Robotic process automation (RPA) has certainly been getting a lot of attention in the last year, with startups, acquisitions and IPOs all coming together in a flurry of market activity. It all seemed to culminate with UiPath’s IPO last month. The company that appeared to come out of nowhere in 2017 eventually had a final private valuation of $35 billion. It then had the audacity to match that at its IPO. A few weeks later, it still has a market cap of over $38 billion in spite of the stock price fluctuating at points.
Was this some kind of peak for the technology or a flash in the pan? Probably not. While it all seemed to come together in the last year with a big increase in attention to automation in general during the pandemic, it’s a market category that has been around for some time.
RPA allows companies to automate a group of highly mundane tasks and have a machine do the work instead of a human. Think of finding an invoice amount in an email, placing the figure in a spreadsheet and sending a Slack message to Accounts Payable. You could have humans do that, or you could do it more quickly and efficiently with a machine. We’re talking mind-numbing work that is well suited to automation.
In 2019, Gartner found RPA was the fastest-growing category in enterprise software. In spite of that, the market is still surprisingly small, with IDC estimates finding it will reach just $2 billion in 2021. That’s pretty tiny for the enterprise, but it shows that there’s plenty of room for this space to grow.
We spoke to five investors to find out more about RPA, and the general consensus was that we are just getting started. While we will continue to see the players at the top of the market — like UiPath, Automation Anywhere and Blue Prism — jockeying for position with the big enterprise vendors and startups, the size and scope of the market has a lot of potential and is likely to keep growing for some time to come.
To learn about all of this, we queried the following investors:
- Mallun Yen, founder and partner, Operator Collective
- Jai Das, partner and president, Sapphire Ventures
- Soma Somasegar, managing director, Madrona Venture Group
- Laela Sturdy, general partner, CapitalG
- Ed Sim, founder and managing partner, Boldstart Ventures
We have seen a range of RPA startups emerge in recent years, with companies like UiPath, Blue Prism and Automation Anywhere leading the way. As the space matures, where do the biggest opportunities remain?
Mallun Yen: One of the fastest-growing categories of software, RPA has been growing at over 60% in recent years, versus 13% for enterprise software generally. But we’ve barely scratched the surface. The COVID-19 pandemic forced companies to shift how they run their business, how they hire and allocate staff.
Given that the workforce will remain at least partially permanently remote, companies recognize that this shift is also permanent, and so they need to make fundamental changes to how they run their businesses. It’s simply suboptimal to hire, train and deploy remote employees to run routine processes, which are prone to, among other things, human error and boredom.
Jai Das: All the companies that you have listed are focused on automating simple repetitive tasks that are performed by humans. These are mostly data entry and data validation jobs. Most of these tasks will be automated in the next couple of years. The new opportunity lies in automating business processes that involve multiple humans and machines within complicated workflow using AI/ML.
Sometimes this is also called process mining. There have been BPM companies in the past that have tried to automate these business processes, but they required a lot of services to implement and maintain these automated processes. AI/ML is providing a way for software to replace all these services.
Soma Somasegar: For all the progress that we have seen in RPA, I think it is still early days. The global demand for RPA market size in terms of revenue was more than $2 billion this past year and is expected to cross $20 billion in the coming decade, growing at a CAGR of more than 30% over the next seven to eight years, according to analysts such as Gartner.
That’s an astounding growth rate in the coming years and is a reflection of how early we are in the RPA journey and how much more is ahead of us. A recent study by Deloitte indicates that up to 50% of the tasks in businesses performed by employees are considered mundane, administrative and labor-intensive. That is just a recipe for a ton of process automation.
There are a lot of opportunities that I see here, including process discovery and mining; process analytics; application of AI to drive effective, more complex workflow automation; and using low code/no code as a way to enable a broader set of people to be able to automate tasks, processes and workflows, to name a few.
Laela Sturdy: We’re a long way from needing to think about the space maturing. In fact, RPA adoption is still in its early infancy when you consider its immense potential. Most companies are only now just beginning to explore the numerous use cases that exist across industries. The more enterprises dip their toes into RPA, the more use cases they envision.
I expect to see market leaders like UiPath continue to innovate rapidly while expanding the breadth and depth of their end-to-end automation platforms. As the technology continues to evolve, we should expect RPA to penetrate even more deeply into the enterprise and to automate increasingly more — and more critical — business processes.
Ed Sim: Most large-scale automation projects require a significant amount of professional services to deliver on the promises, and two areas where I still see opportunity include startups that can bring more intelligence and faster time to value. Examples include process discovery, which can help companies quickly and accurately understand how their business processes work and prioritize what to automate versus just rearchitecting an existing workflow.
via https://AiUpNow.com May 7, 2021 at 08:22AM by Ron Miller, Khareem Sudlow,
