Near the end of 2019, Microsoft added various RPA features to Flow, its automated workflow service, and rebranded it as Power Automate. It wasn’t surprising to see Microsoft getting into this space to embed RPA into its products such as Excel, PPT, Outlook, Teams, and SharePoint, and enable business users to automate tasks directly from these products. Now, with its acquisition of RPA software vendor Softomotive, it’s staking its claim in the US$1 billion RPA software market, accelerating its positioning in the RPA space, and offering greater depth and breadth of RPA capabilities to its customers.
This acquisition has come at a time when the demand for automation is being amplified due to the COVID-19 pandemic, and automation at scale is gaining pace. And it positions Microsoft as a serious contender for automation software needs as organizations are rethinking their automation strategies.
Here’s our take on the deal.
Founded in 2005, Softomotive is a leading RPA software vendor with roots in desktop automation. Its popular desktop automation product, WinAutomation, helps automate tasks running on Windows-based applications and technologies. We positioned Softomotive as a Major Contender and a Star Performer in our 2019 RPA Products PEAK Matrix assessment for multiple reasons including:
This acquisition validates the RPA space and reinforces the point that RPA will stick around for much longer than some have been predicting. It’s a big moment for the RPA market as a whole and could accelerate technology maturity, awareness, adoption, and development of RPA skills. It could drive or accelerate key market trends:
With Microsoft going all-in on RPA with this acquisition, other RPA vendors will need to up their game to remain competitive. Microsoft will be able to deliver RPA that’s tightly and seamlessly integrated with its vast suite of business applications. To combat this move, other vendors will have to position themselves as specialists and best-of-breed providers of enterprise automation capabilities. Also, going forward, growth may elude pure-play RPA vendors; in order to thrive, they will have to either invest in other complementary areas such as AI and process mining, or be acquired. Note that today, most RPA players, including the big three, are offering complementary products in addition to RPA.
Additionally, Microsoft has deep integration, joint functionality development, and go-to-market partnerships with big RPA vendors including Automation Anywhere, Blue Prism, and UiPath. These partners also contribute to Microsoft’s revenue through collaborations, such as Azure, and it’s likely that those partnerships will continue, and clients will be given flexibility to choose, as co-opetition it is becoming quite common in the enterprise software space. For example, UiPath acquired a process mining vendor, ProcessGold, but has maintained its partnership with Minit. Similarly, Blue Prism announced an Intelligent Document Processing (IDP) solution called Decipher, but has maintained its partnership with ABBYY.
It will be interesting to see how well Microsoft is able to leverage this investment. It could take the company up to a year to come up with its integrated RPA offering and embed Softomotive at a technical level across its suite of software products. In the meanwhile, Microsoft has made WinAutomation available for free to all of its Power Automate customers. However, it remains to be seen how Microsoft plans to leverage Softomotive’s ProcessRobot and Robin. Some say Microsoft gets it right the third time. Flow was Microsoft’s first attempt at RPA, Power Automate was its second, and Softomotive is its third. So, will the third time be the charm for Microsoft?
Going forward, Microsoft could follow on with more acquisitions in other automation areas such as Intelligent Document Processing (IDP), Intelligent Virtual Agents (IVA), process mining, and analytics to further establish itself in the intelligent automation space. An indication of this possibility is Microsoft’s late 2019 launch of Power Virtual Agents, a chatbot/IVA offering that’s based on its Bot Framework. Might IVA be the next area where Microsoft could make an acquisition, perhaps of one of the 16 IVA software vendors we assessed as part of IVA Products PEAK Matrix?
Consider what’s now happening at companies that made investments in automation and moving work to the cloud. They’re doing better than others in the COVID-19 pandemic. They’re more flexible under trying conditions. They’re more resilient to challenges. They are a bright spot in this awful crisis. The pandemic showed what companies invested in as preparation for challenges. Unfortunately, it also exposed companies that were less prepared. As I mentioned in my prior blog, the pandemic was like what Warren Buffet described as the tide going out, exposing naked swimmers. One fact that the COVID-19 crisis exposed is that automation matters.
As companies attempt to shift to 100 percent remote working model during these unprecedented times, accounts payable departments are struggling to maintain a fluid “business as usual” approach in managing their invoice processes in a timely and cost-effective manner in the absence of a sound digitally-applied account payable strategies.
Organizations can and should take steps now to digitize accounts payable not just to ensure business continuity, but to also tap the immense potential in it to save time and cost.
