RPA/IA Insights Vol 26: Higher Growth at Larger Scale + Cowen RPA Survey

THE COWEN INSIGHT

Advances in process automation software in recent years has coincided with a growing need for such solutions. This was accelerated by COVID-19. A survey of 150 robotic process automation (RPA) software customers relayed favorable medium-term spending intentions. Increasing digital transformation urgency by the Global 2000 and nascent market penetration is favorable for RPA solution providers. Rising enterprise software investment & the IPO of an industry leader are apt to drive higher interest in RPA.

Robust Growth Is Durable in an Evolving Process Automation Market

Automation of business processes is not new. However, advances in recent years in process automation software have made the tools easier to use & scale. As these solutions improved, the need for them has simultaneously risen. That has only been amplified by the pandemic.

Formerly a cost-driven catalyst, various studies reflect increasing diversity of why automation is being prioritized. Cost reduction remains critical, but it moved from the 1st priority to the 4^th. There’s also clear indication of increasing strategic relevance. 95% of executives are accelerating workflow automation.

When you consider the addressable market potential of automating manual workflows as part of broader digital transformation initiatives the numbers are massive. Analyses by leading global consultancies pegs the low end at over $65 billion and a robust top end projected at $200 billion. With low levels of spending penetration, we think this provides durable growth for RPA and IPA solution providers over the medium term.

Cowen RPA Software Survey Affirms Ample Runway

Our proprietary survey of 150 enterprise RPA software customers relayed favorable medium-term spending intentions for RPA. 97% of participants agree that they expect their organization to materially increase RPA spending over the medium-term.

There are robust RPA spending intentions. They are supported by broad applicability for and drivers of RPA usage. On average 3+ departments utilize RPA within participants’ organizations. 5 of 7 potential options for RPA usage cited by 50%+ of respondents. Further, our survey suggests a fragmented RPA vendor market. Each vendor option was cited by participants. However, there’s also a concentrated market at the top. The top 3 vendors cited 2.5x the 4th highest vendor.

Increasing Awareness & Rising Investment in RPA and IPA

Increasing urgency across the Global 2000 and nascent market penetration are drivers for the sector. Several factors are likely to bring more awareness and investment to RPA and IPA, an industry still largely comprised of private vendors. This includes a growing focus by large diversified enterprise software companies and a recent IPO of an industry leader.