>> Narrator: From theCUBE's studios in Palo Alto, in Boston, connecting with thought leaders all around the world. This is a CUBE conversation. >> Hey everybody, this is Dave Vellante and welcome to this episode of "CXO Insights." As you know, we've been grabbing the perspectives of leaders throughout this pandemic and assessing their tips for managing in a crisis and of course, managing in good times as well. But now, as we enter the post-isolation economy, we really want to look at not just how you manage through the crisis but how you manage beyond the crisis. And I'm really excited to have Chris Riley here. He's the newly minted Chief Revenue Officer at Automation Anywhere. Chris, my friend, how you doing? I hope you and the family are well. >> Thank you, David. I wish the same for you. I think getting by as most folks are, it's the new normal, we're all getting used to it but I'm happy to be here and happy to be at Automation Anywhere. >> Yeah, I want to talk about that in detail. Eddie Walsh calls it the new abnormal but so congratulations on the new role. I want to start with your career. I met you in 1987, which ironically was the same year I met Dave Donatelli, the same year I met Michigan I. and Saul Koi, talk about great timing. And then, you came into the industry at a time, really different time. It was, the IBM people don't remember this but IBM was the dominant player and you guys unseated them amazing 12-year career at EMC and then you kind of went to the .com boom. That was amazing. You relive that ride, did a stint at HP and really turned that business around and then came back to Dell, top go to market executive. One of the top in the industry that I know and now, of course at Automation Anywhere we're going to talk about. My first question to you is, a lot of changes have occurred since 1987. What has changed the most? Now we're talking diversity, we're talking all kinds of your different sales models. From your career looking back, what's changed the most? >> I think everything has changed and candidly for the better, Dave. You just led with one of the key areas in an area I'm deeply passionate about and that is diversity and inclusion and I think there's no stronger time, at least in our country's history where the inequalities that exist have been so exposed. So I view this as an opportunity, as I did at Dell to make a difference, lead from the front and make this a destination and a company whose culture really supports and drives diversity and inclusion. So I'd say that's one area, and I know it's very passionate for you as well. The others, it was a time before laptops, desktops. I think Ken Olsen once said, who would ever need a laptop in their home and boy, the world has changed. So I think some of the things though that haven't changed and this is why I'm so excited about Automation Anywhere. At the manual processes we have our workers doing and I think there is a real opportunity. I've lived through explosive growth at EMC, top company performing stock during the 90s, I get to see VMware firsthand. I've seen what's happened with ServiceNow and I believe this RPA space, as to you is in its infancy. It's seeing 30% compounded annual growth and we're just at the beginning and I think it's going to change the way people work and really lead to that digital transformation that so many of us have been talking about for the last decade. >> Yeah and you know kind of my position. Quick aside, I don't know if you saw the Netflix announcement this morning and I've been wondering as a small business, what can we do? What more can we do for inclusion and diversity? Netflix announced they're going to take 2% of their cash and put it into banks, financial institutions that support black causes and I just talked to our CFO. I said, look, why don't we take some of our cash, let's take 2% and stick it into banks, community banks. There's 30 million small businesses in the United States. If just 1% puts 10 grand in each, that's $3 billion that go into black community. So I'm going to start a mission and I just thought I'd share that 'cause I know it's a passion of yours. >> Yeah, and we all need to be in a position to provide equal opportunity for employment and that is reaching out into those communities and starting early on in creating the opportunities for advancement professionally, mentorship and just the path forward. And I'm excited to see what Netflix is doing. I'm sure you'll come up with the right answer for your company and I think all of us are searching, what's the right answer for our respective companies? >> Yeah, so now let's get into it. You're a month in and I want to talk about this project. I've learned a lot about not only RPA but about automation. I've just had a deep dive with your team and it really brought some things into focus. Guys, if you bring up the first slide, I want to get some thoughts on the table here. So this is a chart that sort of came into my focus with a friend of mine, Dave Moschello, who really big thinker on this stuff and he pointed out, this is data from the US Bureau of Labor and Statistics and the EU and it shows the lackluster productivity that's going on in the past decade. So you can see, we had the boost in the 80s and the 90s, we had this sort of productivity uptick from laptops but now, look what's happened since 2007. And the point that Moschello made on the right hand side is we have all these huge issues that we face, whether it's climate change, we have this massive debt, healthcare, an aging population, feeding everyone, et cetera, et cetera, et cetera, and his point was, there's no way we're going to be able to solve all these problems by throwing humans at the problem. So I've really begun to sort of think about this just in terms of machines and the roles that machines will play. I think overnight, Chris, we've gone from, wow, I'm afraid that machines are going to take my job to you can't operate if you're not digital. >> Yeah, well digital transformation is not a new term. I think it's meant something different each year for the last 10 years and I look at this as an opportunity. The World Economic Forum projected that IA and RPA will create 58 million new jobs. It's an astounding number. What COVID-19 has exposed is this work from home phenomenon that really exposes the risk of manual processes within the enterprise. So I think those two things combined is almost a perfect storm and I think what it'll do is accelerate the adoption of RPA and IPA. So something that might've taken years or decades to really be adopted in force, in this new normal, I think is going to be accelerated quite dramatically. >> So, the combination of your go to market execution, you managed complex sales motions before. Automation Anywhere obviously has some great product capabilities. Guys, I want to bring up the next slide and Chris, you might have seen this in some of the stuff that I wrote but this is data from ETR Enterprise technology research. They're a data partner of ours. Now it's clear that Automation Anywhere has the right product market fit and you can see on this chart, this is a methodology that we use. ETR goes out and they ask people, are you adopting a platform new? Are you increasing spending relative to last year? Are you flat, decreasing or replacing? And you can see here, there is zero churn in the Automation Anywhere base. And so obviously you got product market fit. Churn is the silent killer, obviously of SAS companies and so, you've picked a winner and I'm learning more about this. At first I thought the team office is quite