RPA Market Growth: Pandemic Fuels Robotic Process Automation
The Rise of Robotic Process Automation: A Market Overview
The filing of UIPath’s S-1 document last week marked a significant milestone for the robotic process automation (RPA) industry. Initially noted by our team in 2017 with a $30 million Series A funding round, the company has since secured an impressive $2 billion in funding while remaining a private entity.
Prior to its latest funding round in February, UIPath’s valuation reached $35 billion after raising $750 million.
The Pandemic's Impact on Process Automation
RPA and broader process automation technologies gained prominence during the pandemic. Businesses accelerated their digital transformation efforts as remote work became essential.
The need to establish more automated workflows, requiring minimal human intervention, became critical when employees were unable to work together in a traditional office setting.
RPA's Emergence and Appeal
Even though RPA had existed for several years, it wasn’t widely recognized within enterprise software circles when UIPath initially raised capital in 2017.
The category’s growing popularity stemmed from its ability to address automation within existing, often outdated, systems. Companies with established legacy technologies – a vast majority not originally designed for the cloud – could automate processes across older platforms without the costly and risky process of complete system overhauls.
Bridging the Gap to Modernization
RPA allows executives to implement a degree of workflow automation, offering a preview of more modern capabilities.
It effectively provides organizations with time to modernize their systems while simultaneously reducing the volume of repetitive, manual tasks common across nearly all industries.
The Debate Around Job Displacement
While some view RPA as a tool for job elimination, it also presents an opportunity to free employees from tedious and monotonous work.
The core argument suggests that this shift allows personnel to focus on more strategic and complex responsibilities.
A Practical Example of RPA in Action
For instance, RPA can leverage established technologies like OCR (optical character recognition) to extract data from forms.
This data can then be automatically entered into spreadsheets, invoices generated, printed and mailed, and notifications sent to relevant departments – such as accounting – via platforms like Slack, confirming task completion.
Looking Ahead: A Deeper Dive
This analysis will provide an in-depth exploration of RPA and the broader process automation landscape.
We will examine market size and dynamics, identify key players and major investors, and ultimately, attempt to forecast the future trajectory of this evolving market.
Key Players in the RPA Landscape
UIPath currently dominates the Robotic Process Automation (RPA) market, holding a substantial lead with 27.1% market share, as reported by IDC. Following closely is Automation Anywhere, securing the second position with 19.4% of the market.
Blue Prism occupies the third spot, accounting for 10.3% of the RPA market, according to IDC’s July 2020 report, which represents the most recent market analysis from the firm.
Beyond the top three, WorkFusion and NTT are also significant contenders, capturing 6.8% and 5% of the market share respectively.
Blue Prism, recognized for coining the term RPA, has operated as a publicly traded company since 2016. Automation Anywhere, remaining a private entity, has successfully raised over $800 million in funding.
Their most recent funding round in 2019 secured $290 million at a $6.8 billion valuation, though this is considerably less than UIPath’s valuation a year later. Nevertheless, it represents a significant financial achievement.
WorkFusion has attracted over $341 million in investment, while NTT boasts a long-standing history as an established vendor, originating in the 1970s.
The RPA market also includes a multitude of smaller companies, such as the open-source platform RoboCorp, Kryon, and Catalytic. Notably, Signavio, a Berlin-based startup, was acquired by SAP late last year for $1.2 billion.
This acquisition exemplifies a broader trend observed last year, where larger enterprise software companies began to recognize the potential of the RPA category and sought to participate. They have been entering the market through internal tool development and strategic acquisitions.
Several notable acquisitions have occurred recently:
- ServiceNow acquired Intellibot, an RPA startup headquartered in India, earlier this month.
- IBM completed the acquisition of Brazilian RPA provider WDG Automation last July.
- PegaSystems integrated OpenSpan, an RPA software company, into its portfolio in July.
- Microsoft acquired Softomotive last May, intending to integrate it with their existing RPA solution, PowerAutomate.
