Rumors have been around for some weeks, and now we have confirmation. Microsoft acquires robotic process automation (RPA) vendor Softomotive, and – without doubt – shakes up the RPA market forever.
The immediate conclusion? RPA is here to stay. It’s not a bridge technology, not a band-aid or a short-term fad. When a giant like Microsoft invests in RPA technology to bolster its intelligent automation ecosystem, doubts about the technology’s relevance in the market are erased. Microsoft would not be extending its presence in this space if it did not see a strong return on investment. In essence, the move cements RPA and intelligent automation technologies as major components of our future.
But why Softomotive and not one of the big three RPA vendors? Automation Anywhere (AA), Blue Prism and UiPath are heavily ventured and publicly financed with UiPath at around $8 billion, AA at $7.8 billion and Blue Prism (as of May 20, 2020) showing a market cap of £1.15 billion. And while the client roster of any of the big three would surely be enviable, Softomotive reports just 8,000 RPA clients. And since Microsoft claims its automated workflows tool Power Automate is deployed to 350,000 clients, it’s likely all 8,000 Softomotive clients are already Microsoft clients in one way or another.
This acquisition isn’t about customers, it’s about capability.
Microsoft entered the automation market with Flow, later renamed as Power Automate, to mixed reactions from industry experts. Its functionality was limited and nearly impossible to use outside the Microsoft stack. The move by Microsoft to incorporate a tool from an independent vendor like Softomotive helps break down some of these barriers. Whether the initial perceptions of Power Automate were true or not, the company is clearly taking steps to counter them by bolstering its growing automation offering with a strong assisted and unassisted capability.
What does this mean for the automation market?
Certainly, the board rooms of the big three RPA vendors will be discussing what this means to their business strategies and how to react to a new, large player entering the market. For one thing, we can expect immediate pricing competition in the market. Microsoft already announced Softomotive will be available at no additional cost to existing automation clients. While exact prices are not yet published, VP for Microsoft’s Citizen Application Platform Charles Lamanna referred to “uniquely affordable pricing,” further supporting the expectation that this will be a low-cost model.
Furthermore, we expect to see Microsoft bundle its automation tools with other products already available across the Azure platform. All of this will be geared toward low-code, no-code use and “citizen development” style deployment to every desktop. Power Automate is already part of the Office 365 suite, giving huge numbers of people – many of whom don’t even know it – automaton capability.
Softomotive CEO and Co-Founder Marios Stavropoulos was quoted saying “One of our most distinguishing characteristics, and an indelible part of our DNA, is in unswerving commitment to usability … We have always believed in the notion of citizen developers and, since less than two percent of the world population can write code … we believe the greatest potential for both process improvement and overall innovation comes from business users.” While the debate between citizen development and centers of excellence will endure in the automation community, we feel sure the market power and broad reach of Microsoft will be a boon for both the citizen developer movement and attended automation adoption.
How has this increased Microsoft’s overall automation capability?
At ISG, we use a unique framework to guide clients through the intelligent automation journey. We help them avoid the constant impulse to see everything like a nail when you’re holding a hammer. We coach our clients to avoid find/replace automation and consider the wider potential for a multi-tool environment that can transform processes and workflows rather than simply cut humans out where possible. We advise clients to think through the actions taking place in their operations: copy/paste, look, read, decide and communicate. Microsoft has point solutions in most if not all of these categories and will likely integrate various capabilities to create a complete automation platform. An early indicator of this is the widely anticipated integration of a conversational AI capability called LUIS2 in MS Teams.
Source: ISG Automation
What will the big three RPA vendors do?
We expect the big three RPA vendors to leverage their positions as trusted market leaders to demonstrate the maturity and track record of their automation capabilities, especially in environments and applications that are not Microsoft-owned. By now, RPA products from the big three are more well-integrated with intelligent automation tools both inside and outside of the Microsoft ecosystem and stress-tested for critical business processes at some of the world’s largest businesses.
The real question is can Microsoft integrate this new capability and its other point solutions into a one-stop-shop for intelligent automation, price the offering competitively and get it to market fast enough to beat the big three? Blue Prism, UiPath and Automation Anywhere have each been pursuing an end-to-end intelligent automation solution for several years now and are further down this path with teams of people dedicated to making it a reality.
Being big isn’t always an advantage, and Microsoft needs to prove that it is nimble enough to react to the market and bold enough to challenge the experienced players at their own game. For now, this is a ripple in the broad context of the automation market. To make a tidal wave, Microsoft will need to move fast, be bold and prove some early quick wins in its newly acquired competency.
Whatever happens from here, we believe this will be a good thing for the industry. It demonstrates the strategic value of automation and accelerates the race to develop an end-to-end intelligent automation solution that will likely to change the face of business forever. Contact us to learn more.
About the authors
Andreas Figueiredo Lüth leads the ISG automation business in DACH and is an expert in automation, shared services and outsourcing, restructuring and internal optimization. He has extensive expertise spanning from strategy development to sourcing transactions, from transition & transformation to operations. His know-how in dealing with financial and strategic issues allows Andreas to bring great benefit to ISGs clients. Andreas Figueiredo Lüth brings more than 19 years professional experience in Finance and information technology (IT) to ISGs clients.
Wil is the regional lead for intelligent automation across Northern Europe. He is an experienced technology and business consultant having led complex programs involving IT transformation, business operating model and people change. With a background spanning Transport & Logistics, Financial Services, Outsourcing, Healthcare and Telecoms, Will has a breadth of sector knowledge. He helps some of the world’s largest and most important firms develop and deploy their automation strategies.