Robotic Process Automation: the next big trend in enterprise digitalisation?

As investment in Robotic Process Automation increases, could it be the great new wave of enterprise technology?

Investors are pouring funds into Robotic Process Automation businesses, sending their valuations sky high. New York-based UiPath's valuation has risen from $70m two years ago to a staggering $6.4bn this spring. Silicon-valley based Automation Anywhere raised $550m from investors last year and is valued at $2.3bn. Meanwhile, the UK's Blue Prism has a market capitalisation of $1.5bn.

Robotic Process Automation (RPA) software carries out mundane office tasks such as processing invoices and answering email enquiries. RPA software plugs directly into a computer monitor and replicates the work of a human employee, but with far greater accuracy and speed and for a third of the price.

Gartner says that RPA is becoming the fastest growing segment in enterprise software as organisations in finance, insurance and government look to automation to save costs and speed up operations. RPA's market revenue grew 63% to $850m in 2018 and is expected to grow hit $1.3bn in 2019. 

Combining RPA with AI and ML

For some, this latest trend in automation is unremarkable, just another step forward in the digitisation of business processes. RPA's revenues may be growing fast, but are tiny compared to other software sectors. They see RPA as relatively unexciting, a blunt instrument for automating simple office tasks. But the technology is increasingly using artificial intelligence and machine learning to carry out complex, multi-level processes. 

As analyst Marc Hardwick at TechMarketView says: "I don't think RPA in itself is a genuinely transformative technology. But when you start to couple it with some other areas, particularly artificial intelligence, machine learning and cloud-based technologies, you have something which is quite transformative."

RPA is effective at handling structured data such as invoices and order-processing, but it has struggled with semi-structured or unstructured data from emails, letters or phone calls which don't follow a standard format. Adding in advanced technology helps broaden RPA's capabilities.

"You start to put AI or machine learning technologies with RPA and you get something which is very exciting," says Hardwick. "They have started to do that, and a lot of the money raised by the companies is capitalising on the hype," he adds.

Most businesses with extensive administrative workloads are looking at how automation can save costs. For instance, Lloyds Banking Group in the UK is reported to be experimenting with RPA in consumer services, payments, mortgages and the commercial department. According to white collar union BTU, Lloyds Banking's head of RPA Gerald Pullen gave a presentation about the tests. One admin exercise required creating 80,000 files which would normally be done by staff building one file per day. With RPA, a file can be built every 30 minutes, 24 hours a day, seven days a week. 

UiPath's "chief evangelist" Guy Kirkwood says that his company offers additional free services to its RPA clients through the Go platform, which is like an app store where users can download AI services to work with their office robots. 

"Organisations looking to build these capabilities into their automations can use all these elements for free, they just drag and drop them into the creation of the robot. Democratisation is changing the thinking of organisations to an automation-first mind set," he says.  

The days of monolithic service providers such as IBM overseeing all an enterprise's technology needs such as consulting, systems integration and outsourcing, are disappearing. Today, there is a wide ecosystem of vendors, technologies and platforms that organisations can choose from. These are offering open-source AI services such as natural language processing, natural language understanding, cognitive engines and machine learning models. Businesses are bolting these on to automation tasks.

UiPath is offering AI skills in four areas. One is visual understanding which allows the robot to interpret everything it sees on a computer screen. The company is also working on document understanding, where computers can read paper documents and make sense of them. Process understanding is also vital - the RPA robot observes office processes in action and creates ways of replicating them. The fourth area is conversational understanding, where the robots can respond to voice commands. 

The great new wave of enterprise technology?

Clerical staff are understandably nervous about the new technology. The rush to office automation could wipe out millions of admin jobs, though RPA companies argue the technology will help developed economies cope with a severe shortage of staff and RPA will free office staff for higher level tasks such as customer service. 

RPA is expected to seriously disrupt the way organisations work and will have huge implications for IT departments. 

RPA vendors see automation as the next great wave of enterprise technology. But where previous waves such as the move to the web in the early 2000s, the mobile-first strategy of the 2010s and today's great migration to the cloud have been IT projects, the IT department will have only a small role to play in implementing RPA.  

The term Robotic Process Automation was first coined by UK company Blue Prism in the early 2000s. Blue Prism co-founder Dave Moss says the technology has been created to put power in the hands of operational business people to implement themselves, rather than being some mysterious piece of IT magic: "This is part of the technology estate but more importantly, it is given to the operation to go and configure it, it is not something that developers do, it is not a big coding job.

"The point is these processes are not part of the standard IT infrastructure, not part of platforms you've got now."

So not only are clerical staff wary of being put out of work by RPA, but IT staff also have reasons to worry.

Moss believes that in the long run, RPA will help IT departments run more effectively. "IT departments are shrinking, they are outsourcing work and cutting back and getting smaller budgets. At the same time, businesses are adopting more technologies, but with fewer staff to support them, so organisations become starved of resources to create new initiatives." He says 70% of IT staff are "keeping the lights on with existing processes," which leaves a small number for new projects. The simplicity of implementing RPA across a business means IT staff will not need to take time putting it in place. But IT departments will become increasingly automated and maybe able to implement RPA in their own processes.

The success of RPA over coming years will depend on how quickly dumb automation robots can learn higher skills to carry out more complex tasks. Several sky-high valuations are depending on it.

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