The Long Overdue RPA Market Consolidation Takes Off

And finally, the digital process automation universe is righting itself.

For far too long, the market valuations for RPA vendors have been so lofty – so out of this world – that the natural progression of RPA technology being consolidated into digital process automation (DPA) platforms through mergers and acquisitions has been completely stymied. High valuations have been, and still are, a significant roadblock for the many digital process automation and content management vendors seeking to integrate RPA into their evolving intelligent business automation platforms. In an ideal world, these two technology solutions – tasks and processes – belong together in a more elegant, integrated way than the crazy quilt of overlapping RPA/DPA vendor partnerships that were quickly stitched together to get around stratospheric market caps.

Here’s why setting right this muddled state of affairs matters to RPA buyers:

RPA excels at task automation, while digital process automation, also known as simply process automation, manages the more complex, structured, and dynamic processes. In other words, process automation products tackle the big picture, such as accounts payable, order processing, and customer support, or even end-to-end processes such as order-to-cash and procure-to-pay. With this rich process environment, where do tasks fit? Tasks are always completed within the context of business processes – whether those processes are automated, semi-automated, or manual. From a business solutions perspective, RPA and process automation systems belong together to fully address the business process. 

The RPA/DPA world is now righting itself. There’s a clear trend, as these three important process automation and/or content management vendors made RPA acquisitions in the past seven months, while showing how it can be done:

• Appian acquired Jidoka, a small RPA vendor based in Spain
• IBM acquired WDG, a small Brazilian RPA vendor
• Hyland just acquired Another Monday, a small RPA vendor headquartered in Germany

These vendors went through extensive build/buy/partner decisioning and decided to partner in the short term while vetting potential acquisition candidates. Ultimately, they found that buying and integrating RPA products was a faster onramp than building integrated RPA into their process, analytics, and content product roadmaps. Because the three acquisition targets were small, undervalued companies working under the radar, the business cases for these acquisitions were compelling. 

These companies making acquisitions in 2020 join five other process/content/applications companies that have already acquired RPA products and integrated them into their platforms: Kofax, Microsoft, Nintex, Pegasystems, and SAP.

It’s getting really interesting trying to predict which vendors will decide to buy other small RPA companies. For example, when will Salesforce or OpenText make their moves? Or Alfresco? Or many others?

There’s one other big change to watch. The valuations for current RPA market leaders are potentially going to tumble because it will be hard for three leading vendors – Automation Anywhere ($6.8 billion valuation as of July 13, 2020) Blue Prism (£1.28 billion market cap as of Aug 20, 2020), and UiPath ($10.2 billion valuation as of July 13, 2020) – to maintain their incredible market caps. This doesn’t mean they will have done anything wrong. It’s just an economic reality that what goes up really will eventually go down. To counteract this situation, expect these companies to go through their own build/buy/partner strategies and ultimately make additional acquisitions in AI, process mining, and digital process automation. 

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 Blue Prism acquired Thoughtonomy to expand its RPA platform with a cloud-based AI engine that delivers SaaS-based RPA solutions; Automation Anywhere acquired Klevops to maximize collaboration between humans and bots, and acquired StepShot and ProcessGold for tools to track and identify workflows.

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