RPA suddenly becomes the eye candy of Chinese investors. Merge and new financings alternatively come. When AI becoming a trend, it is time for RPA to welcome a renaissance.
Deloitte and NICE released a whitepaper report regarding Robotic & Cognitive Automation (R&CA). The robotic process automation(RPA) is regarded as an important component in an artificial intelligence (AI) era. The R&CA time comes under the big topic of robotic process automation and intelligent process automation (IPA).
RPA has been mentioned frequently in this decade. It is programmed to follow the workflow and perform tasks without human intervention. The traditional RPA aims to relieve human from doing repetitive and procedural works in massive volumes, such as bookkeeping, customer service and so on. With the development of AI technologies, RPA is upgrading into IPA and is expected to perform more sophisticated works with cognitive training and others.
Previous research released by Deloitte in 2017 indicated that enterprises responded that they agreed that RPA would substitute 20% of full-time positions. It was believed that the financial advantage of using RPA could be recognized in a year. Approximately 72% of respondents had the willingness to adopt RPA into practice.
The high acceptance of RPA in the research implies a blue market. The top three well-known RPA companies, UiPath, Blue Prism, and Automation Anywhere, are soon entering their third decade, while most Chinese RPA companies are experiencing their first decade. Except for Blue Prism, UiPath and Automation Anywhere are still private companies, but the Chinese RPA company i-Search (艺赛旗) founded in 2011 had gone public since it landed at the New OTC Market from the mid of 2016 and was delisted at the end of 2017. Blue Prism went public in 2016, only several months earlier than i-Search’s IPO. To sum up, public companies specialized in RPA are less than a hand and there is plenty of room to grow.
Development is accelerated in China, though the RPA industry in China is still at an early stage. Except for i-Search, Cyclone (弘玑), Uibot (merged with Laiye Tech), EncooTech (云扩科技), and others remain private and are exploring opportunities. R&CA is a chance to use AI technology to simplify the workflow and elevate operational efficiency. Unlike other AI applications are mostly used by humans, R&CA is a co-worker, or colleague, under the working scenario.
R&CA can be regarded as a concept of evolved RPA, and hence we use RPA in general for all following contents. RPA-related investment is trending up recently. UiPath raised USD 568 million in its Series D funding round in nearly two months ago with an approximate valuation of USD 7 billion and Automation Anywhere received USD 300 million from SoftBank Vision Fund at the end of 2018. EncooTech announced on June 25 that it received tens of millions of US dollars in Series A from GSR Ventures (金沙江创投) and FutureCap (明势资本). Hot cash bets on the future the RPA.
Traced back to 2000, RPA startups came up but failed to attract attention, and China was even untouched. But the ascending heat in RPA brings eyes in the industry. There are three major factors for the rapid growth of RPA in this decade: technological, economic, and demographic factors.
It is easy to understand the technological factor. RPA’s intelligence level depends on the entire ecosystem and AI development. A standardized workflow and large volume are the prerequisites for enterprises to adopt RPA and thus the discovery of such scenarios decides how big the playground is for RPA; the algorithm determines if the RPA can handle different tasks with varied ranges from easy to difficult and from simple to complex. Our expectation towards C&RA is mainly due to the rapid development of AI technology and we believe it is the best time for RPA to evolve along with other co-existing technologies to better serve enterprises.
As to the economic factor, to sustain a growing economy requires increasing productivity, which can be realized by technology and innovation. Economic development and technology mutually impact each other as indicated by industrial revolutions. From another angle, the S&P 500 Index has grown from 1999’s 1300-level to 2019’s 3000-level and these companies represent the growing need for their productivity and profitability.
RPA companies are to-business (to B) business and mainly to large companies because only the volume size and the complexity of these enterprises’ workflows can afford RPA services – No need to take a spear to kill a fly. The customization of RPA is still an unneglectable cost for RPA companies, but the situation should be able to better off after introducing C&RA when RPA has a chance to learn and work as a human.
Regarding the third factor, the demographic one, we need to look at the demographic data, which has been introduced in other EqualOcean’s healthcare-related articles. The wearing demographic dividend in the West and in East Asia has proposed higher demand for the labor force, and RPA sets people free from repetitive and trivial works and indirectly allows people to participate in more complicated tasks that can only be handled by humans. The most-aged country Japan has the highest automation level not only in industries but also in daily life. So are the West, where the natural birth rate declines and faces an aging crisis.
The IPA is a must but how long it will be realized widely is the most concerned. Indeed, as we mentioned earlier, there are public RPA companies whether in China or in the West. However, Blue Prism reported losses and i-Search faced a profit decline from 2016 to 2017 (the last financial statement before privatization).
All other AI technologies like autonomous driving will be the future for sure, but how far is the future? The current challenge is to educate the market and accelerate the RPA adoption process. Those who succeed in the market education can enter the next stage, the real development time, from the entry-level survival game.