RPA – Is it Hype or Reality?

Automation, Robotics Process Automation, Intelligent Automation, Hyper-automation – In the last few years we have been hearing a lot of these buzz words in the industry, at times interchangeably and at times as an extension of the process automation. There has been a debate about how RPA / Automation is just a hype or a bubble about to burst, but then at the same time there have been new organisations hopping onto the bandwagon of Intelligent automation consistently and year on year. Every year the analysts add a few new names to their list of potential players in the automation market and each of these players want a pie of the Intelligent automation market.

The addressable market for Process Automation also undergoes a change, a different set of definitions for the Automation market, including the components. The growth rate keeps changing based on the adoption by the various industries and large corporation and some of them have really gone big on automation and probably reaping the benefits of the automation they have done within the organization. This is happening because the solution is evolving and creating its own ecosystem, driven by how the customer demand is progressing, to automate at scale, build in an intelligent engine to support their complex processes.

In 2018, the global Robotic Process Automation (RPA) market size was 477 Million USD, and it is expected to reach 1930 Million USD by the end of 2025, with a CAGR of 21.3% between 2019 and 2025. (Source: Valuate Reports June 2020).

Robotic process automation (RPA) software revenue grew 63.1% in 2018 to $846 million, making it the fastest-growing segment of the global enterprise software market, according to Gartner, Inc. Gartner expects RPA software revenue to reach $1.3 billion in 2019 (Source: Gartner in 2018).

Similarly there are other analysts who have been sharing their view of the addressable market, the rate of growth of the segment, the rate of growth of the market and so on. This variation is because of the fact that:

1.     There are many players who are coming in to address a specific geography, nice segment.

2.     The solution is evolving – scope of the automations is changing and developing as we speak.

3.     The market surely is expanding – new products / solutions added to the mix.

4.     The scale of the customers is changing and being defined by various extrinsic factors too.

Definitely the market is growing and expanding – with more technologies being built into the solution – more innovation happening. With the changes also happening in the market, the analysts are also revising their predictions and expanding the scope of the automations.

Why it’s not Hype?

I do not believe that the RPA / Automation market is something which is unreal or over hyped. While as some people think that way owing to the overly high valuations which the companies have got post their funding – it is as real as it can be.

The reason for that is manifold:

1.     Each player – whether a complete portfolio carrying OEM or a niche player - we are seeing an ever-growing increase in the revenues of the key players of RPA in the market – UiPath, Automation Anywhere, BluePrism, WorkFusion etc. The growth rates have been very healthy for each of them, at the same time the money burn rate might be higher as well in some cases.

2.     Earlier we had seen some specific industries make an effort to automate their processes / tasks but today the automation is all pervasive, across different industries. BFSI and BPO’s verticals were the earlier adapters of the automation technology – which was followed by Healthcare, manufacturing, Retail etc.

3.     Earlier we had probably seen the Finance & Accounting function primarily getting into the automation bandwagon – rather they were more prominent – today we have a whole lot of other functions from Supply Chain, Legal, Marketing, Sales, procurement etc. in line to automate their process – probably because of the cost pressures within the organization, the growth pains – to do more with the same number of resources, increase productivity, which became more relevant with the Covid 19 pandemic driving organizations to work from home.

4.     The functions which earlier seemed to be untouchables from an automation perspective are further adapting automation, more and more complex processes are being automated, processes which were being done manually for so many years, very critical processes, are being automated with an injection of Artificial Intelligence and Machine Learning capabilities. Considering all the facts stated it does not seem to be completely hype and there is value to the solution, the way it is executed, the buy in from the stake-holders and the execution is very critical to the success and sustenance of an automation program. It surely is not a project in itself but a journey – as the solution is evolving, new facets are coming to the fore, new parameters of evaluation being tried out, new players coming up with their own flavor of the solution.

We will see further growth and expansion in the market

One, the OEM’s are expanding their list of customers across different geographies – where the list of new logos is expanding in a big way.

Second, the market is unlike a year or 2 years ago – where the customers were looking at buying few bots to test the water as a pilot. Now the same customers are expanding their footprint to do large scale automations.

Third, the portfolio of products for the customers has also expanded – from Discovery to Build, to Manage, Run and Measure.

Fourth, the various System Integrators and consulting partners of the OEM’s are also expanding their teams to cater to the development and implementation of the processes.

Five, the customer maturity has increased and the early adopters especially the large corporates are automating more and more tasks – we are seeing a larger uptake from these early movers to automate tasks across their organizations.

Last but not the least, it does not seem to be a hype with the intent we have seen in the market of big players coming into the picture by the acquisitions they have made, Microsoft’s acquisition of Softmotive, IBM taking over WDG Automation, Salesforce gaining intent to get into the Process Automation space (and probably on the look out for organizations) to acquire.

The various venture funds have been investing in a big way in the Automation companies – existing and new ones:

1.     UiPath received a funding of US$ 225 M

2.     #FortressIQ got $30M from Microsoft

3.     #Hyperscience Raises $60 Million

4.     RPA player #Jiffy.ai raises $18M

While the existing players are looking at ways to innovate and expand their portfolio of solutions, with the bigger players coming into the picture, the dynamics of the market are also changing from being a niche player to focusing on building a platform. The platform may not be ready and available, but the intent and the action is towards such an objective – whether it is Microsoft or IBM or any other organization. Probably, at this point of time, UiPath has the most fulfilling Automation or should we say Hyperautomation platform available in the market.

What we see happening in the market in the next 12-18 months:

a.     Consolidation of the RPA / Automation OEM’s in the market – with more and more niche players being acquired, OEM’s with small team and a niche affordable product. Do we see the trend continuing? Probably yes, that will be in order considering that there are lot of players and every organization will not have the muscle and finances to build the automation platform. Probably that is the way the market will consolidate.

b.     The Hyperautomation platform being available not just on premise but slowly it will move to the cloud.

c.     More intelligent and cognitive technologies being incorporated into the platform – to make it more intuitive and self-learning.

d.     We will see players like Microsoft / IBM and others making a splash in the market to announce their presence and intent.

Overall, it is a win-win situation for the customers with lot of options to choose from, having more advanced capabilities and more focused funding. The solution will further evolve for the better, and develop further to help customers increase their top line and bottom line.

Any comments / thoughts / insights are welcome.