Robotic Process Automation
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In recent years concepts like Industry 4.0 and Business 3.0 strongly appeared in mainstream awareness. Software robots are becoming a significant part of it, making Robotic Process Automation (RPA) one of the fastest-growing global markets. Companies worldwide see RPA more as an inherent part of their ventures than a cost generator, adopting this technology faster than ever.
At this very moment, we should mention a very repetitive, mundane, tedious, and almost ubiquitous RPA definition saying that software bots can free employees from... repetitive, mundane, and tedious tasks. That is, of course, true, but there is a slightly broader and deeper sense in it.
To some extent, we can say that the RPA robot resembles a virtual worker. It simulates human activity in a computer environment, performing defined, routine actions - unlimited times or according to a given need or schedule. The bot conducts these tasks faster, with greater efficiency, and within a narrow margin of errors (depending mainly on the preparation method or interference in the bot code).
Looking at emerging trends we could also say that RPA is no longer about repeating tasks after people. More and more it is about building "duties" for robots and the platform they operate within.
Referring to the exact sciences, we can say that such software platforms script and handle predefined tasks, enabling "iterating" of many activities. RPA solutions often include AI, which provides the required context and autocorrects to an automated process. It allows the bots to perform their tasks with a narrow error margin.
As we all know, the pandemic has changed the way we work and, in many cases, also the way businesses operate. Consequently, it has also accelerated the process of digital transformation, including automation and thus RPA. COVID-19 and the transition to remote work made around 76% of organizations reach for automation, and this is a trend that will continue in the post-covid era. In the opinion of experts and available research, RPA is becoming an inseparable part of business and even a necessity.
One of the main reasons for the increase in demand for RPA solutions is the cost of employee retention. In each company's best interest, especially its efficiency and profitability, employees' productivity is as high as possible, mainly in large companies from the most dynamically developing industries.
For example (based on SAP Concur research), in German companies hiring 500 people, the time wasted on repeat tasks weekly reaches 5 hours and 9 minutes, which translates into $1,3119,353.45 per year. As a comparison, it is 4 hours and 55 minutes in the US, which gives $1,478,750 yearly. But in Japan, it takes 2 hours and 56 minutes with the cost of $457,600 per year.
However, as RPA solutions become more mature and one of the crucial elements in enterprise development, smaller companies, are also beginning to see the benefits of task automation. The same is true of companies that provide business process outsourcing services, which see software robots as a way to lower the cost of providing services.
One of the main advantages of RPA is automation at a relatively low cost and in a short time. In addition, the implementation and use of software robots are non-invasive, controlling selected infrastructure elements without interfering with existing systems. Otherwise, their maintenance would be burdened with higher costs, and the possible replacement would be difficult and significantly burden the company's budget. And that would be a significant deterrent to companies from investing in RPA.
Meanwhile, it is estimated that over 53% of enterprises have already implemented their first solutions in this technology. Interestingly, 19% of Deloitte Global RPA Survey plan to adopt software robots technology in two years.
As we have already mentioned, one of the main factors driving the RPA market's growth is that companies using the Robotic Process Automation capabilities can quickly and cost-effectively improve their operations' quality, speed, and productivity.
Companies that have decided to implement this technology in recent years have recorded a significant increase in cost-effectiveness due to reduced labor costs. According to Grandview Research, this will translate into an expected total CAGR growth rate of 32.8% in 2021-2028.
Such optimism is rooted in numbers. According to Computer Economics, up to June 2021, 20% of all companies implemented RPA, which raised the 2020's adoption rate to 13%. Gartner estimates that by 2022, almost 85% of large and international entities will invest in, quote: "some form of RPA". At the same time, total spending on this technology will reach $2.4 billion. The RPA market is expected to grow up to $13.74 billion by 2028.
Looking at the parting global RPA market, we can analyze the dynamics of the technology adoption from various points of view. For example, we can check different segments. Each can be defined by a given element, variable, or operation depending on the current need.
So far, North America has the largest market share in RPA, with nearly 37% market share, according to data from 2020. This state of affairs is largely due to the high level of market coverage with software supporting process management as well as automation both in private and public entities.
