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Robotic process automation: who is buying, and why?


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I recommend business decision-makers use this logic as a lodestone to guide themselves past any confusion; the
point of innovative technology must be better automation, because only better automation can produce better business

Published in: Business

Robotic process automation: who is buying, and why?

  1. 1. EYES ON AUTOMATION WHERE TO START WHO’S BUYING THE MARKET SPEAKS REPORT 01 Cover final.indd 13 07/07/2016 15:21:27
  2. 2. The smart money says people are talking about robotics but not buying, by Guy Kirkwood of UiPath 18 Professional Outsourcing Special Report F or all the media attention being paid to the robotic process automation (RPA) market, it seems that clarity into where the industry is going is hard to find. There’s been a proliferation of acronyms – SDA, RBPO, RPA and AI (just to name a few) – to the point where a prospective customer has to be tempted to just sit back and wait for the dust to settle. That would be a mistake. RPA technology is far too legitimately disruptive and transformational for any business person to ignore. How can I make that statement on the heels of describing the industry as un- intelligible? Fair question; I can because my company is a leading RPA provider. We’re talking to companies well before there’s any external knowledge of their automation interest; we’re implementing solutions months away from publicity and seeing the scaling of this technology right in front of our eyes. The starting point for understanding RPA is to recognise it’s not another coming of ERP or BPM (I know, more acronyms... ) sold to IT decision-makers as much, if not more, than to the busi- ness side of the house. While it began with techies in IT departments using scripts, macros and screen-scraping to solve specific problems, this automation has grown into a powerful technology Robotic process automation: who is buying, and why? 18-23 Guy Kirkwood RPA who is buying.indd 18 07/07/2016 15:59:06
  3. 3. “Some RPA providers muddy the waters by presenting compliance and governance as the holy grail.” ROBOTICS that is now purchased overwhelmingly by business stakeholders. Why? Because it’s the best response to their perennial marching orders – do more with less. It’s a starting point for clarity because it’s all about the impact on business processes: lowering (compellingly) costs and increasing (dramatically) efficiencies. Some RPA providers muddy the waters of features and capabilities by present- ing compliance and governance as the holy grail: essential to be sure, but table stakes rather than a differentiator for the customer. Further, that same competitor is on an amusing crusade against the record function, which is one of the best features to deliver productivity. Our recording is actually recording intelligent actions on objects, not dumb, screen- based actions. They cannot implement it because of their convoluted (and old) object-oriented design. Other providers and third parties create shiny objects, by forecasting the remarkable impact AI will have on RPA – and they will, someday. Lodestone logic I recommend business decision-makers use this logic as a lodestone to guide themselves past any confusion; the point of innovative technology must be better automation, because only better automation can produce better business outcomes. In my experience, the most successful robotic automation companies share a common characteristic. They don’t view themselves as software companies; rather, their business model resembles that of a service business and the value proposition is a compellingly better business outcome. This business model is now potentially on a collision course with other, bet- ter-known providers of service: business process outsourcers (BPO) and shared services centres (SSC). From what I can see, the growth of robotic automation is not just mimicking the historical growth of those business models, but accelerat- ing at a far faster rate. The venture Professional Outsourcing Special Report 19 t 18-23 Guy Kirkwood RPA who is buying.indd 19 07/07/2016 15:59:07
  4. 4. 20 Professional Outsourcing Special Report only result from many high-volume, automated processes, and high-volume benefits soar with efficiency or sink in its absence. What do I mean by efficient auto- mation? Let me illustrate it with two different automation circumstances. One is a customer who discovered that similar processes they’d automated over a nine-day period with a competitor’s product took less than two days with ours. Another is recurring waves of high error rates caused by minor shifts of field locations. Very few robots besides ours can “see” the screen like a person and respond to a shift in field locations with- out revised automation scripts. Instead, instructed to navigate to a fixed point on the screen, those robots continue to do so, producing errors such as filling phone fields with street addresses and bringing the automated process to a screeching halt. Despite all the horror stories in the press about how “the future of work” actually means mass unemployment, we’re not seeing significant redundancies as a result of our automation projects. Clients are simply moving those people affected on to higher-value tasks – doing stuff that they just couldn’t do before. Irrelevant, or not? However, we are seeing real disruption across service industries. Let me give an example. Last month I was briefing Cathy Tornbohm of Gartner on what I saw happening in the market when she delivered a true bombshell; Gartner is cancelling its annual financial and ac- counting (F&A) outsourcing BPO, Magic Quadrant, because she has concluded that unless that type of BPO involves automation, it’s become irrelevant. Think for a moment of what that means to those global service providers – unless BPO involves automation, it’s irrelevant. In fact, the smartest business buyers are now producing requests for proposals that ask for pricing on the assumption that automation is going to be the delivery model, so any bidder that does not have automation as a key plank of their proposition is – to be blunt – screwed. In addition, I’m witnessing tier one, global consultancies making noises about taking minority stakes in RPA providers. Why? Certainly there’s a pure