The Robotic Process Automation (“RPA”) Landscape is Heating Up
Enterprise adoption and service provider consolidation is accelerating
Let’s start with the basics: Automation is driving the next wave of Digital Transformation.
The digital transformation market has almost doubled in the past 18 months, and is expected to reach $798 billion USD by 2025 according to a new study done by Grand View Research, Inc. This rapid market increase can be attributed to the necessity for companies to keep up with the ever-changing world of technology. So what does Digital Transformation mean for a company? The answer to this question varies, but put generally, Digital Transformation is the implementation of technology into a business with the goal of streamlining and refining business activities. This impacts the company by improving customer experience, gaining an edge in the market, saving money, gaining better insight, and increasing productivity overall.
There are many ways to catalyze the Digital Transformation process, but Robotic Process Automation (RPA) has been the choice by many companies due to its ability to go hand in hand with the transformation process. So what exactly is RPA? RPA is the use of robotic software to automate time-consuming, high-volume, repetitive back-office activities. Examples of these activities include: order and claims processing, HR, data audits and migration, extraction of data from PDFs, generating mass emails, updating CRM, creating and delivering invoices, service job entry, etc. Simply put, RPA reduces labor hours and cost.
Software vendors are in the spotlight.
Automation Anywhere, Blue Prism and UiPath are the clear industry leaders amongst RPA software platforms at this time. And while the attention is rising, these platforms are not new (Exhibit 1). While these are the “big 3” platforms at the enterprise level, they are positioned differently and firms need to evaluate which platform best fits with their culture and transformation strategy. We are now seeing significant institutional capital get behind RPA and support the growth of this market by establishing defined partnership programs and experienced sales and marketing teams.
Exhibit 1. Fundraising in the RPA space is gaining momentum, but it has taken some time to get here.
As RPA acceptance is growing, service providers are approaching the market with different strategies…
RPA is gaining acceptance; however, it still seems to be in the “prove it” stage and service providers are getting creative in their approach to the market. For example former 7 Mile Advisors client, Premier Logic (a Digital Transformation and RPA provider) which was acquired by the ALTEN Group, has chosen to go to market with a managed services offering to help firms accelerate across the full RPA lifecycle, from concept to scalable execution. Premier Logic helps firms with the broader automation strategy, while achieving quick wins and building RPA capability in a single managed services offering that can scale and grow on a monthly recurring basis. Another approach we have seen in the market is identifying low-hanging fruit to run a quick proof-of-concept that takes less than 3 months to see results before opening the door to other RPA opportunities, or, a much larger custom software development opportunity.
Like any enabling technology, RPA needs to be approached as a business and transformation initiative, not a technology initiative. Accordingly, we are seeing that most successful implementations are the ones that focus on the standardization of the business process and business outcomes, and focus on the broader change management and operating model to scale the “digital workforce.” Accordingly, we see many service providers focusing on an industry vertical to drive best practices from a domain expertise standpoint. Premier Logic, for example, leverages its 10+ years as a provider to the Financial Services vertical, and has worked with BluePrism, UiPath, and Automation Anywhere as the “go-to” provider to the Accounting Industry and other financial service providers.
…and the partnership ecosystem is expanding.
Automation Anywhere leads the group with >100 implementation partners, followed by UiPath and Blue Prism, with each around 50. As expected, the big management consulting and global systems integrators are partners across each of the three main platforms in the space (Exhibit 2). As the partnership model continues to mature (the formal partnership model is still in its infancy), we would anticipate more mid-tier companies expanding partnerships to multiple platforms as well, but ultimately, expect for most to be focused on a single platform.
Exhibit 2. Large consulting and SIs have worked to gain expertise and partnership status across the big 3 RPA platforms.
With RPA acceptance growing and the partner universe expanding, consolidation is happening.
7 Mile has closed two transactions of RPA implementation partners and believe consolidation will pick up speed from here as service providers gain further expertise on the platforms and start to win large enterprise clients.
- Arrow Digital acquired by Softvision
Arrow Digital, a West Palm Beach-based digital consulting firm, offers scalable custom software — delivering business process automation, digital experience, and RPA solutions. The firm, with their 160 creative technologists, 5 global offices, and renowned clients such as PwC and Hilton Grand Vacations, will join Softvision LLC, a leader in enhancing the digital consumer experience for top brands.
