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Visibility of what’s happening in the automation market is hard to find. You have SDA,
RBPO, RPA, AI, Cognitive, and a whole alphabet soup of
three letter acronyms that mean *** all to most business people.
I’m here to shed a little light on what’s actually happening.
How can I know?
It’s because we are seeing the development and scaling of the RPA market from the cockpit,
we’re currently getting contacted before anyone else by companies looking to automate
– but more of that when we get to the three buckets.
I’ll start with a simple truism
UiPath is not a technology solution that is sold to IT departments.
The earliest adopters of automation ran pilots with competitors who “play nice” with IT.
They were techies buying from techies;
that’s why that particular company bangs on about compliance and governance
as being the be all and end all.
But it’s not.
RPA was originally created out of scripts, macros, and screen scraping;
possibly built on object oriented software platforms.
Does today’s average business buyer care about this?
No.
Today’s RPA buyer comes from the business.
Their initial focus is on decreasing cost and increasing efficiency,
because that’s what their boards require of them.
That’s not to say that UiPath technology is not up to snuff.
I’m the only person in the industry that actively tells prospective clients
to check out the other three credible technologies.
I can say this because we have yet to lose a technical
evaluation or RFP when IT departments compare the products of different vendors
So although we sell to business,
technology likes us too. After all,
better technology leads to better business.
So, we may be an enterprise software business
but we think, act and sell like a services business,
because that is what our customers and partners expect.
In many ways, the growth of the RPA
is mimicking the growth of BPO and shared services twenty years ago
but it is highly accelerated.
In fact, it’s accelerating so fast
that a strange thing is happening with funding.
One would expect in what is essentially a nascent market,
that funding would come from the tier two and three Venture Capital or Private Equity houses
but what’s actually “sniffing around” are the likes of General Atlantic Partners and KKR
who would not normally get out of bed for less than 100 million dollars.
Companies like UiPath which wouldn’t even be on the radar of these giants
are suddenly “interesting”
in the same way that the early BPO companies that they backed were “interesting”.
Putting that, frankly scary, thought aside,
what ARE customers and clients and partners actually doing with UiPath software?
Well, many of them are switching to UiPath from the alternatives
after successful pilots and proofs of concept.
Yes, after successful pilots.
The reason for this is that
as soon as companies achieve a successful POC
they want to scale
but scaling with technology when the latest edition of the software is three years old,
or where it takes two engineers from another competitor
nine days to automate a process that one of our devs managed in less than two days,
it’s not surprising that when you want to automate for example,
forty processes that had previously been offshored to an Indian outsourcing service provider,
the speed and ease with which you can do it
has a material impact on the successful delivery of the business case.
And, delivering against the business case is what the business needs and wants.
But we can go further.
Our recommendation is to automate the back office function
that aligns directly with the front office activity that feeds it.
In that way, not only do you get the cost reduction and efficiency gains in the back office
but by moving the people
that are released from the drudgery of manual transaction processing into the front office
and using UiPath front office robots to augment call centre and agent tasks
our customers are able to double the delta and benefit.
Seamless access to customer data drives increased customer experience,
increased ability to on-sell and up-sell additional services and decreased churn,
which of course is particularly important in the banking, telco, insurance, and utilities markets
which, let's face it, have not been traditionally renowned for their fabulous customer experience.
Despite all the horror stories in the press about how “the future of work”
actually equates to mass unemployment,
we are not seeing significant redundancies as a result of our automation projects.
Clients are simply moving those people affected on to higher-value tasks
– in other words doing stuff that they just couldn’t do before.
Let me give you a really simple example of how far we’ve come.
On Monday, I was briefing Cathy Tornbohm of Gartner on our progress
(we’ve closed out our Q1 with revenues that exceeded the whole of 2015 – so not bad)
and she delivered this bombshell:
Gartner has cancelled its F&A BPO Magic Quadrant for 2016
because as Cathy said "unless BPO involves automation, it’s become irrelevant”.
That bears repeating. Unless BPO involves automation, it’s become irrelevant.
Suddenly, the Gartner hype cycle, which was supposed to be the topic of this event,
doesn’t quite cover the fundamental change we’re experiencing.
For our consulting partners like Accenture and Deloitte,
this is manifesting itself by them potentially wanting to take a minority stake in UiPath
and although any IPO (and no, we’re not going to IPO when our revenues are still in single digits)
or trade sale would conservatively provide them with a 5-8x return,
what really turns them on is the pull-through of consulting revenue.