In this webinar, Everest Group’s Shirley Hung joins the Kofax team to share insights on:
In addition, Bob Monio from Kofax discusses how companies of all sizes can now embrace modern tools to automate a majority, if not all, of their invoicing and payment processes and reach positive ROI almost immediately.
Director of Commercial Product Management
Automation CoEs in Global Business Services (GBS) centers or Shared Services Centers (SSCs) have evolved over time. Mature GBS adopters of automation have made conscious decisions around the structure and governance CoEs, evolving to extract maximum value from their automation initiatives. Some of the benefits they have hoped to gain from the evolution include:
CoE models generally evolve from siloed model to centralized and then to a federated:
Most GBS centers start their automation initiatives in silos or specific functions. In the early stages of their automation journeys, this approach enables them to gain a stronger understanding of capabilities and benefits of automation and also to achieve quick results.
However, this model has its limits, including suboptimal bot usage, low bargaining power with the vendor, lower reusability of modules and other IP, limited automation capabilities, and limited scale and scope.
As automation initiatives evolve, enterprises and GBS organizations recognized the need to integrate these siloed efforts to realize more benefits, leading to the centralized model. This model enables benefits such introducing standard operating procedures (SOPs), better governance, higher reusability of automation assets and components, optimized usage of licenses and resources, and enforcement of best practices. This model also places a greater emphasis on a GBC-/enterprise-wide automation strategy, which is lacking in the siloed model.
However, this model, too, has limitations, suffering slow growth and rate of coverage across business units because the centralized model loses the flexibility, process knowledge, and ownership that individual business units bring to the bot development process.
The federated model addresses both of the other models’ limitations, enabling many best-in-class GBS centers to scale their automation initiatives rapidly. In this model, the CoE (the hub) handles support activities such as training resources, providing technology infrastructure and governance. Individual business units or functions (the spokes) are responsible for identifying and assessing opportunities and developing and maintaining bots. The model combines the benefits of decentralized bot-development with centralized governance.
The federated model has some limitations, such as reduced control for the CoE hub over the bot development and testing process, and, hence, over standardization, bot quality and module reusability. However, many believe the benefits outweigh the drawbacks.
The three CoE models are described in the figure below.
The table shown below shows how the three models compare on various parameters.
There are several reasons why GBS centers are moving to the federated model, as outlined below.
A leading global hardware and technology firm’s GBS center adopted the federated CoE model, which houses the CoE hub, in 2017. In the three years since, it has grown to over 400 bots across more than 20 business units in a wide variety of locations, and saved more than $25 million from automation initiatives. The CoE hub has also successfully trained over 1,000 FTEs from technical and business backgrounds on bot development. As a result, firm-wide enthusiasm and involvement in the GBS center’s automation journey is high.
Transitioning to a federated CoE model has helped many GBS programs scale their automation initiatives rapidly. For more details, see our report, Scaling Up the Adoption of Automation Solutions – The Evolving Role of Global In-house Centers or reach out to Bharath M or Param Dhar for more information on this topic.
Businesses in the UK are facing a spate of challenges; there’s the specter of new Brexit-driven red tape on trade, a staffing shortage as some EU workers are returning to their home countries, and UK changes to the IR35 contract worker tax legislation, which is making it very difficult for companies to hire contractors. A Coronavirus pandemic could be the final straw that breaks businesses’ backs. Let’s face it – there is a perfect storm ahead.
With Brexit and the EU trade negotiations still going on, there is little certainty about the red tape that businesses will face in order to trade with each other across the English Channel. Yet, with the transition period set to end on 31 December 2020, there is little time for businesses to prepare for whatever the new trade requirements may ultimately be.
Because adherence to the as yet unclear regulations will increase businesses’ workloads, a natural response would be to hire more staff. But unemployment is at record low, and many skilled EU workers are leaving the UK and returning to their home countries. Furthermore, the UK Office of National Statistics (ONS) reports that EU immigration to the UK is at an all-time low.
The HMRC’s new IR35 rules, which come into effect in April 2020, are exacerbating the problem. Many companies have had to adopt no-contractor hiring policies and cannot fill temporary vacancies. They are already feeling the impact of the regulation. If they can’t hire staff or contractors, where are companies going to find resources to handle the extra workload of trade red tape?
Additionally, widespread cases of the Coronavirus could lead to prolonged periods of sick leave, further reducing the number of staff who are available to help with the increased workload of trading with the EU. While cases are still far and few between in the UK, the impact of the spread of the disease in China has been great. Empty offices and factories in Chinese cities and manufacturing heartlands are already leading to a shortage of parts for cars and other products that are much in demand in the UK.