The benefits of RPA were also appreciated by US government agencies when they introduced them to the budget in 2020. It was an additional impulse that increased the private sector's confidence, which positively influenced the adoption of automation by the market.
Looking at the CAGR index, we should note that Asia, together with the Pacific area, accounted for the highest rate of growth in RPA adoption in almost every industry. The dynamic of this growth is mainly generated by the demand for automation in the business process outsourcing (BPM) sector. But there is one exception - India, with a less strict approach to data privacy and budget constraints.
Businesses can also analyze the RPA market in terms of services and software. The service segment generated a record 61% of overall RPA revenues in 2020. Analysts expect further growth until 2028. More so, enterprises are increasing their expenses on advisory, consulting, and training services related to automation while targeting scalability.
On the other hand, the software segment grew steadily (a steady CAGR) due to the high business requirements resulting from remote work and remote infrastructure access, network security, automated internal data control tasks, and much more.
We should look at the process of adopting RPA solutions from one more perspective, namely local (on-premise) and cloud. Up to 2020, almost 90% of the share in revenues was generated by implementations of software robots in the on-premise segment. It is primarily due to the largest enterprises, the fastest-growing group that implements and uses RPA solutions. It is not surprising that the bots' implementation in such entities facilitates their use on a large scale, with secure access to data - following the company's rules and internal protocols.
However, businesses are more often interested in automation realized by cloud services, especially in recent years. The experts estimate that this segment will grow in 2021-2028 with the highest CAGR of 34%.
Companies implementing cloud services do not have to incur investment costs in IT infrastructure and its maintenance and development. In addition, each enterprise has secured access to data in real-time - regardless of the place and working environment - which is particularly important for entities with a dispersed structure with distributed working environments.
The events of recent years and months, caused by the pandemic, the general condition of economies, as well as events created by geopolitics forced companies to look for new, technology-based strategies.
Retail (with e-commerce), manufacturing, telecommunications, and selected sectors of the IT industry experienced a downturn - sometimes very significant. Paradoxically, some companies from the same markets but in different sectors noted a considerable increase in demand. Like medical and healthcare entities, others were facing increased pressure and periodically reduced supply - especially in the private sector. It happened even though the availability of their services was for some time in deficit.
Such problems affected back-, front-, and middle-office operations and consequently contributed to increased issues with (among others):
All listed problems required a stronger focus on the highest possible efficiency and a well-balanced relationship between productivity, costs, and maintaining business liquidity. Moreover, the current digital transformation had to guarantee a reduction in the number of errors, a positive impact on ROI, and at the same time support employers in maintaining their crews. It also influenced the adoption of RPA solutions in various industries.
Manufacturers are most often associated with industrial robots (automatic machines), whose tasks are to support employees on production lines and perform the most precise work related to handling heavy elements. Nevertheless, companies in this industry are increasingly interested in software robots to improve operational processes and back-office ventures.
In addition, RPA supports reporting and administrative tasks. It is also worth noting that bots also strengthen procedures in supply chains. For example, they fill the gap between repetitive administrative work (pricing and invoicing vendors, as well as accounts receivable, payable, etc.) and manual production on the production line. As a result, RPA helps increase productivity, efficiency, and revenues, thus the company's competitiveness.
According to Acceleration Economy research, in 2021, manufacturing was the industry with the highest percentage of 35% in leveraging the RPA market. Although various researches and surveys point out different data on which industries are top adopters of RPA technology and solutions, we may list the most often mentioned.
Other industries with a fast RPA adoption are Banking and Finance, although some analyses treat them separately. For example, the Grand View Research listed them as market leaders in RPA adoption with a 29% share in global revenue (40% in the US market). And yet, the Acceleration Economy lists only the Finance sector leveraging RPA adoption in 2021 with a 5% market share. Additionally, Gartner's research suggests nearly 80% of finance leaders plan to adopt or have already adopted RPA automation.
Nevertheless, the described industries use a high volume of operations and tasks that can be easily automated - data entries, statement processing, balance sheets, compliance regulations, etc. These are overall time-consuming activities. Their automation leads straight to boosting the effectiveness and efficiency of the organization and benefits from various (automated) analytical insights.