PegaSystems, alongside NICE and NTT, is considered a legacy vendor within the RPA space. Abbyy and Kofax, specializing in scanning and workflow solutions, can also be included in this market overview.
Numerous other smaller vendors globally are striving to gain a foothold in this rapidly expanding automation market, mirroring the acquisitions made by ServiceNow and IBM. It is highly probable that other major enterprise vendors, such as Salesforce and Oracle, will also become involved.
While Salesforce has not directly entered the RPA market, its venture capital arm, Salesforce Ventures, led Automation Anywhere’s $290 million funding round in 2019, demonstrating a clear interest in the sector.
Investment Trends in RPA
A substantial influx of capital into the Robotic Process Automation (RPA) sector demonstrates a strong belief among venture capital firms in its potential for significant development and market penetration.
Consequently, the industry has successfully drawn investment from numerous prominent private equity organizations.
Data from IDC validates this growth trajectory; their July 2020 report projects the standalone RPA market to achieve approximately $2 billion in revenue during 2021.
Furthermore, the firm anticipates total RPA revenue will climb to $5.9 billion by 2024, representing a compound annual growth rate (CAGR) of 36.1% from 2019 to 2024.
Key Investors in RPA
The RPA landscape has garnered attention from well-known investment firms. UIPath’s early funding came from Accel, Sequoia Capital, and Kleiner Perkins.
Automation Anywhere has secured investments from Goldman Sachs Growth Equity, Softbank, and General Atlantic, as well as strategic investors Workday Ventures and Salesforce Ventures.
RoboCorp, a more recent entrant, has benefited from early support from Benchmark and Bret Taylor, Salesforce’s president and COO, as an individual investor.
Catalytic’s investor base includes Boldstart Ventures, Intel Capital, and In-Q-Tel.
Future Investment Outlook
As the RPA market continues to mature, it is anticipated that additional investors will actively seek opportunities in emerging RPA startups.
This expansion will likely extend to companies focused on broadening their capabilities within the broader field of workflow automation.
A Promising Outlook for Automation
Although Robotic Process Automation (RPA) offers significant benefits and has established itself as a distinct software category, its long-term viability as an independent entity is questionable. As organizations progressively decommission on-premises legacy systems in favor of cloud-based alternatives, the nature of workflow demands will evolve.
Consequently, businesses will inevitably seek more sophisticated workflow automation tools. This shift is driving the industry towards a more encompassing Intelligent Process Automation (IPA) category, integrating modern workflow and no-code solutions – a trend recognized by UIPath in its recent S-1 filing.
The expansion is also fueled by the relatively modest size of the RPA market, despite its considerable growth rate. Compared to established enterprise software segments like Customer Relationship Management (CRM), which reached $42 billion in 2020 according to Statista, RPA remains smaller.
Understanding the Market Landscape
IDC positions RPA as a component of the labor-centric automation market, which in turn is a subset of the broader IPA software market. Their projections indicate the IPA software market will attain $30.5 billion by 2024, exhibiting a compound annual growth rate (CAGR) of 13.3% over five years.
Statista presents a more bullish forecast, estimating $74 billion, though discrepancies in category definitions may account for the difference. These figures highlight the substantial potential within the intelligent automation space.
UIPath's Strategic Evolution
RPA has garnered substantial investment, and UIPath’s initial public offering represents the second company in this sector to go public. Recognizing the need for expansion beyond RPA’s boundaries, UIPath recently announced the acquisition of Cloud Elements.
This acquisition will facilitate integration with Application Programming Interfaces (APIs), broadening the platform’s capabilities and providing access to a wider range of enterprise applications for workflow automation.
The Future of RPA
The long-term survival of pure-play RPA as a standalone category is uncertain. However, it is likely to persist as a key element within the larger IPA ecosystem.
This evolving market presents numerous opportunities for growth and innovation, creating space for new ventures to emerge and disrupt the status quo. The future of work is undeniably being reshaped by intelligent automation technologies.