Microsoft’s RPA chess move
Microsoft accelerates RPA with the Softomotive acquisition on May 19, 2020. Softomotive, founded in 2005 and located in London, is a provider of robotic process automation (RPA) with strengths in desktop (attended) automation. With a single acquisition, Microsoft accomplished several strategic objectives. We’ll explore why Microsoft bought Softomotive, as well as what it means for the broader RPA market.
Why did Microsoft do this acquisition?
Softomotive offers both attended (WinAutomation) and unattended (ProcessRobot) RPA capabilities, but lacks the end-to-end, enterprise capabilities compared to #1 UiPath. As a result, both Gartner and Forrester rank Softomotive below the top-tier RPA players. Gartner considers Softomotive a “niche player” (July 2019) and Forrester classifies them as “strong performer” (October 2019). In fact, Softomotive started with robotic desktop automation (RDA), and that legacy capability now complements Microsoft’s cloud-first automation strategy. Read on.
Like Softomotive, Microsoft provides both attended and unattended RPA through its PowerAutomate platform. However, Microsoft started with cloud-based UI Flows for screen scraping of legacy green screens and recording various keystrokes and clicks. In 2019, Microsoft launched the PowerAutomate platform – an extension of its Power platform – and rebranded and incorporated its UI Flows workflow capabilities. Microsoft was in the RPA game. Unfortunately, because PowerAutomate is hosted in the cloud, running attended robots on desktops is a challenge. Softomotive to the rescue. Microsoft will leverage WinAutomation to close the desktop automation gap. But, wait, there’s more.
Analysts also questioned Microsoft’s gap with unattended automation compared to UiPath and AutomationAnywhere (similar to BluePrism’s apparent gap). While Softomotive’s desktop capabilities address Microsoft’s attended automation gap, Microsoft will fill its unattended gap with UI Flows. In our opinion, this makes sense. To become competitive, Microsoft will need to improve UI Flows’ current design interface, which is lacking compared to the big three RPA vendors. But not to worry, Softomotive has that covered as well. The acquisition represents a major upgrade to Microsoft’s web design interface. Finally, Microsoft picks up improved surface automation capabilities that is a core RPA strength to move beyond simple screen scraping.
What does it mean for RPA?
First, Microsoft validates the RPA category as well as RPA’s role in intelligent automation (IA). Microsoft raises the stakes and applies pressure on the incumbents. Further, and as already mentioned, Microsoft fills several RPA product gaps with a single, modest acquisition. In fact, it does more than fill those gaps. Microsoft extends the value proposition of its existing product families while also increasing consumption for Azure.
We expect additional consolidation in the RPA vendor space. Microsoft joins Appian (bought Jikoda) and BluePrism (acquired Thoughtonomy) with their deal. UiPath acquired two process mining vendors in late 2019. In addition, enterprise cloud platforms like SAP, Salesforce (a recent minority investor in AutomationAnywhere), and Oracle are extending their SaaS product offerings with RPA.
Microsoft is more likely to add to its automation and AI product portfolio with smaller, more manageable acquisitions, than to acquire one of the big three RPA vendors. In addition to the Softomotive acquisition, Microsoft led the $30 million Series B financing round for FortressIQ (May 13, 2020). FortressIQ enables process mining and understanding (read how process understanding drives RPA success). Although we won’t rule it out, Microsoft probably decided that buying one of the big three may be too rich an acquisition (UiPath is valued at $7 billion).
Analysts believe that Microsoft will embed RPA into its many product families using the PowerAutomate platform. To cite one example, many RPA use cases start with email or Excel spreadsheets, which enables Microsoft to easily extend its Office 365 value proposition.
Microsoft’s next chess move
Looking to the future, Microsoft is well-positioned to broaden the business value to customers with hyper-automation capabilities. These include natural language processing (NLP), workflow orchestration, intelligent document understanding, and combining RPA with artificial intelligence (AI) and machine learning (ML) to create intelligent automation.
There are a few unanswered questions about Microsoft’s RPA strategy and next move. With PowerAutomate’s focus on rapid deployment, citizen development, low price points, and small-to-midsize deployments, we wait with interest to learn how Microsoft will achieve enterprise scale and performance to compete with the big three for global enterprise customers. In addition, we see the RPA vendors start to separate into those that provide a layer on top of legacy products with their open platforms and architectures, and those like Microsoft that will embed and/or connect with proprietary products. Stay tuned for more chess moves.