exception when the requested item is discontinued? Who manages the workflow when the warehouse assigned to fulfill the order suddenly loses capacity?

In most European enterprises, the answer is: people with spreadsheets.

The Redwood research found that automation "tends to stall at system boundaries, where workflows and data must be coordinated across environments." This isn't a minor inconvenience—it's the difference between automation that transforms operations and automation that just speeds up individual tasks.

The €10 Billion Opportunity

Here's the remarkable part: European companies don't need to tear out existing automation and start over. The systems they've implemented work fine. What's missing is the orchestration layer that connects automated processes into intelligent, end-to-end workflows.

Orchestration platforms act as the conductor for your automation symphony. Rather than having each system play its part in isolation, orchestration ensures they work together to complete business outcomes. When an exception occurs in one system, orchestration reroutes the workflow automatically. When data needs to flow from ERP to MES to WMS, orchestration handles the transformation and validation.

The European market is already moving in this direction. Gartner's analysis of the Service Orchestration and Automation Platform (SOAP) market shows accelerating adoption, particularly among manufacturers, financial services firms, and logistics companies that have hit the mid-stage automation wall.

Early adopters report measurable results. A 140-year-old wood company eliminated manual order processing entirely by adding an orchestration layer to their existing systems. They didn't replace their ERP or their inventory system—they connected them intelligently. Manual touchpoints dropped from dozens per order to effectively zero.

This is what changes the ROI calculation. Individual automation projects deliver 20-30% efficiency gains in their specific domain. Orchestrated automation that eliminates cross-system friction delivers 50-70% cost reductions across the entire process. The difference compounds across hundreds of business processes.

What AI Can't Do Without Orchestration

The AI wave hitting Europe in 2025-2026 makes the orchestration question even more urgent. Redwood found that 98% of manufacturers are exploring or considering AI-driven automation, yet only 20% feel fully prepared to deploy it at scale.

The gap isn't AI capability—it's infrastructure readiness.

AI needs context. An AI agent handling customer support automation can't provide accurate answers if it can't access real-time inventory, current order status, and historical interaction data. An AI model optimizing production schedules generates nonsense if it doesn't have accurate demand forecasts, material availability, and capacity constraints.

In siloed automation environments, getting that context requires stitching together data from disconnected systems, often manually. The AI technically works, but it can't operate with the real-time information it needs to make intelligent decisions.

Orchestrated environments solve this by design. When systems communicate through a common orchestration layer, data flows naturally. AI agents don't need special integrations to access information—they tap into the orchestration fabric that already connects every system. Exception handling, workflow routing, and data validation happen automatically.

This is why the Redwood research found that "manufacturers who focus on orchestrating workflows, data flows and exception handling across systems are better positioned to move beyond the mid-maturity trap and prepare for AI-driven operations."

European companies spent 2024-2025 building individual AI capabilities. The ones that succeed in 2026 will be the ones who built the orchestration layer that lets AI actually operate.

The European Advantage (If You Move Fast)

Europe enters 2026 with some structural advantages. Capgemini projects €4.7 trillion in reindustrialization investment by 2028. Corporate surveys show 66% of large European firms pursuing active reindustrialization, with 56% already investing in nearshoring or reshoring plants.

This isn't just manufacturing—it's a complete rethinking of how European businesses operate. Energy costs, supply chain resilience, and sustainability requirements are forcing companies to redesign processes from scratch. That creates an opportunity: rather than automating broken processes and then trying to orchestrate them, European companies can design for orchestration from the start.

The timing matters because the competitive gap opens quickly. The Redwood data shows their customers are 2.7x more likely to be in mid-to-high stages of automation maturity compared to the broader market. These companies didn't necessarily spend more on automation—they spent smarter by implementing orchestration early.

For European SMEs and mid-market companies, this represents a rare chance to leapfrog larger, more established competitors. Legacy enterprises carry technical debt from decades of system implementations. A mid-sized Dutch wholesaler or German manufacturer can implement orchestrated automation with zero legacy baggage. They can connect Business Central, SAP, AFAS, or Exact through a modern orchestration platform and immediately operate with enterprise-level workflow intelligence.

The data transformation and system integration work that used to require months of custom development now happens in days with AI-native orchestration platforms. The cost barrier that once made sophisticated automation enterprise-only has collapsed.

Moving Beyond Mid-Stage: A Practical Roadmap

European companies stuck in mid-stage automation don't need a complete digital transformation. They need orchestration. Here's how to assess where you stand and what to fix:

Identify the handoff points. Map your most critical business processes end to end. Note every point where one system hands off to another, where data moves between systems, or where a person manually intervenes. Those are your orchestration opportunities. A typical order-to-cash process in European wholesale has 15-20 handoff points. Most companies have automated 60-70% of the steps but left the handoffs manual.

Quantify the friction. For each handoff, measure the time delay, error rate, and manual effort required. This becomes your business case. When a steel distributor found they were manually reconciling data between sales, inventory, and logistics 47 times per day, the ROI for orchestration became obvious.

Start with high-volume, high-friction workflows. Don't try to orchestrate everything at once. Pick the business process that combines high transaction volume with painful manual touchpoints. Invoice processing is a common starting point—high volume, expensive errors, clear ROI. Quote generation is another good candidate for businesses with complex pricing.

Choose AI-native orchestration platforms. The orchestration tools that worked in 2020 won't suffice in 2026. You need platforms that embed AI throughout—for exception handling, for data validation, for intelligent routing. Traditional integration platforms can connect systems but can't make decisions. AI-native orchestration platforms can adapt workflows based on context without requiring explicit programming for every scenario.

Measure across the entire process, not individual steps. This is critical. Mid-stage automation companies measure the efficiency of each automated task. Companies with mature orchestration measure end-to-end cycle time, total manual touchpoints, and exception rates across the complete business process. The metric that matters isn't "how fast does each system execute its step" but "how long from initial input to final business outcome."

The 2026 Inflection Point

The European automation market stands at an inflection point. Companies that invested in isolated automation in 2023-2025 are discovering the limits of that approach. The ones that pivot to orchestration in 2026 will capture the full value of those investments. The ones that don't will keep throwing money at automation projects that deliver diminishing returns.

The cost of inaction compounds quickly. While you're manually managing handoffs between automated systems, competitors are operating with end-to-end orchestrated workflows. While your AI initiatives struggle with data access, orchestrated environments are deploying autonomous agents that actually work. While you're reconciling systems, orchestrated businesses are scaling.

The good news: this is a solvable problem. Your existing automation isn't wasted. The systems you implemented still function. You don't need to rip and replace. You need orchestration.

European businesses built the automation foundation in 2024-2025. The ones that build the orchestration layer in 2026 will be the ones that actually transform.

Ready to move beyond mid-stage automation? Lleverage's AI-native orchestration platform connects your existing systems—Business Central, SAP, AFAS, Exact—and turns isolated automation into intelligent, end-to-end workflows. Book a demo to see how orchestration eliminates the manual friction between your automated systems.

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