There are even races between different countries and individual partners over who holds the relationships with us.
All of this is accelerating UiPath adoption.
So, let’s move on to the buckets of activity.
The first bucket consists of the most mature shared service, captive and GBS operations.
They have been buying licenses and building up their own centers of excellence.
They don’t need any external help
because they have all of the process improvement, process mapping, and lean six sigma skills
necessary to build their own capability in RPA
and they see automation as the next logical step for their organizations.
The numbers in this bucket quite small; it’s the P&G's, the Amex’s, the Philips’ of this world.
The second bucket is the biggest and this is where we are seeing the most activity.
This bucket consists of organizations that want to automate but don’t have the capability in-house.
They don’t necessarily have all their processes mapped,
they don't have the black belts to look at process improvements;
they may have outsourced and gutted their retained organizations, so they don't have the skills anymore.
For these companies, we are recommending that they use external parties.
And, depending on the geography, the industry in which they operate and the service line they want to automate,
we've got a number of partners that we recommend they talk to
ranging from the very large, like Accenture, HP, or Capgemini
down to the smaller specialized RPA implementers like Symphony or Genfour.
The third bucket holds the BPO providers who in 2014 and 15 were using UiPath to reduce their cost to serve
but which are now going to market with automation as-a-service -
particularly as UiPath is the only RPA technology which operates seamlessly over Citrix.
As an example, one BPO partner had previously used one of the other vendors to automate a relatively simple process
but because of Citrix, it took nine hours of coding to complete.
Using UiPath, it took 16 minutes to automate the same process –
needless to say that particular BPO company now only uses us.
How does AI and digitization fit into the scheme of things?
Some partners are using two different technologies;
Capgemini for instance is using Celaton for the digitization
and UiPath for RPA for all of their client work.
With one of our insurance clients,
we’re moving the processing upstream directly by using a combination of industry standard OCR
with Google’s algorithms to turn their unstructured data into structured data
that our RPA robots can then transact.
One company in the AI space which had previously
(and rather ironically) used people to do this in a crowd-sourcing way
have been saying that RPA is unimportant
if one has the cognitive element.
Of course they would say that because they don’t have an RPA capability,
but with us now building machine learning using open source and readily available tools
rather than reinventing the wheel,
we will be the only automation vendor who can deal with processes from end to end
regardless of whether process data is ready for robots or not.
Speaking of new, our new server product called Orchestrator is officially released on Monday.
It not only reduces the dependencies by half
but we’ve also built Elastic Search into it by default.
What this means is that our customers and partners can do “big data” analytics on the fly
and without the need to purchase a separate analytics platform.
This is big data big news
as it allows patterns of behavior to be identified natively
to counter fraud in banks and insurance companies
and help meet the ever-stricter compliance rules in other heavily regulated industries.
When I came into the automation market,
I assumed that it would be sold and delivered in the same way
and to the same clients who had bought BPO
but what we’re seeing is that it is the industry-specific processes that clients want to scale quickly -
claims processing, securities processing and fund administration, order processing, fare distribution, etc.
rather than the more traditional areas provided by outsourcing and shared services operations in F&A, procurement, and HR.
These industry-specific processes are more attractive in the short term
because they tend to run on old technology.
The processes have not been “optimized” or “commoditized” precisely because the processes are not generic,
and companies have just thrown bodies at the problem as there has been no real technology solution.
What’s particularly interesting is that
one of the smartest consulting companies is now looking to UiPath to help them to build
an industry-specific “verticalized” offering in mortgage processing.
They will take the operation from one the US’ largest banks
and instead of just outsourcing it, they’ll partner to share the investment and returns,
using UiPath as the tool to bring on additional business from the other mortgage providers.
Well, I’ve banged on for a bit
but before I finish and move to questions,
I have a call to action.
Download the UiPath software for free
and yes, this QR code will work, and have a play.
Further, over the summer, all of our online training will be made available free to everyone.
As part of that training, you will have the opportunity to automate processes in a mini PoC or pilot
and we or our partners will support you free of charge.
What we’re then expecting to see is hundreds if not thousands of use cases across geography, industry, and service line.
For the service providers and consultants,
partner with us and cherry pick the companies that most closely align with your capabilities.
For you corporate business users, try us or talk to one of our current customers.
I know it’s a bit of a curse, but we do indeed seem to be living in exciting times.
Thank you.