HFS Highlight: Automation Anywhere must differentiate its legitimate cloud-nativeness

Automation Anywhere (AAI) doubled down on its ambitious cloud narrative at Imagine 2021 – although no new announcements were made. Its march towards following UiPath in going public continued as a new CFO and COO with prominent IPO and cloud experience, respectively, have been brought in. AAI is going after over a billion knowledge workers worldwide – but not via the citizen developer route – rather through its “single, cloud-native” Automation 360 platform front-ended by AARI (Automation Anywhere Robotic Interface). Its narrative continues to echo the UiPath tagline of “a robot for every person” – while it is also positioning itself as a scalable, enterprise-grade vendor to go after Blue Prism.

Credit where it is due: when AAI rearchitected (for the second time) it legitimately built a cloud-native platform with a microservices architecture (A360), but do the majority of customers and investors care? True, they care about cloud, but do they care about being legitimately cloud-native versus virtualized SaaS enough to differentiate AAI against other firms’ all-guns-blazing cloud marketing? Cloud and RPA are on an unquestionable collision course – fact. But getting there is complicated. The AAI-Google Cloud partnership will go a long way to being a differentiator and validator of the end-benefits of nailing the cloud angle; AAI must keep pressing as hard as it can on its legitimate cloud-nativeness and making customers care.

New leadership in CFO and COO roles with IPO and cloud-brand experience continues AAI’s journey on both fronts

Mihir Shukla, AAI’s CEO, made new C-suite hires top of the agenda at Imagine 2021 – continuing AAI’s march to a possible IPO and an all-around doubling-down on cloud. James Budge joins as Chief Financial Officer (CFO) having shepherded two cloud firms through IPOs. Mike Micucci becomes Chief Operating Officer (COO) from Salesforce where he was CEO and EVP of Salesforce Commerce Cloud.

AAI must help the market understand that it is the only legitimately cloud-native RPA firm. But do clients realize and/or care when the Big 3 (and others) look so similar in their “cloud, cloud, cloud” marketing?

Shukla could not have been clearer in pitching cloud and RPA as a multi (multi) billion-dollar opportunity for AAI. With what he termed “a business poised for disruption,” the AAI idea is to disrupt its own market first. Blue Prism, UiPath, and friends might have something to say about a similar frame of mind, but possibly with less aggressive and ambitious narratives.

Approximately 60% of new customers are choosing the AAI public cloud option (a further 5% opt for the hybrid option), and Shukla sees the on-prem model as being “dead” within 2-3 years—although it’s worth noting that RPA operates wherever processes operate… and on-prem processes aren’t going to totally disappear anytime soon…  See our separate report myth-busting of RPA truths and lies for 2021.

The “for every employee” narrative also came across on numerous occasions at AAI Imagine. The same benefits are widely cited throughout the RPA market of a single platform, scalability, speed of new deployments, agility, citizen development, and so on… and AAI made many of these key self-identified differentiators and ways it is winning new business – while also picking up on three main themes:

• A single platform (A360, more on this later), including AAI’s IQ Bot, Discovery Bot, AARI, RPA, and range of other technologies – with plans to integrate more and more with Google in that latest big-name partnership; see our separate take on the original announcement.
• Cloud-native (legitimately): at 1/5^th the cost of a legacy on-prem platform (so AAI claims) – cloud-native is transformative for AAI too – and as public cloud hosting costs plummet – the benefits reach both AAI and customers. When it launched A360, AAI made architectural decisions to go down the container and microservices rather than monolithic architecture route – and that remains a core benefit of a cloud-native strategy. When it comes to educating the market on AAI’s view of its cloud-native differentiator is… there’s less that appears to cut through… but it’s very possible that’s just where the market is at – and so AAI must zone in on what “cloud-native platform” specifically means for their customers versus their competitors’ versions of “cloud washed” (AAI’s term for virtualized SaaS) RPA.
• “Enterprise-grade” is interesting as a competitive positioning to Blue Prism’s focus on enterprise-wide, large-scale deployments. AAI claims 3-times faster scaling with its cloud-native infrastructure and an “infinite scaling potential” – with all employees being able to access from a URL – removing the friction of downloading and running new apps.

