DISCLAIMER: Do not make any investment decisions based upon this article. It is an opinion piece and not meant as an investment advice.
Microsoft announced the launch of RPA and a new war has begun: RPA vs. IPA. IPA stands for Intelligent Process Automation and is generally viewed as ML+RPA.
The news barely hit the wire and RPA-vendor-paid-analysts and market research firms began screaming that Microsoft’s launch of RPA will not be a threat to the legacy RPA firms. After all – the vendor-paid-analysts claim – companies are buying RPA, why would they trouble their souls with AI+RPA combo offered by Microsoft when all they want is their bots to sort emails and have some cute little chatbots. The client executives, vendor-paid-analysts are claiming, will be all too happy doing something small and robust that they can run to their bosses with, win some meaningless vendor awards, get a little bonus and recognition, or appear in some conference. They would not risk AI + RPA with Microsoft (or for that matter with anyone else) particularly when things are going so smoothly with legacy RPA implementations.
These claims above are dangerous, inaccurate, and tremendously insulting.
First executives of companies are not some kindergarten kids who’d run to their parents seeking praise for every little achievement. They do things to create business value. It is true that sometimes executives get mesmerized by some technologies – but they snap out of it pretty quickly.
In the initial days of the AI revolution – RPA created value as the standalone product. Its adoption picked up. Focused on automating repeatable tasks, RPA was seen as the new tool of automation. Machine-learning stayed in a different class of solutions. But since then three things have happened: 1) companies are now looking at the intelligent automation of the entire value chain; 2) machine-learning has become more mainstream; 3) executives have recognized that the source of value creation and competitive advantage is not “small automation” but instead it is “large automation”.
RPA is analogous to the industrial robots with very small degrees of freedom – like a robotic arm designed only to lift objects from a conveyor belt. I call this”small automation”. In 1961, General Motors installed the first robot (Unimate). After its success, Ford, Chrysler, and Fiat followed GM. But did they all stop there? No.
Imagine if the factories of the 1980’s stopped at that (robotic arm) automation – only because it was simple and looked more doable. Did it happen? Absolutely not (and if did happen those factories wouldn’t have survived). Factories automated the entire assembly lines. They automated the entire process chains. They went for the “large-automation”. History tells us that “large automation” will always be the pragmatic choice of strategic executives.
And that is why Microsoft’s launch of RPA is a great move. It poses a challenge to the legacy RPA firms to move beyond the value proposition that is focused on headcount reduction of some low-level data entry clerks and to move to the big value play.
Seriously, if AI revolution was about headcount reduction of data entry clerks, it wouldn’t be much of a revolution.
The AI revolution is about revolutionizing your business model, your value delivery framework, your operational platforms, your collective cognitive abilities, and your competitive potential. It is about creating a bold new world made of intelligent and ethical AI.
To do that you need to think big. You need to think strategic. You need to think “large automation”.
TPA* or Total Process Automation = RPA + ML + ES + PM + ITI
Where ES means Expert Systems, PM means Process Mining, and ITI means IT Infrastructure. (*The TPA concept is developed by AIAI)
Microsoft has now taken the first step for TPA. Legacy RPA firms need to respond not by doubling down on low value-creation, clerical-headcount-reduction-centric, small automation, but instead to use their existing knowhow, implementations, and engagements to transform into TPA companies. They must embrace sophisticated ML – and not just in small automation such as in invoice reading OCR but in more sophisticated end-to-end automation. Microsoft has upped the game.
I believe legacy RPA firms can survive this competitive onslaught – but they will have to let go of their archaic RPA-only mindset. Stop adding horses to the buggy. Automobile is a better option. For legacy RPA, it is think different or RIP. The countdown has begun.
Conflict Disclosure: I am not paid by Microsoft. I do not have a business relationship with Microsoft. I do not own Microsoft stock or options. I do not own any RPA firm stock or options.
Professor Al Naqvi teaches AI business and AI technology courses at the American Institute of Artificial Intelligence. He has authored several books. He advises executives on how to build their companies around AI. Even though his research interests are technical and involve hands-on machine learning, he makes AI fun to learn for business executives. Executives from over 300 companies have benefited from his trainings.