03 April 2020
Recent investment in artificial intelligence (AI) has the potential to redefine the role of Robotic Process Automation (RPA), transforming it from an invisible and efficient task performer to the independent builder of business solutions.
RPA is the technology that allows for computer software, or bots, to execute a business process by mimicking the actions of humans.
It has already become a silent but effective force within many organisations, working behind the scenes across all industries to enhance inefficiencies and drive results.
“RPA has proven its efficiency at business processes involving administrative work," explains Sean McCarthy, a Managing Director in Macquarie Capital's Telecommunications, Media and Technology (TMT) business. “It has already transformed the process-driven parts of various sectors such as health, logistics, insurance and finance."
McCarthy points out that because much of this reform has been in streamlining customer-facing services, many people may have experienced the impact of RPA without even realising it.
“When you call to apply for a credit card, you are no longer usually going straight to a person in a call center - you're answering a series of automated responses and the way you answer them will take you down a different path," he notes. “That's RPA."
“Another example is in accounting software where RPA sits on top of the workflow and prompts you to do things like upload receipts, then pulls together all the data you need to reconcile accounts."
In fact, RPA has become so ubiquitous in this field that AI provider UiPath estimates that as much as 100 per cent of all travel and expense report processing can be automated. More broadly, McKinsey estimates the total automation potential of the finance and insurance sectors at 43 per cent.
And yet, despite both the obvious benefits and high uptake, to date, RPA has also come with its own set of limitations.
"RPA works by applying logic-based rules to known data," says Tej Shah, Managing Director at Macquarie Capital TMT. "In other words, it replicates specific tasks. If it's given data that falls outside of this scope, the bot fails and human intervention is needed."
"This is time-consuming, costly and complex, especially if you're looking to scale RPA across a whole enterprise."
Shah says there is real potential for AI to work together with other technologies such as machine learning and natural language processing (NLP) to overcome this challenge.
"Together these technologies could monitor what humans are doing and immediately learn from that, so that the parameters of what they can deal with begins to grow, almost exponentially."
"When artificial intelligence, RPA and other technologies such as machine learning all work together, any concerns about time and cost - and most importantly, scalability, begin to disappear."
Tej Shah, Macquarie Capital
RPA companies also recognize this. Almost every major player in the RPA sector is now putting research and development funds into integrating AI, and investors are piling in to help them.
Most notably, in 2019, market leader UiPath raised $US568 million in a Series D funding, giving the company a valuation of $US7 billion. UiPath says this money will be used to develop decision automation, machine learning and AI algorithms, as well as to help companies “accelerate their RPA+AI journey."
In November 2019, Automation Anywhere raised $US290 million in Series B funding to take its valuation to $US6.8 billion, up from $US2.6 billion just 12 months previously.
Heavy investment is helping contribute to exponential growth in the sector. In 2018, Gartner estimated total RPA industry revenue of $US846 million. For 2019, it forecast that revenue to reach $US1.3 billion, an increase of approximately 54 per cent. By way of comparison, even the fast growing 3D Printing and Rapid Prototyping Services industry is set to grow revenue by just ~29 per cent in 2019-20, according to IBISWorld.
Another forecast from Forbes Business Insights suggests RPA's compound annual growth rate (CAGR) will continue at 22.3 per cent from 2019 until the end of 2026.
Sean McCarthy argues that the unprecedented investment and work going into RPA means it will be one of the key technologies that shapes the next 10-to-20 years.
“When it comes to RPA's potential, we're still in the early stages," he says. "But once it gets going, things will happen quickly."
"Eventually, the combination of AI and RPA will mean that we won't just see bots replicating processes, they'll be analyzing, refining and improving them - not in isolation but in the context of the entire organisation and its objectives."
"This will force the structure of organisations to change too. Managers will no longer simply manage people, they will manage a team of people complemented by a group of bots."
"Bots will play a larger role improving efficiency and productivity, thereby opening up new possibilities for human creativity throughout many industries."