invest- ment rationale, but just as important is the motivation for a pull-through of con- sulting revenue. Unusually, these small RPA vendors (and we are all still small, comparatively) are being approached directly by clients wanting to find out t capital interest RPA is attracting – not from the tier two or three firms I’d have expected for such a nascent market, but heavy hitters such as KKR and General Atlantic Partners – leads me to believe that what I’m seeing is true. There’s one robotic automation soft- ware capability that I strongly encourage business leaders to value as highly as the venture capitalists do: efficient automa- tion. A common fallacy is all automation is efficient and the technology is by and large the same. Efficiency is a relative term; certainly, all types of automation will be more efficient than the manual alternative, but efficiency gaps between robotic software products can make the difference between process automa- tion success or failure. Why is efficient automation so critical? Because of this basic truth; large cost reductions can “A common fallacy is that all automation is efficient.” 18-23 Guy Kirkwood RPA who is buying.indd 20 07/07/2016 15:59:08
  5. 5. “Very few robots can ‘see’ the screen like a person and respond to a shift in field locations without revised automation scripts.” ROBOTICS Professional Outsourcing Special Report 21 18-23 Guy Kirkwood RPA who is buying.indd 21 07/07/2016 15:59:10
  6. 6. more about and then try automation. We’re getting 15-20 leads a week, for instance, which means that they can “feed” the implementation firms, rather than the other way round. That situation will, of course, change over time, but for now the consulting and implementa- tion companies see the RPA vendors as golden geese. Having spent 20 years in BPO and shared services, when I arrived in this automation market, I assumed the technology would be sold to clients who had previously purchased BPO service lines and now planned to replace those services with in-house automation. But what we’re seeing is clients who want to scale the industry-specific processes quickly: claims processing, securities processing and fund administration, order processing, fare distribution, etc. Processes typically provided by BPO or SSCs – F&A, procurement and HR – are a secondary priority. These industry-specific processes are more attractive in the short term because they generally run on old technology; the processes have not been “optimised” or “commoditised”, precisely because the processes are not generic, so companies have just thrown bodies at the problem and there’s been no real technological solution. Three drivers of growth When I first started feeling the tremors of explosive growth, I began to look for signs of the growth engine beyond the phenomena. What I discovered is that there are three such growth engines. The first growth engine consists of the most mature shared services: captives and global business service operations. They have been purchasing RPA soft- ware licences, implementing pilots and 22 Professional Outsourcing Special Report t creating their own centres of excellence. These mature organisations don’t need any third-party help because they have the process improvement, process map- ping and lean six sigma skills necessary to build their RPA competencies. They accurately perceive robotics as the next logical step for their business organisa- tions. The numbers behind this engine are quite small, limited to large, global enterprises. The second growth engine is the biggest one, and where my company is seeing the most activity. It consists of organisations seeking to automate, but lacking the in-house capability. These organisations typically don’t have all their processes mapped, nor do they have the black belts to plan and implement process improvements. Often they have outsourced as many processes as possible, then gutted their retained or- ganisations, leaving themselves barren of skill sets, documentation and methodol- ogies. We recommend these companies leverage third parties to help them implement automation. Our ecosystem of partners is diverse, covering geogra- phies, industries and services lines, and we can therefore recommend partners that match their needs. The third growth engine consists of BPO providers who began using RPA over the past two years and are now coming to market with automation as-a-service offerings, particularly if their technology can operate extremely effi- ciently over Citrix. We find that capability is important to our BPO customers, because many of their clients operate dozens of ERP systems and/or instances in Citrix environments. The importance can be seen in this Citrix efficiency example; a new customer discovered the process that had taken nine hours to automate with a prior vendor now took 16 minutes with our technology. With- out seamless efficiency, automation as a service is a flawed business model. How do AI and digitalisation fit into this automation picture? Certainly digitialsa- tion fits into the picture right now and in different ways. Capgemini is combin- ing two providers: for example, using my company for RPA technology and Celaton for digitisation – dealing with un- structured data. Other customers prefer the “one throat to choke” approach and we’re providing digitisation by combining OCR with Google algorithms to struc- ture their data, then applying our RPA technology to the digitised information. AI is farther off. Like our competitors, we’re moving in that direction using open source software and tools, but it’s unlikely the industry will see any major announcements in this field for another two or three years. However, based on the activity and noise that came out of Google’s recent I/O 2016 event, it may come sooner. To some this surge of automation may seem to be a curse, but with a 300% growth rate in 2015 and a projected 400% growth in 2016, I’m in the group of those pleased to be living in truly exciting times. “A new customer discovered that a process that had taken nine hours with a prior vendor now took 16 minutes.” 18-23 Guy Kirkwood RPA who is buying.indd 22 07/07/2016 15:59:11
  7. 7. “It’s unlikely that we’ll see any major announcements in AI for two or three years.” ROBOTICS Professional Outsourcing Special Report 23 18-23 Guy Kirkwood RPA who is buying.indd 23 07/07/2016 15:59:13
  8. 8. Chris