Highlight Report

Blue Prism sale to Tibco—it’s time to go loud, not fade gently into the night

October 20, 2021

The Bottom Line: To reassure customers, Tibco and Blue Prism must quit being coy, align fast to support the end-to-end automation life cycle, and be loud and proud about it.

The firm that invented robotic process automation, Blue Prism, is headed for sale to private equity firm Vista, where it will be folded into enterprise data firm Tibco—if shareholders agree. But what does the $1.5 billion deal mean for current and prospective enterprise customers?

First, we think we can reassure customers that Blue Prism is not about to be broken up and sold for parts. There are the regulatory processes of being listed on the London Stock Exchange to overcome, for a start. This is no fire sale and the price paid isn’t chump change. Operating losses fell in the six months to April 2021 (from approximately $73 million to $30 million). Financially, the business is heading in the right direction, albeit too slowly to please investors.

Second, access to capital and more customers could be just what Blue Prism needs to get its mojo back and with it, the confidence to cut through the RPA-focused hype to reclaim leadership to meet the broadening needs of a maturing automation market. Let’s not forget, this is a market it pretty much started when—working with HFS in 2012—it coined the phrase “robotic process automation” (RPA).

A realistic price, at just less than seven times its annual revenue

At between 6.5 and 7 times revenue, $1.5 billion represents a fair price. Other investors in RPA would be wise to take note. If nothing else, this deal does much to burst the RPA hype bubble and inject some reality back into the market.

Its growth rate has been a problem for Blue Prism, and the source of much of that is the pandemic era, in which competitors have been noisily forging ahead while Blue Prism ill-advisedly went quiet when the world had little else to do but listen. It lost significant mindshare and, with it, growth opportunities.

Blue Prism would say its growth has been in expansion within loyal clients. Its top 50 customers (among its total of 2,000) spend an average of $1.5 million a year with the company. UiPath has romped to 9,100-plus customers to deliver an annual recurring revenue (ARR) of $726.5 million. But, as UiPath reports, only 1,247 of those earn more than $100,000 each per year.

Even within loyal Blue Prism clients, the expansion has not been at the rate the British-founded business may have hoped for. The company released a flurry of new products earlier in 2021 (Interact and Service Assist, finally Dechiper, etc.), bundling them with its revamped “all-in licensing.” However, the view from its customers was that this was too little, too late. Although several months on, some are experimenting with the tech as it’s optically free of charge.

Staff turnover had also hit partner programs, marketing, and sales, just as rivals ramped up their go-to-market budgets.

Timing of ABBYY process intelligence partnership shows why and how rivals have stolen a march

A case in point of marketing misfire: the recent announcement of Blue Prism’s partnership with ABBYY for process intelligence. That partnership has been in play and development for the best part of four years. Yet, Blue Prism chose to announce its take on bringing together the power-couple of RPA and process intelligence in the same week as announcements that the company had been sold. Which news did they expect to cut through?

The integration of ABBYY Timeline with the Blue Prism platform combines desktop user data with process details mined from system event data. A parallel integration with Blue Prism’s Capture enables process models to be pushed straight into the design studio to cut delivery time.

Combining process mining and RPA has become something of a trend among automation platform providers. Appian acquired LANA Labs for its process mining capabilities only last month, while Kryon announced an entry-level free version, indicating how quickly process mining is becoming commoditized unless it is integrated into broader automation processes. And everyone and their cat has a partnership with the category heavyweight Celonis.

That the Blue Prism response is a partnership rather than a build or buy reveals much about its current challenges on innovation and investment.

The Tibco deal arrives just as Blue Prism is waking from its slumber

Blue Prism is now showing signs of waking up. Having finally modernized its product management processes, it is increasing investment in products, and we see no evidence of that slowing as this acquisition plays out.

Indeed, it is in the promise of its product pipeline that Vista may be placing its bet.

The Tibco deal also dangles the carrot of increased investment in sales, marketing, and other go-to-market activities. And with increased access to the market (with Tibco) comes the chance to accelerate—and shout more loudly about—what it has to offer, and that’s going to require wholesale changes at the top. In needing to draw a line, there will be casualties.

Tibco offers a range of automation services to connect data sources. It is an expert in integration and analytics. Blue Prism’s RPA offers services that make use of those data sources in task and process automation. There are upsides for both with heartlands as trusted providers in regulated markets.

There is potential for a quick win for Tibco. It is a leading vendor in master data management (MDM), and RPA offers an extension to its capabilities in maintaining and synchronizing data across application landscapes, especially where legacy systems are in play with little native connectivity.

Tibco also has the infrastructure expertise to realize Blue Prism’s cloud-native ambitions.

Palo Alto-based Tibco was founded before the web got fast in 1997 (four years before Blue Prism). It made its name with what was then revolutionary software that allowed real-time communication in financial markets without human intervention. Vista Equity Partners acquired it in 2014.

Takeaways

Time is not on Blue Prism’s side. The market for RPA may be approaching a reset after 18 months in which enterprises have been biased toward tactical problem solving to meet immediate, often pandemic-driven, needs.

In this acquisition, Blue Prism must draw a line under past mistakes. Get loud and proud and reclaim the narrative. Come back to the market showcasing the pivotal role of RPA when it is complemented by additional functionality. Blue Prism must step up and lead the enterprise charge to enable native automation in the enterprise, where processes are designed in the cloud, end-to-end, across silos to deliver tangible business outcomes.

Is it too late? Many clients still regard Blue Prism as the most robust RPA provider, with the best security, best controls, and the tech least likely to break. But customers are also telling us even this advantage over rivals is closing. And those customers now like the look of rivals’ better TCO (total cost of ownership) and more complete value propositions across unattended and attended and through integrated add-on functionality and products.

It is essential that Blue Prism and Tibco come together fast and be ready to answer customer demands for clarity, helping customers get to value faster, and support enterprises through the end-to-end automation life cycle.

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