2. Premier Logic acquired by ALTEN Calsoft Labs
Premier Logic is the go-to digital transformation company for enterprises that need to fast track their new product ideas. The company has an impressive track record of helping enterprises quickly envision, prototype and launch digital solutions with the end user in mind to accomplish the desired business outcome. With this acquisition, ALTEN Calsoft Labs has also created a separate “Digital” division that will exclusively focus on cost-effective and lean digital transformation solutions for enterprises and product companies.
The following is a breakdown of the leading RPA vendors:
Blue Prism
Blue Prism is a U.K.-based software corporation founded in 2001. The company produces RPA software with a revenue size of $38.1 million. Some of Blue Prism’s largest customers are Coca Cola, BNY Mellon, DTE Energy, Prudential, Walgreens, Schneider, and Fannie Mae. Blue Prism has around 50 implementation partners, including the Big 4, and around 30% of those being global providers. Their funding history is summarized below:
- Dec 2015 Series Unknown from Clydesdale Bank and Yorkshire Bank ($3.12 mil)
- Nov 2017
- Jan 2018 Post IPO Equity ($53.1 mil)
UiPath
UiPath is another key player in the RPA market. They are a U.S.-based global software company founded in 2005 that develops a platform for Robotic Process Automation. According to a UiPath blog post, in addition to creating more jobs, the technology will have a potential economic impact of between $5.2 billion and $6.7 trillion by 2025. Some of UiPath’s larger customers include: General Motors, RELX Group, MassMutual, BBVA Compass, Bristol Myers Squibb, and AbbVie. UiPath also has around 50 implementation partners, one of those partners being Arrow Digital, and ¾ of the Big 4. Their funding history is summarized below:
- April 2017: Accel Partners, Earlybird Venture Capital GmbH & Co. KG, Credo Ventures, and Seedcamp — $30 million Series A
- August 2017: Plug and Play Tech Center — Between $25 thousand and 500 thousand
- March 2018: Accel Partners, Capital G, Kleiner Perkins Caufield & Byers, Earlybird Venture Capital GmbH & Co., KG, Credo Ventures, Seedcamp — $153 million Series B
Automation Anywhere
Automation Anywhere (France) is another leading developer of RPA software founded in 2003 with a revenue size of $161 million. Big enterprises using Automation Anywhere include: Google, LinkedIn, Cisco, Tesco, Mastercard, Juniper Networks, Volkswagen, Whirlpool, ING, and Siemens. Automation Anywhere has around 100 implementation partners, twice that of Blue Prism and UiPath. All four of the Big 4 are included in this mix. Their funding history is summarized below:
- 2017: Accel — $30 million
A couple of patterns emerged between the implementation partners of each of the three companies. Accenture, Capgemini, IBM, Cognizant, Sopra Steria, and Tata Consultancy Services are all companies that partner with all three of the key players profiled above, as well as ¾ of the Big 4. Automation Anywhere also partners with two additional accounting firms: Grant Thornton and Baker Tilly. Companies that partnered with ⅔ of key players include Avanade, Avasant, The Burnie Group, Genpact Premier Logic, Voyager Solutions, and CGI. Around 15% of all implementation partner companies were global, more than 25% were consulting companies, and about 35% of the companies were IT companies. Blue Prism and UiPath both had many management consulting firms as implementation partners, whereas Automation Anywhere’s implementation partners were slightly more diverse. Many of the implementation partners were providers of “end-to-end” RPA services. “End-to-end” process automation efforts in reference to RPA mean that they not only implement the RPA technology, but are involved throughout the entire transformation process of the business activity that they are automating. Another classification of these partners was that they were “SaaS” companies, describing a software distribution model where third-party providers make software available to customers. Digital Transformation companies were also common implementation partners, highlighting RPA’s importance in the Digital Transformation process.
Author: John Cooper, Director at 7 Mile Advisors
About 7 Mile Advisors
7 Mile Advisors provides Investment Banking & Advisory Services to the Business Services & Technology Industries globally. 7 Mile Advisors advises on M&A and private capital transactions, and provides market assessments and benchmarking. As a close-knit team with a long history together and a laser focus on our target markets, 7 Mile Advisors helps its clients sell companies, raise capital, grow through acquisitions, and evaluate new markets. For more information, including research on the M&A markets, visit www.7mileadvisors.com.
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