“The majority of our top 500 customers are thinking about or are currently migrating to cloud; 65% of new deployments are on cloud – and while some industries are more careful – we’re seeing quicker than expected uptake in highly regulated industries like pharma.”

Mihir Shukla, CEO, Automation Anywhere at Imagine 2021

Cloud may be everyone’s favorite “panacea tech” at the moment, but cloud + RPA is not a slam dunk

While AAI and its competitors are reporting notable upticks in cloud adoption, HFS’s research suggests it’s a complicated decision. We note that its “new” deployments are cloud-led. The numerous enterprises with existing on-prem RPA implementations are often not on the cloud party train and choose to stay on-prem for a host of reasons. HFS interviews with twenty automation leaders yielded the pros and cons depicted in Exhibit 1. The potential for lower costs and less infrastructure management is very enticing. But enterprises question whether the migration of its existing RPA environments to cloud will yield benefits worth the time, effort, and cost. Especially when most of what they are automating is also on-prem. We see a best of both starting to emerge as a consequence – existing deployments stay on-prem and new deployments are in the cloud. This is contributing to AAI’s cloud growth.

Exhibit 1. Enterprise perspectives on the pros and cons of cloud + RPA

Source: HFS Research, 2021, N = 20 interviews with global automation leaders

AARI is expanding beyond being a digital assistant – to helping AAI push automation to more people – but NOT as citizen developers… time will tell what the endgame is and whether it works

Aside from cloud, AARI is AAI’s other foray into something new and potentially differentiated. AARI is now being pitched as a front-end to AAI’s A360 platform – the one intended to bring in nye-on every knowledge worker out there (estimated over 1 billion by Shukla) as opposed to putting all its eggs in the citizen developer basket. AARI was originally designed as a digital assistant – but is now AAI’s fastest-growing product of all time. It draws from automation libraries and can build automations based on components. The idea is that each user has an AARI license, which can draw on existing automations creating a one-to-many relationship.

AAI and Google Cloud are pressing on with their aims of cloud-RPA integration and building industry-specific solutions – expect more later in 2021

Google Cloud and AAI are presenting a shared vision for how their partnership can deliver a competitive advantage to customers, whether that’s by efficiency, speed, and so on. A deep technical relationship will underpin their go-to-market and they’re aiming for success stories “customer by customer and industry by industry.”

AAI and Google’s partnership is “deepening by day” despite no specific announcements at Imagine 2021 (although Thomas Kurian showed up for a virtual fireside chat with Mihir Shukla). The focus areas of specific vertical solutions, including co-creation, and leveraging GCP skills remain, as does the integration between both firms’ technologies. The focus industries remain largely as banking and financial services, retail, healthcare, supply chain, contact center/BPO, and life sciences. The building blocks from Google are its vision, AUTOML, speech, and NLP technologies, and from AAI its Discovery Bot, IQ Bot, Enterprise, and Bot Insight.

The ambition is to create a single platform and be the world’s best platform for digital transformation; more announcements were promised in the next few months.

Thomas Kurian, CEO at Google Cloud, pressed on the need to rearchitect business processes which undoubtedly ties into the industry focus.

“Expectations for cloud (and any emerging technology) need to translate into a long-term vision – which involves making business processes as smooth as possible. Better processes and user data is what people want from their technology partner.”

Thomas Kurian, CEO, Google Cloud

The Bottom Line: If AAI can find a narrative that nails the benefits of a “cloud-native platform” to differentiate in a rapidly expanding market – then there’s game-changing potential

We give AAI credit for creating a cloud-native RPA platform. We also think the Google partnership has legs if it can execute. We even think AARI may be a stroke of genius to front-end RPA and get people to automate without the pain of having to become citizen developers. However, if AAI cannot make enterprises understand why its approach to cloud + RPA is differentiated and what value can be realized because of this, then it is much IPO hype about nothing.