The document discusses the rapid developments in Robotic Process Automation (RPA) and its implications for enterprises, highlighting key contractual pricing metrics, vendor landscapes, and evolving automation technologies. It emphasizes the importance of enterprises adapting to these changes by vetting vendors and negotiating contracts carefully to benefit from competitive pricing and capabilities. Additionally, it outlines various pricing models and their potential evolution as RPA solutions become more sophisticated.

1. ®
Sourcing RPA: Latest Developments and
Enterprise Implications
August 8, 2018

2. Proprietary & Confidential. © 2018, Everest Global, Inc. 2
Introductions
Michel Janssen
Chief Research Guru
michel.janssen@everestgrp.com
®
Sarah Burnett
Executive Vice President and
Distinguished Analyst, Service
Optimization Technologies
sarah.burnett@everestgrp.com

3. Proprietary & Confidential. © 2018, Everest Global, Inc. 3
Discussion points for today
Key contract
pricing metrics
RPA software
vendors
Birth of the
intelligent RPA
platform
Late-breaking
market
developments
Q&A
Existing
outsourcing
relationships

4. Proprietary & Confidential. © 2018, Everest Global, Inc. 4
Everest Group’s “RPA Virtuous Circle”…is moving at warp speed
Significant capital
being infused
into segment
RPA firms will
make aggressive
buy/build decisions
Software platforms
are getting more
sophisticated
Clients demand is up
because value propositions
are significant (and real)

5. Proprietary & Confidential. © 2018, Everest Global, Inc. 5
The RPA vendor landscape is rapidly changing
Significant capital will allow for further scaling of their organizations, R&D,
and acquisitions to increase their capability and speed of adoption

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In your opinion, what is going to be the biggest impact
of large investments in RPA vendors?
A. Increased competition in the RPA market
B. Reduced competition in the RPA market
C. Improved RPA products
D. Improved quality of customer care by RPA vendors
E. Reduced quality of customer care and intimacy by RPA vendors

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RPA “leaders” are pulling away from the pack
Source: Everest Group (2018)
Significant capital will allow for further scaling of their organizations, R&D,
and acquisitions to increase their capability and speed of adoption
 Increased sales and
marketing teams/budgets
 Geo expansion
 Customer support
 More R&D
 Acquisition of other smaller
players
 Acquisition of automation
functionality
 Positive positioning with
enterprises

8. Proprietary & Confidential. © 2018, Everest Global, Inc. 8
RPA vendor landscape changes
Implication for enterprises
Be careful of your change
of control clauses in your
contracts
Vet your vendors carefully
in terms of liquidity and
consider short durations
as pricing and value
proposition change quickly
Keep up with the latest
developments in RPA
software with new features
and functionality

9. Proprietary & Confidential. © 2018, Everest Global, Inc. 9
Discussion points for today
Key contract
pricing metrics
RPA software
vendors
Birth of the
intelligent RPA
platform
Understand impacts
of the convergence
of RPA and AI (and
other key automation
tools)
Q&A
Existing
outsourcing
relationships

10. Proprietary & Confidential. © 2018, Everest Global, Inc. 10
Core RPA technology is changing rapidly

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RPA vendors are going to make their platforms the glue that brings
together enterprise automation
Robotics
Optical Character
Recognition (OCR)
Orchestrator /
Business Process
Management (BPM)
Analytics
AI
RPA
Platform of
the Future

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What do the latest developments in RPA solutions mean for
enterprises?
What it means
for enterprises Enterprise-
grade scalability
Easier control &
maintenance
Faster and easier
implementation
Business
intelligence
Virtualization of
infrastructure
Higher
automation rate

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The birth of the RPA platform
Implications for enterprises
Despite vendors’ marketing imagery,
it is still a software purchase
Integration of the RPA
software “modules” is going to
get more complicated over the
next few years
RPA is still a bit of a hot
potato between IT and Biz
Ops in terms of ownership

14. Proprietary & Confidential. © 2018, Everest Global, Inc. 14
Discussion points for today
Key contract
pricing metrics
RPA software
vendors
Birth of the
intelligent RPA
platform
Learn about key
contract pricing
metrics so you are
prepared for deal
negotiations
Q&A
Existing
outsourcing
relationships

15. Proprietary & Confidential. © 2018, Everest Global, Inc. 15
Pricing Models Description Adoption Frequency
Perpetual licensing
Buyer pays up-front fee for technology and software licenses for the long term
plus an Annual Maintenance Charge (AMC); low recurring costs
Fixed capacity
Buyer pays a fixed fee per term (generally annually) for each robot inclusive of
maintenance costs
Usage-based
Buyer pays for robot usage; best for buyers whose requirement and workload
volumes vary significantly
Transactional /
per process-based
Pricing is directly and linearly linked to discrete units of outputs delivered by the
RPA technology to the buyer; price based on discrete unit of output
Outcome-based
Pricing linked to outcomes; i.e., measurable cost or revenue impact delivered to
the buyer; price based on gainsharing model
Pricing models for RPA technology
RPA vendors are approaching buyers with a multitude of innovative pricing options
Subscription-based
LowHigh

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What pricing units would you like to
use in licensing your RPA software?
A. Fixed price per robot per year
B. Per transaction (business metrics)
C.Volume based (robot usage and amount of time)
D.Fixed flat fee for enterprise license