Clearly, UK businesses are facing a perfect storm.
Investing in digital and Intelligent Automation (IA) technologies can help them tackle some red tape issues, particularly if they use IA for what I call Red Tape Automation (RTA). This could be automation of compliance form-filling and reporting requirements, weights and measure conversions, or making changes to transaction or product-related data and synchronizing them across multiple systems such as those used for sales and revenue to record value added taxes and other duties. Companies that trade with both EU and non-EU countries could automate the red tape for all of those, using rules engines to fill in the right forms and apply the correct rates.
IA is not a perfect solution, as people will be needed to implement technology, and there is a growing talent shortage. Nonetheless, UK businesses will be well served by investing in learning the art of the possible with IA. While the final details of any trade deals with the EU, or new deals with the rest of the world, will not be known for a while, knowing how to implement the requirements quickly using IA can help them weather the impending storm.
For more information about IA, please check out Everest Group’s Service Optimization Technologies research.
Visit our COVID-19 resource center to access all our COVD-19 related insights.
Appian announced its intent to acquire the Spanish vendor Novayre Solutions SL and its Jidoka RPA platform on January 7. With this acquisition, Appian, best known for its low-code process management and orchestration software, will be able to offer extensive automation capabilities natively, while it did so previously with partners’ software such as Blue Prism and UIPath.
So, what does the acquisition mean for the market?
Our estimates show that the RPA third-party software market is expected to grow by 80 percent to reach $2.5 billion this year. With this phenomenal growth rate, it’s not surprising that non-RPA companies want a slice of the pie.
Appian has been active in this market for a while and has benefitted from many new clients thanks to its partnerships with RPA vendors. It is also a reseller for Blue Prism and has experienced growing demand for RPA first-hand through that channel.
In addition, technology giants are increasing their activities in this market. SAP acquired Contextor back in 2018. And most recently, Microsoft announced UI flows to add RPA capabilities to Microsoft Power Automate (previously Microsoft Flow). It combines digital process automation (DPA) via APIs with UI-based automation. Pega is another competitor that has also invested in this market; it took over OpenSpan back in 2016.
We have assessed Jidoka as part of our RPA Technologies PEAK Matrix for a number of years and most recently positioned it as a major contender in our 2019 assessment. Jidoka is a Java-based platform where robots are designed and managed by a web-based console. There is a design studio for workflow and orchestration of robot operations. A console centralizes monitoring, audit, and exception handling features along with secure user permission and authorization capabilities. It has proprietary image recognition technology, Hawk Eye, to support Citrix automation. The platform offers capabilities such as auto-scaling of robots, a secure credentials vault, roles-based access controls, execution logs, audit trail, robot performance analytics, and ROI calculator. It also offers a chatbot capability that is available from the console. Real-time human-robot collaboration is provided via chat interface from the console (and Google Home,) the Jidoka mobile app (voice and chat,) and via IoT devices.
Appian intends to rebrand the product as Appian RPA. It will turn it into a low-code environment and integrate it with its own solutions to be offered on the cloud on a competitively priced subscription basis. While growing in Spain and Latin America, Jidoka has limited presence in other geographies. This is something that Appian can address with its presence in major tech markets.
As for its partnerships, Appian is keen to keep them going and offer clients choices. It remains to be seen how partners such as Blue Prism and UiPath will react to this news. It is not unusual for partners to go for co-opetition. For example, last year Blue Prism announced an Intelligent Document Processing (IDP) solution called Decipher, but has maintained its partnerships in the IDP segment, e.g., with Abbyy.
We have been expecting M&A activity in this sector to increase with market maturity and as RPA becomes a key tool for process efficiency and productivity. RPA is also commoditizing, and the fact that Appian is acquiring a very small vendor shows that entry into the market is not expensive. The news of this acquisition could encourage other tech companies, particularly those in the process management and orchestration space, to act too. There are many small RPA vendors with good offerings. The big RPA players with their current large valuations could suffer if a wave of acquisitions materialized and bypassed them; but at the same time, they have an awful lot of customers and a huge global footprint among them. Furthermore, private equity investors continue to invest in the market, as evidenced by Automation Anywhere’s last round of funding. This market remains buoyant and dynamic.
With Microsoft getting into the RPA business, all vendors have to up their game to remain competitive. As for the RPA scale challenge that many enterprises are facing, vendors are working on this with new, improved offerings in the areas of robot management and controls, ease of use, and increased robot resiliency. With its existing and new capabilities, Appian will be well placed to address the scale challenge to make RPA adoption and operations smoother and, in so doing, edge ahead of the competition.