ZWC Insight|How shall RPA with Consistent Effort on Higher-efficiency Upgrading in Firms Break the Waves and Forge Ahead?
December 6, 2021

RPA is one of fastest-growing enterprise software sectors in recent years.

The IPO of RPA giant UiPath on the New York Stock Exchange closed in this April is a strong boost, substantiating the potential of domestic RPA market. Lately, ZWC portfolio company Cyclone finalized series C financing, an RPA vendor, announced the largest single amount of funds raised in China.

China’s RPA market began gaining momentum in 2018. Following rounds of financing, an industry picture was taking shape in 2019. And it should be noted that the craze of financing on RPA market has never receded despite the outbreak of the COVID-19 pandemic. Confronting intricate and volatile concerns in the industry, only those time-tested have the potential for sustainability. So will RPA suffice to stand the test of time?

ZWC Partners (ZWC) has confidence in RPA. In China’s market, RPA has revealed its value and is prone to sustain in the long run; what’s more, it may prevail as software that enhancing individual productivity.

Overhigh manpower cost entails imperative of lower cost but higher efficiency

As digital applications are sweeping China at demand side, clamor for transformation and upgrading at supply side is growing in the industry chain; in the era of stock-based economy, business competition is focused on enhancements to production efficiency and growth quality and enterprise service market is booming as firms are more willing to pay for relevant services than ever.

Enterprises opt for basing core businesses on the cloud online for digital upgrading. Some enterprise service industry leaders in China have fast-forwarded, institutionally consolidating substantial RPA deployment, unlike their European and American counterparts experiencing stepwise evolution from industrialization, IT reform to cloud-based transformation.

Besides, enterprises are anxious for quick iteration of in-house IT software, so as to accommodate changes, internal or external. The traditional mode of building IT architecture is time-consuming and costly, so some enterprises switch to “container” and “serverless” service deployment. In this respect, products somewhere between those for underlying universal infrastructure and those for upper-level standardization better meet their requirements

In addition, China’s working-age population has declined as of 2012, which is indicative of loss of demographic dividend. Rising manpower cost is a catalyst for radical change to enterprises. Previously heavily relying on accumulation of factors to production for gaining rapid economic growth, they are now forced to enhance labor efficiency by greater inputs on technology and knowledge. And business operations, particularly those handled by primary employees, entail a vast body of irrelevant and personalized repetitive tasks. Objectively speaking, such a disordered business process is required of technical improvements.

Moreover, post-90s/post-95s begin playing a primary part in the job market. They witness the popularization of the mobile Internet as they grow up, so they show high acceptability to digital operation and prefer to solve problems with automation toolkit. In this sense, drivers to new technology are already in place.

And physical uncertainties caused by frequent occurrence of black swan events, e.g., the pandemic or extreme weather, pose a daunting challenge against business operations as well. Featuring continuity, RPA can substantially alleviate manpower burden and effectively strengthen capacity of crisis response, so as to establish an efficient and flexible working mechanism–enterprises are propelled to resort to RPA.

Efficiency, accuracy and stability: RPA technology targets acute bottlenecks of enterprises

Boiling down to an instrument, RPA is intended as an easy-to-get-started product; it safeguards sensitive data through compliance management of privilege; in simple deployment, it is embedded in the current system with no impact on underlying architecture.

Internal friction is prevailing among enterprises, which is attributable to overloaded software deployment and isolation of data stacks and apps. Fixing “last-mile” problem in IT transformation, RPA is compatible with interface operation layer in diverse systems with speediness and adaptiveness. Building a bridge in the IT system, it helps enterprises realize exchange of data and digital operations with higher efficiency.

Unfortunately constrained by primitive digital applications in Chinese enterprises, RPA only shows part of potential. China is lagging behind developed countries in prevalence of RPA, particularly among enterprises. By industry, RPA has attained sizable penetration in some highly digitized industries, finance, banking, energy, manufacturing and telecom, to name a few; and RPA is expanding at top speed in traditional retail and EC.

