IVA market growth will accelerate post-pandemic as enterprises strive to overcome recession with focus on automation, customer experience
The global Intelligent Virtual Agent (IVA) market stood at US$300 million-US$350 million in 2019, exhibiting about 42% growth year on year, according to Everest Group. The firm projects a dip in demand in 2020 due to the COVID-19 pandemic but expects the IVA market to post strong growth going forward, achieving as much as a 70% compound annual growth rate (CAGR) through 2022. In fact, Everest Group has boosted this estimate by 13-22%, anticipating that enterprises will place greater emphasis on cost reduction and improving business continuity in the post-pandemic period.
IVA solutions are a key enabler of automation in the front office, currently being used primarily for customer support as well as IT and help desk functions due to their large volumes of repetitive queries. These functions account for more than 80% of the IVA market today. Banking, insurance, and telecom industries account for the highest adoption of IVA and continue to exhibit impressive growth, particularly given the maturity of contact centers within these industries.
Increasing sophistication and collaboration with complimentary artificial intelligence (AI) based technologies are driving IVA popularity in the market. Enterprises across industries and geographies are leveraging or plan to leverage IVA solutions for different use cases to reduce human involvement and improve customer experience (CX).
“IVA is still in the realm of early adoption today, but that is rapidly changing as enterprises realize what a tremendous opportunity they have to leverage this technology,” said Anil Vijayan, vice president of Everest Group. “IVA technology is continuously advancing and growing in sophistication well beyond rule-based chatbots. Today we see a higher level of maturity in intelligent IVA applications, which are being used for a variety of use cases including payment services account resolutions and employee onboarding, for instance. We’re also beginning to see IVA playing a key role in conversational AI ecosystems, where a collaborative set of tools—including IVA, AI, robotic process automation, learning and listening engines, analytics and more—is used to seamlessly integrate front and back office systems. Here, IVA supports more advanced use cases such as cross-selling and upselling, customer retention, and making personalized recommendations. We expect this evolution to continue, leading to reliable and delightful customer experiences while reducing human effort through automation.”
These findings are discussed in more detail in Everest Group’s recently published report “Conversing with AI – Intelligent Virtual Agents (IVA) State of the Market Report 2020.” The report includes a detailed analysis of the IVA market, including a market overview and adoption trends, solution characteristics, vendor landscape, barriers to IVA adoption and best practices, and the outlook for 2020-2021.
Evolution of the IVA Market
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com/.
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.