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Pricing metrics are likely to evolve as the offerings become more
sophisticated
Price per robot (or virtual FTE)
will be very difficult to manage
over the long term
Price per seat/headcount
like many other SaaS
platforms
Largely fixed flat price by
enterprise based upon
enterprise size and number
of “modules”
• The majority of pricing will still be fixed price…but the unit of measure will change
• Pricing will become more complicated as the software packages evolve to include more “automation modules”
Likely to evolve over time

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RPA pricing trends
Pricing in this segment is highly variable (and negotiable)
100
93
88
72
North America
UK
Continental Europe
APAC
Price variation by geography
Per robot price in North America indexed at 100
Market price movement across years
Current per robot price indexed at 100
108
100
88
72
2016 End of 2017 2019 2021
Price variation by volume
Average per robot price for 1-25 bot usage indexed at 100
Price premium for AI capabilities
Price per RPA robot license indexed at 100
100
320 - 370
RPA
Integrated
RPA + AI
8 - 12%
13 - 17%
17 - 22%
23 - 28%
30 - 40%
20
40
60
80
100
1 - 25 26 - 50 51 - 100 101 - 250 251 - 500 500 +
Priceperrobot
Number of Robots
~8% per year price reduction

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Pricing changes
Implications for enterprises
Keep your contract duration short so that you take
advantage of changing prices in a very competitive
market (and increasing capability)
Ensure that – as volumes scale – it makes sense
for your business (think 10-100x increases)
Ensure that the billing metrics are understandable
and easy to count

20. Proprietary & Confidential. © 2018, Everest Global, Inc. 20
Discussion points for today
Key contract
pricing metrics
RPA software
vendors
Birth of the
intelligent RPA
platform
Q&A
Existing
outsourcing
relationships
Tips for managing
the implications with
your existing
outsourcing
relationships

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There are broadly three choices for sourcing and deploying RPA
solutions for buyers
1
The buyer purchases directly from the RPA technology
vendor and deploys in-house with or without consultancy
2 The buyer commissions a BPS provider to automate
outsourced processes. The BPS provider works with an RPA
technology partner to deliver alongside its own IP
3
The buyer commissions a specialist technology System
Integrator (SI) to implement RPA
BPS
provider
SI
RPA
technology
vendor +/- SI
Buyers
1
2
3
Representative lists

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In your experience, are outsourced services
being automated by service providers?
A. Yes, and quickly, but value is NOT being shared
B. Yes, and quickly, and value IS being shared
C.Yes, but at a slow pace
D.Yes, for new customers only or at renewal time
E. No, very little automation is happening

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 Primarily input-driven / FTE-based pricing models
 Leveraging RPA to incrementally reduce the FTEs required to
perform selected activities
 Reduced effort leads to a lower total price of the contract
 Typically used where there is a high potential of exceptions and/or
unstable baseline volumes
 Benefits realized as higher ongoing continuous efficiency
commitments (~30-40% cumulative)
Option 1: Incremental
 Moving from an input-driven model to a truly output- or outcome-
based pricing model
 Significant changes are required to the underlying operating model
and processes
 Typically used where baselines are well known and processes are
aligned to maximize value capture
 For highly transactional processes, the per transaction effective
price could reduce by ~40-60% very quickly
Two common routes to incorporate use of automation within
outsourced contracts
Incorporating automation
into contracts
Option 2: Transformational
Eventually, incremental adopters may move to transformational adoption

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Important TCO components to be aware of when negotiating with
service providers
One-time impact
 Reduced direct people costs
– Salaries and benefits
 Reduced indirect people costs
– Transportation and T&E
 Reduced facilities and overhead costs
 Higher accuracy
 Higher speed
 Improved standardization
Ongoing/recurring impact
Costdrivers
Savingsdrivers
 Reduced direct people costs
– Annual wage increases
 Reduced indirect people costs
– Recruitment
– Training
 Ongoing standardization/improvement
benefits
 Better governance and audit trails
 Automation tool implementation costs
– SME effort
– License costs (if one-time)
– User training costs
 Cost of additional staff to manage
exceptions
 Potential down time
 License cost (if periodic)
 Ongoing tool maintenance costs
 Tool version upgrade costs
 Potential down time
 Additional KM cost to manage loss of
tribal knowledge

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RPA within outsourcing contracts
Implications for enterprises
Absolutely ask your outsourcing partner for their plan
for a step change in price and operational metrics
Ultimately, the business case has to work for both
parties – but if you don’t ask (insist) it won’t happen
Understand the biggest part of the challenge is
process redesign within your organization

26. Proprietary & Confidential. © 2018, Everest Global, Inc. 26
Discussion points for today
Key contract
pricing metrics
RPA software
vendors
Birth of the
intelligent RPA
platform
Q&A
Existing
outsourcing
relationships

27. Proprietary & Confidential. © 2018, Everest Global, Inc. 27
Have a question?
To ask a question during the Q&A session
 Click the question mark (Q&A) button located on right
side of your screen. This opens Q&A
 Be sure to keep the default set to “send to All Panelists”
 Type your question in the box at the bottom of the Q&A
box and click the send button
 Attendees will receive an email with instructions for downloading today’s presentation
 For scheduling a diagnostic assessment of your contract or consultation on contract
alignment, please contact:
– Sarah Burnett, sarah.burnett@everestgrp.com
– Michel Janssen, michel.janssen@everestgrp.com

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