Built on diversification and sheer stability, RPA penetration will be enhanced. After all, China is the world’s biggest potential RPA market. China’s RPA market will maintain rapid expansion in 2021, which will represent over 25% of global market by 2023, IDC projected.

To give a real and visual glimpse into RPA regarding its practicality and effectiveness, ZWC conducted a top management survey on enterprises of all trades and identified recognition of RPA’s value among enterprises. As RPA iterates itself nonstop, it has evolved from targeting simple and typical enterprise scenarios to penetrating into all manner of personalized scenarios.

“Out of demand for downsizing, at first we piloted RPA in the financial department, which worked well in enhancing efficiency in the department. Later we applied RPA in production, dispatching, marketing and other departments as well as branches and subsidiaries. Right now it has been put into practice in hundreds of in-house scenarios.” –Some energy enterprise

“To accommodate our new business model and meet demand for intelligent application, we teamed up with an RPA vendor in 2019. As the banking process features consistency, standardization and repetition, RPA software takes to scenarios like a duck to water, enhancing efficiency in all departments concerned.” –Some banking enterprise

Currently, RPA is applied through top-down mining of available scenarios by enterprises or third-party service providers, entailing greater manpower input and confining horizon. If RPA is applied from the primary level, much greater penetration of RPA software will be expectable. But RPA designer/studio is too intricate for primary enterprise employees to design and operate RPA robots on their own.

As codeless designer/studio advances and enterprise employees go deeper in understanding RPA principles, threshold for use of RPA designer/studio may be lowered. In the future, all employees may leverage RPA for improving productivity. Actually RPA vendor ShadowBot has successfully turned RPA an app dominated by primary employees in EC by lowering the design/studio threshold, alongside a whole bunch of top RPA vendors in China with ongoing lightweight, codeless and product-oriented RPA research & development.

Commitment to progress: essential for a bright future is RPA embedded in AI scenarios

Graphic user interface (GUI) recognition forms the basis of RPA technology and computer vision is one of core capabilities of early RPA products. RPA software is a good performer in data access and analysis.

But for domestic enterprises, IT building remains in embryo and unstructured data are in the majority, so RPA is required of decoding the unstructured data by virtue of AI technologies; output accuracy of AI module is directly proportional to RPA’s scenario penetration–so to speak, AI capacity plays a decisive part in China’s RPA software development.

Therefore, RPA penetration is determined by its AI capacity. NLP and OCR are now predominating among AI technologies in RPA application, which are embedded into RPA products via self-developed or third-party interfaces.

In some less digitized enterprises involving a tremendous, decentralized and complicated workflow, the management are not fully aware of the workflow in most cases, and consequently a body of scenarios available for RPA automation remain unrecognizable. With mastery of AI-based process mining, RPA vendors will see sustainable income increase in the future.

Looking abroad, UiPath has incorporated process mining into core capabilities for advancing product evolution and taken over ProcessGold for completing process mining capacity, along with other best performers in RPA. Meanwhile, Celonis specialized in process mining has reinforced features of intelligent automation in execution management systems through M&A of RPA vendor Integromat, so as to arrive at a more efficient business process.

China’s RPA firms are late starters in process mining. So far no process mining products have effected massive deployment. Thus we have every reason to believe that process mining capacity will be the key for differentiated vendor competition in the future.

Gartner predicted, 1/3 of jobs will be automated by 2025.

RPA is running at full speed ahead. To stand out of fierce competition, firms refine on their technical strength, consolidate ecosystem capabilities for building tech barriers, gratify various requirements of customers through extension of product lines…they unveil and upgrade a package of measures to stand in the forefront.

Following evolution of next-generation digital technology, RPA stands a chance of transforming workings of our time as machinery made a radical movement to factory production in the period of the industrial revolution.

As Cyclone’s slogan reveals in its website:

We enable automation across all stages of digital transformation.