By Gene Lin
In 2019, the global research firm Gartner found that robotic processing automation (RPA) was among the fastest-growing categories of enterprise software, adding to the increased attention around enterprise automation in recent years.
RPA arguably achieved mainstream popularity when UiPath, a Romanian-based RPA vendor, gained unicorn status after receiving a billion-dollar valuation last year. The company also recently announced a successful Series E, prompting its valuation to soar to US$10 billion. Around the same time, the surge in investment in the RPA sector also attracted other players, from smaller companies such as Blue Prism and Automation Anywhere to technology giants such as Microsoft, IBM, and Appian.
What is RPA?
RPA technology has been around for as long as three decades. These were software designed to emulate a human sitting at a desktop, copying and pasting data between different systems that were too outdated to communicate with each other. An example could be looking through different types of invoice documents and manually copying the data onto a digital spreadsheet.
While this technology’s function may seem trivial, the fact that it can perform traditionally manual, repetitive tasks at a much higher speed and with fewer errors than the average human makes it an attractive solution to enterprises whose systems are too old and gargantuan to upgrade.
According to Gartner, RPA could potentially save finance departments up to around 25,000 hours of avoidable work annually. Other industries that have adopted RPA include banking, insurance, healthcare, telecommunication, manufacturing, and government. The technology is implemented most commonly in sectors that need to process large volumes of data, often in between physical and digital mediums.
“Today, around 80 per cent of software applications are not connected. There are tasks, data, and documents that live in separate applications. RPA bypasses that problem by connecting different applications without back-end connectivity,” said Sam Fahmy, chief marketing officer at WorkFusion, a US-based RPA vendor.
While RPA is much more efficient than humans, this three-decade-old technology is not without limitations. Traditional RPA bots can only follow narrowly defined instructions, and they do not replace the client’s ageing, legacy systems. Francis Carden, vice president of digital automation and robotics at Pegasystems, described using RPA as fixing things with “Band-Aids”.
“RPA promises that anybody can build a software robot to automate their workplace, and investors started piling in because of that. But it wasn’t any different from the original technology 20 years ago,” said Carden.
RPA and Intelligent Automation
Most RPA vendors acknowledge RPA’s limitations on its own, as many try to incorporate newer technologies such as artificial intelligence on top of RPA to make it more efficient. This process is commonly called “intelligent automation,” and it allows RPA bots to perform more complex and general-purpose tasks.
“Although our product has been focused on [RPA] for about 13 years, we are now moving into intelligent automation and other complementary technologies such as machine learning, natural language processing, and artificial intelligence,” said Malina Platon, managing director for strategic accounts, UiPath APAC.
Currently, intelligent automation is considered by most industry stakeholders as an edge for RPA vendors to distinguish themselves among competitors. Given that the cost to buy and implement traditional RPA software is relatively similar across the board, vendors would have to compete on the margin in terms of how skillfully they implement artificial intelligence on top of their RPA products.
“If [RPA vendors] haven’t expanded their products right now, they’re probably already on the way out the door or to be acquired by somebody else,” said Nikki Ahlgren, former customer success director at UiPath, when asked whether it is now a necessity for RPA vendors to expand into intelligent automation to stay relevant.
Amid the attention surrounding RPA, the situation is changing as technology giants such as IBM, Microsoft and Appian recently started acquiring smaller RPA vendors while simultaneously releasing RPA licenses at a very low price. Industry stakeholders generally agree that this is a cause for concern for smaller RPA vendors.
“There is certainly going to be consolidation in the market,” said Zakir Ahmed, senior vice president and GM for Asia Pacific and Japan at Kofax. “People understand that there are too many [RPA vendors] in this market and some of them don’t offer solutions niche enough to have a market share”.
“I hate to say it, but now is probably the time [for smaller vendors] to get bought,” said Ahlgren, when asked how RPA vendors can stay competitive amid acquisitions. “It’s going to be hard to play catch-up with that, as much investment as some of these larger companies are getting, they would have to focus on a niche and get really, really, really good at it”.
According to Carden, the enterprises consolidating RPA vendors are unlikely to compete in the RPA sector themselves as their core products are focused on replacing companies’ legacy systems altogether, which renders RPA technology obsolete as it must be built on top of legacy systems. The consolidation would also likely trigger a “competitive race to the bottom” among the cost of RPA services.
Despite the ongoing consolidation, Carden added that there is still a place for RPA technology in industries. Companies that plan to abandon their legacy systems and switch to a more automated process can use RPA as a temporary solution during the transition. Carden also expressed the technology, however, was never meant to be a permanent fix.
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