We are in an automation revolution, driven by AI and people working hand in hand. And when news like the recent UiPath market cap wipeouts emerge, it creates a cognitive dissonance sparking a lot of debate. In my opinion, the inevitable is happening, but I am surprised how quickly it is happening. So let's break it down.
Late last year, I wrote a blog on RPA’s dirty secret while believing that it will take a few years for the markets to correct course, but the current conflict in Europe accelerated it in a way I did not expect. Today, robotic process automation (RPA) technology remains unsuitable for the masses. All the airport signs with the cute robots did excite the business travelers, but when the rubber hit the road, it was a hard technology to use. Why?
- We needed expensive process discovery and specialized tools and languages
- We needed automation specialists to do any meaningful automation
- And at the end we got brittle results which often ossified a piece of the business that became harder to change and expensive to maintain over time
That brings me to the perfect analogy for the situation, YouTube.
You may ask, “What does YouTube have to do with any of this?”
Prior to YouTube, video content creation and distribution required:
- An expensive video camera
- A technical professional who knew how to use the camera artfully
- A channel for distribution of the video content; this was normally owned by a large media giant.
Today, armed with just our cellphones and YouTube we can immediately create unique content and share it .. and it goes viral. Gone is the steep barrier to entry to create, consume, and recreate. Also gone is the complexity at scale as YouTube solves this for us.
So what just happened?
The man with the camera is what robotic process automation (RPA) looks like today. The concert experience is what the world is craving for when it comes to automation. The art of automation needs to be democratized, atomized, and commercialized. Just like the art of video creation was.
The record breaking IPO of UiPath had marked the attempt of the RPA vendors to democratize the technology into a larger base of users, not just the top of the pyramid. “A bot for everyone.” The idea was to break into the mid-market and below.
The challenge they faced, however, was that even with the aid of AI wrappers on top of the legacy RPA technology, the fundamental issues around speed or cost of automation remained. While the cost of the RPA software on the surface seems affordable by the mid-market, the required professional services, which can be 3-4x the cost of the RPA software licenses, and the overheads of creating centers of excellence and hiring consultants for process discovery, make the technology a non-starter in the mid-market and also for a large chunk of automatable processes in large enterprises.
The RPA vendors find it hard to “land and expand” as they run out of high ROI business processes soon after the first 5-6 workflows are automated at an enterprise. That doesn’t mean that there isn’t the appetite or opportunity to automate more. In fact, what has been automated today is just a tip of the iceberg.
The real appetite for automation today far exceeds the ability of our society to produce automation engineers.
There are only about 18M coders in the world and a very small fraction of them are engaged in business process automation. However, there are about 1B business professionals willing to teach a computer something new about their business — if only the computer was smart enough to understand. These one billion professionals would like to automate with the same ease as someone who uses their cell phone at a concert to record a video, then post it to YouTube. To do that, however, the automation engines have to be rewritten from scratch with both an AI-first and a cloud-first design.
It is no surprise that UiPath has been struggling to democratize the technology beyond the top of the pyramid.
Credit: https://seekingalpha.com
If one looks at the trajectory of UiPath earnings since Q2 2021 (IPO), it shows that the cash infusion from the IPO was not able to accelerate growth. The top of the pyramid was getting saturated while the lower portions were not accessible due to the large cost of the professional services. To make things worse, the war has put a huge question mark on the supply of additional automation professionals needed for future growth. I have spoken with many service providers who are struggling to satisfy their customers’ automation needs today because they are short on developers. In a $38B TAM for RPA, with ~$1B revenue, if the leading RPA platform is struggling to grow, a fundamental shift in approach is required.
While the RPA market is struggling due to lack of developers who can drive automation with the existing technology, the overall $600B TAM for hyper-automation is waiting for the “YouTube” moment in the automation space. We can’t overstate the following fact:
There just aren’t enough coders in the world.
So how do we get the “YouTube moment in automation?” I see three secular trends that will lead us there.
Trend #1: Democratization
Automation will be come accessible to a larger portion of a billion business professionals. The low code/no-code movement promised such a solution, but it has its own issues. In short, business users do not want to learn the complex menus in the general purpose automation tools, and yet on the other hand, feel constrained if the tools are too opinionated.
The automation tools that will succeed will be less menu-driven and more natural language driven. The time is near when everyone will be able to teach a computer a new skill.
Trend #2: Atomization
You might have heard that the attention span of humans is reducing with every generation. From hand written letters that would take weeks to deliver, to emails, to tweets and Instagram. From 2 hour movies to 30 minute TV programs, to 2 minute YouTube videos, down to 5 seconds on TikTok.
The atomization of creation and consumption of content is a multi-generational secular trend that will also shape the future of the automation space. Once the tools that can truly democratize the ability to automate are available, we will see the atomization of automation emerge. From software that we released in 18 months, to every 3 months, to every day today with CI/CD. We will see a new breed of “instant automations” that enable a business user to globally release a new automation to their audience in under 5 minutes using natural language instructions to machines.
Trend #3: Consumerization
Every business is a set of differential business processes and every business employs engineers to automate some of those processes. While the creation of the automations is already hard, the distribution and consumption of built automations is severely anemic to make matters worse. The automation platforms of the future will directly solve for the global scalable distribution of automation just like YouTube did for our videos. At the same time, discoverability and accessibility of the automations will be solved as well. I posit the Action Bar – just like the “search bar” from 25 years ago, will emerge allowing massive consumption of automation by end users at a global scale.
Back to the Future
The businesses will finally focus on the business logic. They will not waste time on how or where the automations run or how their customers, partners, and employees get access to automation. In the end, these automation distribution platforms will enable a new economy of micro-automations, and instead of downloading 200 apps on our phones, we will all be using a single Action Bar with a billion micro-skills backed by a billion users.
One Action Bar – for everything.
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