Back office accounting, billing and customer service is going robotic. Examples of this trend towards hyper business workflow automation include turning paperwork into electronic records, automatically updating payment details, and adopting artificial intelligence and cloud computing to identify fraud and waste. It’s all about automating repetitive tasks.
There are many startups in the new robotic process automation (RPA) space and many are leveraging recurring revenue business models. Virtually every industry with significant back office operations represents the addressable market for this emerging technology.
The RPA industry was estimated to be $1.7b in 2018 and is expected to grow to $4.3b in 2022.
According to an article in Investor’s Business Daily, RPA firms typically partner with consultants, information technology services firms and system integrators, ranging from Accenture (ACN) to Cognizant Technology Solutions (CTSH). Mature companies form partnerships with these startups to provide a new digital workforce made up of software bots and also to gain exposure to a new source of growth. RPA bot farms integrate with enterprise software like of Oracle (ORCL), SAP (SAP), Salesforce.com(CRM), Workday (WDAY) and ServiceNow (NOW).
UiPath, one of the industry leader, is reported to have grown recurring revenue from $1 million to $100 million is less than two years. The company has partnered with Accenture, DXC Technology (DXC), Infosys and others.
UiPath’s $225 million Series C, raised just six months ago, valued the business at $3 billion, according to PitchBook. A more recent $400 million in Series D funding from venture capital investors valued the company north of $7 billion, source: TechCrunch → the firm traded at 15x sales. Compare this multiple to the leading cloud computing companies trading at more than 20x sales.
Here is an example of how a bank uses RPA https://player.vimeo.com/video/244856005
Blue Prism, publicly traded - UK, is applying bots to risk, fraud, claims processing, and loan management. It’s the only public entity with direct exposure to RPA.
Here is how Blue Prism describes how RPA impacted one insurance provider:
New business - Improve straight-through processing and life insurance upgrades by combining Digital Workers, such as software robots, and social data to analyze patterns for refined underwriting strategy.
Policy administration – Automate updates to personal bank details and reject or cancel policies with delinquencies by learning delinquency patterns. This can help insurers avoid policy drop outs.
Claims – Automate FNOL submissions into various systems, and provide notifications to loss adjusters by continually assessing risk, predicting fraud and identifying thefts.
Digital mailroom operations - Utilize optical character recognition (OCR) and intelligent character recognition (ICR) to digitize the handwritten, semi-structured data to lower the cost of paper-based customer interactions.
Cognitive virtual assistants – These can improve customer experience while lowering cost of operations and acquisition across voice, chat and social media channels.
Here is an interview with Blue Prism’s CEO, Alastair Bathgate.
Source: Blue Prism
Update May 16, 2019: “Total Addressable RPA market is worth $50 billion, finds new report from management consulting company Zinnov, but enterprises are expected to spend just $2.1 billion in 2019. The Zinnov report also predicts rapid growth, with RPA spend increasing by 37% a year, hitting $11 billion by 2024 and said that the the worldwide talent pool has increased to 210,000.”
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