UiPath on Track to iPaaS

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UiPath

UiPath on Track to iPaaS

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Every tech vendor, whether VC-funded, bootstrapped, or publicly traded, needs to have a strategy; they all do, and they are at pains to impress on analysts and investors alike just how ambitious and groundbreaking their plan is.

Every tech vendor, whether VC-funded, bootstrapped, or publicly traded, needs to have a strategy; they all do, and they are at pains to impress on analysts and investors alike just how ambitious and groundbreaking their plan is. However, almost all lack clarity. Or, to put it another way, their project vision seldom aligns with the reality of the challenges they will face. Not so with UiPath, who detailed an ambitious but practical and clear strategy for future growth at their annual Forward event in Las Vegas this week. The depth, breadth, and detail exposed here surprised us and may serve as a warning to their erstwhile competitors.

Before diving into the UiPath strategy itself, it’s worth outlining precisely what their competitive landscape looks like, as that again proved to be a bit of a surprise. Rooted in the world of RPA, it will come as no surprise that UIPath has traditionally competed against the other two big-name RPA players, Automation Anywhere and BluePrism. Although UIPath does still encounter AA in deals, it claims not to come across BluePrism so much anymore. Arguably, the RPA market, such as it was, has been subsumed into the broader enterprise automation world, so that makes sense. However, CEO Rob Enslin said their real competitor today is the incumbent tech budget holder. What that means in practice is that (as we have long argued at Deep Analysis) buyers have little interest in traditional analyst-constructed market categories; instead, they focus on who can solve their problems. This means that UiPath is increasingly fighting against (and at times partnering with) incumbent stack vendors like ServiceNow, Salesforce, SAP, and Microsoft. Rather than buyers sourcing a Bot license, they are looking for a provider to give them a platform, service, or comprehensive toolkit for enterprise-wide automation.

Hence, the ambitious and well-defined strategy that was detailed here in Vegas. At the highest level, UiPath is building out an iPaaS (integration platform as a service) architecture, but where traditional iPaaS vendors focus on the pure API integration elements (Salesforce Mulesoft, Oracle, Boomi, etc.), UiPath is taking that as the starting point, and bundling or layering in all the features needed for comprehensive business transformation, from process mining to IDP (intelligent document processing). That alone is ambitious as it potentially puts UiPath on a collision course with the mega-vendors. But when one scratches beneath the surface a little, the UiPath approach is more nuanced as, from a sales perspective, it is less focused on the platform technologies and more on enabling the business to use the platform’s power to make targeted and measurable change.

Taking a step back from it all, UiPath’s roots are in RPA; they have a culture that understands that automating tiny repetitive tasks is the key to a customer’s heart. And rightly so, in our conversations with customers at the event, their enthusiasm about automating simple but costly and error-ridden activities such as manual key entry was palpable. Yet most platform vendors come from the perspective of radical massive process change, multiyear, colossal budget, services-led, top-down transformations. UIPath upends this approach, starting at the bottom, identifying the urgent pain points, and working upward throughout the enterprise. In our analysis, it’s an approach that makes great sense and is, arguably, a much easier and more practical sell.

Honing in on a few key elements at the event that caught my attention, it’s worth calling out both the IDP and Communications Mining (ReInfer). From an IDP perspective, there is little question that UIPath is now a key player in that market, and they are happy to win deals from traditional capture vendors. But IDP, or Document Understanding, as they prefer to call it, is, from UiPath’s perspective, just a component utilized in a broader automation project. That does not mean it’s not an essential component; far from it, UiPath has cottoned onto the fact that document processing is a vast, untapped market and is blazing in all guns. On the other hand, Communications Mining still runs a bit beneath the radar. In fairness, this technology is still new to UiPath, having only acquired ReInfer a year ago. Even so, it’s clear that this may emerge as the firm’s magic wand in the future. In short, Communications Mining is the tech that extracts and correlates the intent and inference within messages (be they text, emails, etc.). The tech provides the context to the process or transaction, which has enormous market potential. Suppose they can leverage this with specialist AI, generative AI, task automation, etc. In that case, they will have something that nobody else has, which will open the door to automating activities that currently cannot be automated. It’s still an if; at the conference, we saw plenty of diagrams and outlines of how Communications, Process, and Task Mining (utilizing digital twins and labeled as Continous Discovery) can all work in harmony, but that is an incredibly complex and challenging thing to pull off. We will watch it with great interest over the coming few years.

In summary, then, like every other tech conference of 2023, the marketed theme was how excellent and unique AI is, but that, for me, masked the actual theme of the conference, which was that UiPath is driven to massively increase the scope of what can currently be automated within the enterprise. And after a year of drowning in an ocean of AI hype, that’s a refreshing and welcome shift of focus and one we can likely all get behind. Yes, AI needs automation to be effective, but at the end of the day, though a powerful component, that is what AI is: a component in a much larger tech stack.

In conclusion, what came across with abundant clarity at the Forward VI conference is that UIPath, though rooted in RPA, intends to expand into and tackle the broader business process automation market opportunities. But if we were to think that business process automation leadership was UiPath’s end goal, we would be selling their vision short; their goal is to upend and expand the enterprise automation market dramatically. That’s an ambitious goal, but based on their track record to date, it is achievable. That’s not to say there will be no headwinds to deal with, far from it. Microsoft has much the same vision and is already making stellar progress. Moving forward, in our analysis, UiPath’s competitors are less RPA or established process management vendors; instead, it’s Microsoft. At Deep Analysis, we heard recently from contacts in the Federal Government about the challenges of utilizing already paid-for licenses (such as UIPaths) when something like a Microsoft E5 license appears to offer an all-you-can-eat buffet of automation tools.

UIPath has done well to date, and the success and popularity of this conference are testament to that. Still, the company will need to ensure that the customer journey does not end once a license is sold, for though RPA may be the toehold UIPath needs into larger accounts, ensuring customers fully leverage those licenses and guiding them closely over the coming years will be key to further expansion.

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