Understanding the Automation Market Evolution and RPA Vendor Landscape

This is the second post in the Robotic Process Automation Series. In the first post (Demystifying Robotic Process Automation - Rise of Digital Workforce ) of this series, we discussed RPA as a concept, the difference between RPA and traditional automation, the architecture of top RPA tool, and benefits of RPA. In this post, we will discuss the market evolution of RPA and understand how the RPA vendor landscape is structured.

Automation Market Evolution

According to Gartner, Robotic Process Automation is the fastest-growing software subsegment with a year-on-year growth of over 63% in 2018. Though the market is relatively small, with total revenue of around USD 850 million in 2018, as compared to other software subsegments, it has garnered significant attention from software companies and investors. The interest and growth of the segment can be gauged from the fact the market valuations for the top three players (Automation Anywhere, Blue Prism, UiPath) is over USD 11 billion (as of March 2019).

The industry has gone through a transformation rapidly in the past few years. Automation has been there since the early 2000s in the form of localized, desktop-centric automation based on macros or other scripting languages. However, the development of GUI based tools acted as a catalyst in the automation journey. Blue Prism coined the term ‘robotic process automation’ in 2012 and since then companies have been riding this term to make robots as the digital workforce of the 21st century. RPA was developed with the objective to automate rule-based, mundane and repetitive tasks so that employees can be engaged in more value-generating activities. In the last 2-3 years, robotic process automation has evolved into intelligent process automation or cognitive automation, wherein the system is designed to take suitable actions itself in the manner that humans would have taken. In other words, cognitive automation is an ensemble of artificial intelligence and robotic process automation. The below Figure (Figure 2.1 Evolution of Automation) talks about the evolution of automation technology over the last two decades.?

Figure 2.1 Evolution of Automation

This growth and interest in the industry have led to the mushrooming of multiple RPA vendors. A lot of these vendors have emerged with the evolution of the RPA market; while, quite a few of them are technology incumbents and have added RPA to their product offerings. In terms of RPA product offerings, a few of these vendors cater to multiple industries and have their tools designed in a manner to automate different kinds of processes; while, the other set of vendors provide very specific services that are more relevant to a particular business function or an industry. On top of these vendors, a new layer of companies has emerged in the form of consultants or system integrators. These consultants/system integrators provide assessment, implementation and support services to clients who deploy RPA tools.

RPA Vendor Landscape

We have categorized the vendor landscape into four categories – horizontal RPA providers, specialized RPA providers, incumbent IT players and consultants/system integrators. Classification of companies into one of these four categories is based on three parameters:

• Depth and breadth of RPA service offerings across the value chain
• RPA centricity of the company
• Service offerings other than RPA?

Figure 2.2 RPA Vendor Landscape

1. Horizontal RPA Providers:

Vendors falling in this category are core RPA vendors i.e. the focus of companies in this category is to develop RPA products that are implemented for carrying out process automation. Within this category, lies a sub-category which is known as Big 3 of RPA world – Automation Anywhere, Blue Prism and UiPath. These 3 companies are the pioneers of RPA and hold the highest market share. Apart from the Big 3, other vendors that fall in this category are WorkFusion, Softomotive, Kryon, and others. This category is called as ‘Horizontal RPA Providers’ because the products developed by these vendors cater to multiple industries and multiple business functions.

2. Specialized RPA Providers:

This set of players cater either to a specific industry or a specific business function. For instance, there would be a set of players in this category which provides workflow automation services; while, the other set could provide loan application automation for banking clients. Since these are specialized providers, the level of customization (for respective processes) required for deployment may be minimal; however, the scalability and expansion to other processes may be a challenge.

3. Incumbent IT Players:

Incumbent IT players took advantage of this emerging automation technology and developed their own RPA/IPA products to expand their product offerings. The advantage that these players offer is two-fold:

• Since these companies already provide a suite of product offerings to clients, the integration of RPA products with their existing product line would be easy and robust.
• These players provide a turn-key project offering, right from the process assessment and identification to implementation and maintenance.

4. System Integrators and Consultants: The emergence and evolution of this category are similar to the evolution of system integrators for the ERP market during the 90s and 2000s. Vendors in this category provide consulting and integration support to end clients. These vendors help clients in their RPA journey, starting from process assessment and identification, implementation, maintenance, and support. System integrators and consultants are generally tool-agnostic and have partnerships with multiple RPA vendors. The benefit that consultants and system integrators bring is the business expertise and technical know-how that expedites the process assessment and identification phase, followed by bot deployment.

In the next post, we will talk about business applications of RPA and split it by different business functions and industries.

This series of articles on RPA is being co-authored by?Mitali Shekhawat? and Vishal Bagla. Mitali Shekhawat is a Manager in Turnaround and Performance Improvement practice at Alvarez & Marsal.