The Technology Marketplace
The issues outlined here may have led you to think that the value of AI is overestimated, and, in the short term, that is true. It’s trendy, it’s on topic, and it can often give a fresh coat of paint to market and sell a venerable old product. But in the longer term, AI will be transformative and play an increasingly significant role in any automation situation. So, when we look at the market and how it is structured today and for the next few years, we need to be cognizant that it may look quite different in 5 or 10 years’ time because the tools we use to change business processes and automate are themselves evolving, both from a technical and a philosophical standpoint.
The late 1990s brought an onslaught of ERP projects and heralded the era of business process reengineering (BPR). Out of this came process modeling, methodologies such as Six Sigma, and technology giants such as SAP. But the philosophy that drove that era of automation was founded on the belief that there was a “right” or “correct” way to do things. As a result, processes were benchmarked; for example, if Mercedes, Toyota, or Ford had the most efficient production line, all the other car manufacturers would copy it. It is hard to comprehend how profoundly this era altered the world of business, but there is no doubt that it was genuinely revolutionary. Fast-forward to 2021, and, though seemingly good at the time, such approaches have left us with expensive, hard-coded, complex, and difficult-to-change legacies. In practical terms, if your organization has focused its efforts on an SAP, Infor, Oracle, or similar set of business applications for the last 20 years, the idea of ripping and replacing it is not an idea at all; it is unthinkable.
In other words, what worked in the late 1990s and early 2000s does not work so well today. Now, we live in an agile world; we live in a world where we all have had to accept and deal with unexpected upheaval and change. There is a dawning realization that business process activities need to be equally agile and adaptable; few have any appetite to be locked in again to a fixed way of working. Business attitudes and approaches to automation are also evolving, embracing a philosophy of adaptable, beneficial, and affordable over the now-dated philosophy of faster, cheaper, and better. Although the organizations I talk to in both the public and private sectors understand that, albeit often unconsciously, it’s a more difficult shift for technology vendors to embrace.
The harsh reality is that many process automation vendors have been around a long time. They have built up lucrative client bases that provide them with a steady stream of maintenance fees—to the point where maintenance fees are the largest source of revenue for some vendors. And, though this may come as a surprise, despite all the hype around cloud computing over the last decade, much, if not most, of that legacy revenue comes from on-prem deployments. Moving customers from on-prem to the cloud is appealing to process automation vendors as it ensures annual subscriptions that can pay more over time than maintenance fees ever could. The problem is that any such a shift is a massive undertaking. There is no guarantee that the customer will remain a customer, as the customer knows that they can select something different, cheaper, or better. As a result, many technology vendors are stuck between a rock and a hard place; they would like to push their clients more forcefully to shift to the cloud but are fearful of what might happen if they push them too strongly.
Our analysis indicates that many legacy vendors will sustain that status quo and live handsomely off maintenance fees that will slowly dwindle over time. The old guard will be replaced by the new guard, including cash-rich RPA vendors who sell effectively into this quick-fix market mentality and can grow inorganically if they so desire. If their investors are to be believed, and this is the future of process automation technology, the long-standing BPM vendors will be replaced and acquired by the incoming, fast-growth RPA vendors. However, I do not believe that analysis to be correct. I think that, although accurate to a point, it is only a tiny part of a much larger automation market evolution.
Multiple Tools for Multiple Jobs
If you were only to read the trade press and analyst reports, you would likely believe that the enterprise automation market consists of BPM or DPA (digital process automation) vendors, as they prefer to be called today, alongside RPA vendors. In reality, enterprise automation technology is much more expansive than this. It encompasses everything from rules engines to case management to chatbots and extends further through the world of document capture, blockchain smart contracts, and beyond. Added to this is the fact that many business applications designed to manage inventories, accounts, and HR are essentially automation systems in their own right. There is no one-size-fits-all approach; there are as many solutions and approaches as automation problems to fix. The scope of options, as well as the number of them, is continuing to grow. Rules engines and case management systems are not new, but they still work well and remain the right choice in many situations. Newer technologies are creating new markets and possibilities. For example, smart blockchain contracts can eliminate the need for many traditional processes.
Technology has also emerged to automate business analysis. Process and task mining products enable us to analyze at a much more granular level what happens at a screen or a system level. These tools are a major step forward for the automation world, but such granularity frequently uncovers much more than expected—often exposing bottlenecks, workarounds, and redundancy nobody knew about and would never have discovered by simply interviewing and observing workers in situ. Then, add to this mix a slew of startups and outside investments coming into the market with highly focused AI solutions that can efficiently automate extremely targeted, industry-specific activities. The combination of these trends brings us to a time of immense change, quite possibly the most exciting time the process automation industry has ever experienced—a scary time for some, but one of incredible potential to others.
What’s Ahead for Intelligent Processes
I have been an industry analyst long enough to know that marketing is fast, but true change comes slowly. Even so, it is fair to say that the process automation market is moving rapidly. Though many may be struggling to manage that change, such upheaval brings with it any number of opportunities for buyers, users, and sellers of process technologies alike. There will undoubtedly be many casualties and failed projects along the way, but we are in a place and time where we need to reconsider what value automation brings and what it takes away. It is time to consider the full scope and ramifications of the shifts that we are experiencing in the world at large and in the world of process automation. Those that take an “intelligent” approach to automation will be well-positioned to grow, expand, improve, and truly transform. The late 1990s and early 2000s were a time of radical growth for the process automation industry, but what lies ahead may well make that era appear to have been a practice session for the real race ahead.