It is worth remembering that the banking industry processes a large amount of information every day, including documents and their templates, payments and withdrawals, certificates, confirmations, etc. Since the vast majority of these are repetitive and schematic operations, they create a natural space for software robots to perform them much faster and with a minimum margin of error. What's more, RPAs are also great for regular audits and compliance processes. Another application area of bots is complex operations on data and transactions.
The term healthcare covers vast areas of activities and regulations related to widely understood health systems, yet it is estimated that their overall share in RPA adoption was around 10% in 2021.
There will be nothing enlightening in the statement that this industry is one of the most demanding -practical and formal. It requires high precision and efficiency in processing considerable amounts of sensitive data. So, the main idea behind RPA robots is to reduce administrative pressure on medical staff and significantly improve patient services.
That means a greater need to automate back-office tasks, digitize data, and provide better and more convenient access to medical analyzes and treatment history. RPA is also helpful in managing inventories, scheduling patient and doctor appointments, issuing prescriptions for the chronically ill, and many more. It all translates into a straightforward relationship - the higher the operational efficiency, the better patient care with shorter waiting times.
Transport and logistics companies belong to an industry where speed and efficiency are essential for the entire business, including its competitiveness and profitability. To achieve this, companies try to improve their processes for end-to-end services.
Increasing efficiency is usually achieved by automating both front-end and back-end processes. Therefore, it is about optimizing order management, order distribution cycles, and combining external supply chain applications with internal tools. In practice, that means, among others, efficient management of:
A highly significant effect of using RPA robots is improving overall customer satisfaction for logistics and transportation companies. That means the automation perfectly fits the customer-oriented approach, which is the goal for the growing percentage of such enterprises.
According to Acceleration Economy data, retail (including e-commerce) and CPG companies provided an 8% of the global RPA market share. In general, retailers strive to run their business as smoothly and efficiently as possible under the given conditions. Here the main challenges most often are:
Answering such problems by automating given processes and tasks, RPA bots brings a set of benefits to retail (e-commerce) enterprises, including:
Qualifying utility suppliers - to a strictly defined group or industry - is not always obvious. Large electricity, gas, or water providers are often a part of the public sector. Many are classified as critical infrastructure units or have mixed ownership with a predominance of private sector entities. The latter often include healthcare facilities, education units, or cultural institutions - depending on legal conditions in a given country.
Interestingly, in 2021, the public sector recorded a 5% share in the RPA market. Therefore, they are implementing this technology in an increasing number and dynamically. Utility companies can automate their operations, including settlements, meter readings (with exception handling), debt service (with debt collection), and customer service. That means large volumes of money transactions, taking care of the security of customer data, processing information between different systems, and handling inquiries and complaints daily. These are the areas where RPA brings the most improvements.
Although the industries mentioned above are the fastest and the broadest in adopting RPA solutions, this does not mean that others must lag. On the contrary. RPA technology is so flexible and universal that companies from less expected industries or sectors may run it beneficially.
The experts worldwide agree that the RPA adoption is still in an early stage despite rapid market growth. However, businesses across the globe show an increasing demand for software robot technology. The growing number of enterprises treat RPA as a strategic investment reducing high volume and rules-based activities with significant error potential.
Considering that customer experience is viewed nearly as a virtue in almost all industries, companies adopt RPA for a wide range of operations. According to the Deloitte Global RPA Survey, 85% of surveyed companies underlined that RPA exceeded their expectations in non-financial benefits, like accuracy, timeliness, and flexibility. In addition, 38% of managers pointed out compliance as the main benefit.
It is worth emphasizing that while the Robotic Process Automation market is constantly growing, software robots are increasingly becoming a part of much larger and technologically wider ventures related to Hyperautomation.
Industries, especially large ones, will increasingly focus on implementing environments that enable automation, which goes far beyond the capabilities of the selected class of IT solutions. That is why in business, there are more and more references to automation projects combining: various RPA technologies, Artificial Intelligence (AI), Machine Learning (ML), Big Data, Process Mining, OCR, Intelligent Business Process Management Systems (iBPMS), supported by low-code, no-code and other solutions.
Nonetheless, we can see RPA adoption by the widely understood industries as a road leading in one direction. It is hard to imagine any turning point. In our times, software robots are the inherent part of a well-managed and prospering business.
More information on the widely understood RPA automation is available on our blog.