IPA: a Quiet $10B Market (Automation is En Fuego part 2)
In the last post, we started with this chart, and we focused on RPA (the bright blue at the bottom of the bar chart), the most explosively growing enterprise software category I’ve ever seen. In this post, we’ll focus on Intelligent Process Automation — that middle dark blue series of data in the bar chart.
I’m going to talk about the market dynamics for Intelligent Process Automation, but first let’s take a moment to understand why this software is valuable for the companies that buy them.
- these solutions solve difficult problems for large corporations: processes that orchestrate corporate resources across departments and business functions. It is hard to find narrowly defined or walled-garden applications that do this effectively.
- these solutions can be paired with the cultural adoption of process and operational excellence at companies looking to improve the way their business performs.
- these solutions can more accurately represent the journeys that customers and employees follow to get their work done — rather than simply being screens to edit data from a database.
- if we can say that digital transformation isn’t just about how it looks (the UI, the website), but also how it works — then the process technologies of IPA are the how it works part of digital transformation of a business.
Look to build solutions with IPA when you need a highly tailored customer journey or process to differentiate from your competition. Look to inject these solutions into your back office when you’re finding that your operations excellence culture isn’t keeping up with the growth of your business and your client-facing systems. Look to these solutions who you need to weave a process (journey) between your clients and your team members to get the job done.
Process Automation isn’t Dead, it’s Thriving
I’ve been around long enough to see the notion of process automation declared dead more than once in my career. But the lure of automation- and context for that automation — is just too strong — because that’s where the value is. When we focus too narrowly on a specific task, we can’t see the forest for the trees, and process context helps you understand the forest.
Even Rich Wong said it, while talking about RPA provider UiPath: “The real efficiency comes from companies being able to connect those digital islands”. And so we’ll see RPA firms push into process context in various ways, each according to their own vision for the market. They likely won’t tackle processes the same way that the incumbent process automation vendors do. For starters, the RPA vendors appear to be more focused on automating the discovery of processes via process mining and other techniques. More generally, the RPA vendors are taking a bottom-up approach: “process definitions and context will emerge from the task automation work”.
Intelligent Process Automation (the marriage of modern process automation with AI and ML techniques) is the second stripe of corporate spend in the above chart (dark blue). It starts bigger, and grows a bit slower, than the other two — growing from $10B in 2021 to $13B in 2023. There are big incumbents in this space — IBM, PegaSystems, SAP, Oracle, and Appian. For the bigger firms it is hard to separate how they’re doing in this space from the rest of their b business, but Appian and Pega offer a closer view to the progress in Intelligent Process Automation because it represents a bigger portion of their business. Some of these firms spend most of their effort targeting other market segments (e.g. Appian, which is very much focused on branding as a low-code software vendor).
Funding Follows Growth and Acquisitions
The big fundraising event in this space in the first part of 2021 was Camunda and their $100 million series B round. The round was led by Insight Partners, with participation from Highland Europe.
“Camunda was founded on the premise that making it easy for business stakeholders and developers to automate and improve business processes would have a transformational impact on organizations,” company CEO and cofounder Jakob Freund said. “It also shows the huge global market opportunity that is in front of Camunda as demand for open, cloud-native process automation solutions that can orchestrate processes end-to-end is quickly reshaping the market.”
Camunda isn’t the only company in the space with interesting news to share: Signavio — was recently purchased by SAP for reportedly as much as USD$1B, in an effort to beef up SAP’s ability to help their clients build better processes on top of SAP’s ERP systems. The best interpretation of the acquisition that I’ve seen comes from Sandy Kemsley’s analysis here, where she argues that SAP is acquiring Signavio to bolster a new Business Process Intelligence unit. Acquisitions like this start to make the math for Camunda’s fundraise make a lot of sense.
In other news, IBM purchased MyInvenio — a process mining software company — for better process discovery in an automated fashion.
“Through IBM’s planned acquisition of myInvenio, we are revolutionizing the way companies manage their process operations,” said Massimiliano Delsante, CEO, myInvenio, who will be staying on with the deal. “myInvenio’s unique capability to automatically analyze processes and create simulations — what we call a ‘Digital Twin of an Organization’ — is joining with IBM’s AI-powered automation capabilities to better manage process execution. Together we will offer a comprehensive solution for digital process transformation and automation to help enterprises continuously transform insights into action.”
These acquisitions add context to the value being put on Camunda as an independent software provider. Camunda is an engineering organization at its heart — and you can hear it in this quote from a TechCrunch article — but this engineering perspective has the advantage of being right, insofar as their software really does enable this:
What’s attracting this level of investment says Jakob Freund, co-founder and CEO at Camunda, is the company is solving a problem that goes beyond pure automation. “There’s a bigger thing going on which you could call end-to-end automation or end-to-end orchestration of endpoints, which can be RPA bots, for example, but also micro services and manual work [by humans],” he said.
Camunda’s software is based on open source software, and based on important standards like BPMN for processes and DMN for decisions.
I’m all in with BP3 in IPA
Not coincidentally, BP3 is heavily invested in the Intelligent Process Automation market and we’ve been building solutions in this market for some time now. Given Camunda is an exemplar of the modern Intelligent Process Automation wave happening now, our firm (BP3) is building compelling and business critical solutions with Camunda’s software. We’re building the kind of applications that once would have been the province of only the largest software vendors in the world. Our own team likes Camunda’s offering for its simple value proposition and developer-friendly philosophy. This stands in contrast to some commercial offerings with proprietary languages and approaches that are hostile to standard software development practices.
I have really enjoyed watching our BP3 team build up a Camunda practice that is, in my opinion, the very best practice in North America. Our team consistently builds great products for our clients, with Camunda. Our team consistently produces great reference-able clients from the work that we do with Camunda, which you can see from the clients we have speaking at CamundaCon every year. And our team consistently creates value for our clients with Camunda. That’s the magic recipe for me.
The wave of IPA may be a bit slower to grow, but it is a large market and there is a lot of activity happening under the surface of that top-line growth as some of the modern software companies are growing much faster than the top-line for the industry segment. I’m bullish on IPA for my own business — but also for the industry and for our clients. We’re going to solve problems with massive customer value in this segment.
I hope at this point you’re convinced that IPA is another critical trend in corporate spending — and that it is happening for a reason (ROI) — and not just as part of some corporate IT fad. Moreover, there are interesting combinations of IPA and RPA… but perhaps we’ll leave that for another post! Leave a comment, I’m interested in your thoughts!
In the next post in this series, we’ll examine what’s going on in the AI Business Operations space, which is an exciting, nascent space. Please share or subscribe!
Originally published at https://sfrancisatx.substack.com.
