Robotic Process Automation (or RPA) is one of the hottest areas in the enterprise technology sector these days, reaching $1.3 billion this year, says Gartner.
According to the market research firm, RPA software revenue grew 63.1% in 2018 to $846 million, making it the fastest-growing segment of the global enterprise software market, with the top-five RPA vendors (UiPath, Automation Anywhere, Blue Prism, NICE, Pegasystems) controlling 47% of the market.
North America continues to dominate the RPA software market, with a 51% share in 2018, followed by Western Europe, while Japan came in third, with an adoption growth of 124% in 2018.
“This shows that RPA software is appealing to organizations across the world, due to its quick deployment cycle times, compared with other options such as business process management platforms and business process outsourcing,” said Fabrizio Biscotti, research vice president at Gartner.
While RPA software can be found in all industries, the biggest adopters are banks, insurance companies, telcos, and utility companies, all with many legacy systems, with the goal to quickly accelerate their digital transformation.
But what is RPA exactly and why such a frenzy?
One of the best definition of RPA I’ve heard was by Neeti Mehta, the CEO and co-founder of Automation Anywhere during a recent roundtable discussion on the “Future of Automation” that was also attended by Ramzi Ramsey, a partner at SoftBank’s $100 billion Vision Fund, Sanjay Srivastava, Genpact’s chief digital officer, and BMC Software’s president of digital service operations management Nayaki Nayyar.
“RPA is a technology that allows you to type on any application, read any application screens, apply set of rules, and with artificial intelligence make decisions,” said Mehta. “What it means is that bots can operate any software application in the world because it is able to do what any human being is able to do except making judgment calls. And when you think about it, banks, insurance companies, logistic companies, have thousands and thousands of people sitting in cubicles doing something, and not everybody is making a judgment call. That’s why, with RPA, and for the first time ever, you are able to automate this vast amount of work.”
As RPA adoption is growing at a frenzied, investors are flocking to the red-hot sector
Last April, UIPath raised $568 million in a Series D round of funding at a $7 billion valuation, led by hedge fund Coatue Management, with participation from Alphabet’s CapitalG, Sequoia, Accel, Madrona Venture Group, IVP, Dragoneer, Wellington, Sands Capital, and funds advised by T. Rowe Price & Associates.
And last year, Automation Anywhere raised $300 million from SoftBank at a $2.6 billion valuation.
“I’ve never seen anything grow this fast, globally, across multi countries, and across multi industries like financial services, manufacturing, pharma, etc,” said Ramsey who helps lead SoftBank’s investments in enterprise software. “But it’s also the multi-use case, so you’re talking about finance, HR, sales, and marketing. So the entire category is growing at an incredible rate that I’ve never seen before for an entire industry.”
When asked why Softbank, which is trying to create the largest portfolio of companies that are leading the disruption in the Artificial Intelligence (AI) and Automation trend, pumped so much money into Automation Anywhere, Ramsey replied with the following 3 reasons:
- We felt they were the largest company in that category
- We found that it actually had the largest number of large RPA deployments (over $1 million) in the industry which gave us a lot of confidence to step in
- And finally, they are the largest player in the U.S. today, which we felt was more important than being in countries that are less strategic
“And as we asked three of our AI portfolio companies to evaluate Automation Anywhere’s technology stack, we actually got more excited about the concept of RPA being a conduit for AI in the enterprise,” added Ramsey. “And we’re trying to actively deploy even more capital to help them on their journey, and we’re not going to be making competitive bets.”
Atherton Research Insights
We believe that RPA is a natural conduit to bringing and expanding AI inside the enterprise, which is why every RPA software company must have an AI and machine learning (ML) strategy from the get-go.
We also expect that with enterprises accelerating their digital transformation, RPA is not only here to stay, and eventually end up replacing Business Process Automation (BPA) altogether, but will enjoy exponential growth for years to come.
Finally, two last interesting data points on the topic: According to KeyBanc Capital Markets, the global RPA market is emerging as a $100 billion opportunity in 10 years while McKinsey expects that the automation of knowledge work could have a potential economic impact between $5.2 and $6.7 trillion dollars by 2025.
RPA is the future of enterprise automation and a key pillar of a digital transformation strategy.
originally posted on Forbes.com by Jeb Su