large, I sized it. I actually think it's bigger than I originally thought. Chris, I thought this was going to be a winner-take-all type of market. I'm really rethinking that after, especially the deep dive I've had with your team in terms of how you guys go to market with an end-to-end sort of life cycle approach as opposed to sort of putting point products in. So I wonder if that narrative that I just laid out, resonates with you, is it sort of consistent with what you're seeing and then maybe some of the reasons why you joined Automation Anywhere? >> Yeah, I would say the most aggressive software growth that I've seen in the last decade or so, and two companies stand out for me. That's VMware and ServiceNow. They don't have a point product, they have a platform and that's what attracted me to Automation Anywhere is this platform approach. And Dave as you know, I've spent most of my career calling on the enterprise' strong relationships with those types of companies and they aren't looking to develop a point product solution and then cobble together lots of disparate islands of solutions. They're looking for a platform that can grow as they grow. They can extend from the back office to the front office but all centered around workforce, transformation, productivity and just as importantly, resiliency. And as we start to develop more and more capabilities that will be delivered through this platform approach, I think we're going to see explosive growth as the industry goes through its explosive growth. >> Well, I know your approach and your approach is to stay very close to customers. So as you were doing your due diligence on Automation Anywhere and as you enter your sort of first part of your 100-day journey here, I'm sure you've talked to a lot of customers. What are they telling you? What are the big takeaways right now that you're hearing? >> Yeah, so I think some of the data you pointed out with 4,000 customers in essence, zero churn, the opportunity to upsell those customers with more products and solutions clearly is there. New account acquisition has been a tremendous source of growth for the company in a strong professional services organization that actually is able to deliver the outcomes that our customers expect. From an enterprise perspective, I couldn't have come into a better situation with 4,000 customers, 50% of the fortune 500, 2 million bots deployed, those types of strategic relationships are going to be more and more critical as this company continues to accelerate its growth. Most of the RPA solutions really got in through the back office and candidly, really weren't even a component of an IT solution. Now, as you go to the front of the house, where you're looking at customer facing applications and worker productivity, these are CEO, CFO, COO and IT initiatives. So I really believe we're coming into our own, at the front of the house with senior executives that really want to create a better working environment for their employees and de-risk a lot of these manual processes that have existed for years. >> So I know why you chose Automation Anywhere. My question is, why did Automation Anywhere choose Chris Riley? I know your capabilities but obviously when somebody hires a executive like yourself, they say, "Hey, Chris, we want you to help us "get to the next level," but what does that mean? Are we talking about changes in the go to market? Are we talking about your ability to recruit and coach, to manage complex of sales motions? What is it that you want to bring to Automation Anywhere? >> I think it's all those, Dave. Having built a reputation throughout my 30 plus year career around a people-centric focus, a customer-centric focus and those two things kind of aren't interchangeable. When you look at customers, they put their faith and confidence in people and they put their faith and confidence in companies. And what I see here at Automation Anywhere is that the ability to kind of expand upon the great culture that the company already has but do it with someone whose role in a company at scale globally and can put a lot of the best practices and disciplines in place to do that 'cause it is difficult but also, how do we start to do larger, more complex deals and build relationships with the CIO, the CFO, the CEO? And I think a big reason why I'm here is, that experience in doing that, doing large complex multi-year opportunities but also being able to deliver upon the outcomes that we told our customers we could achieve and do that together with our customers and again we have a strong professional services organization and an incredible ecosystem of partners that have demonstrated year over year, the company's ability to actually deliver upon its promise. >> That was my next question to you, was the ecosystem. One of the big changes from when you started in this business, was it used to be just belly to belly, hardcore, direct sales, the importance and leverage that you get from a partner ecosystem. You point out VMware. In fact ServiceNow, it's interesting. When we first started covering ServiceNow, one of the things we said is we want to see as an indicator of success, the partner ecosystem evolve and then sure enough, it exploded with the SIs and all the kinds of developers. So maybe talk about AA's ecosystem, The Partner System. You obviously have a lot of experience there in your career, how do you see that as a leverage point? >> Yeah, it's huge. This market is far larger than we can cover with a direct sales organization and requires substantial services engagements that go well beyond the kind of professional services organization we want to build out organically in the company. So when you look at that, the company today has 1,900 partners. The global systems integrators are key, especially those with VPO type practices, the regional SIs and candidly, the regional VARs who've built out a strong service malpractice, a strong VMware practice and have the professional services capabilities to do some of these complex automation or automation type work that have also built the trust and confidence of their customers. So, in partnership with these types of companies, we believe we can expand our reach. We believe we can offer a more comprehensive outcome and solution to our customers and we, what I'm going to be looking at is, how do we enhance our channel programs to be the kind of company that the channel partners want to engage with, built upon the reputation of the company, the leadership position we have in the technology and also our willingness to go after this space together. >> So I got to go but last question is, what can you share with us about your 100-day plan? Where are you going to focus? >> On the people. There is a strong culture here, there's incredible sales talent and there's talent throughout the organization. I think Dave, you've seen for me over the years, a clarity of our mission, keep things simple and try and drive a repetitive process to deliver results. I'm very accountability focused. So I think what I'm going to look to assess is where the organization is today, how to get more out of the great talent we have, build stronger and deeper relationships with our customers and really scale and grow through our ecosystem of channel partners. >> Well, Chris, I'm super excited for you. A great hire by Automation Anywhere obviously got my attention. I think it'll get the industry's as well. Best of luck, and of course we'll be watching. >> Good, always great to see you, Dave, take care. >> Yeah, ditto, thanks so much for coming on and thank you for watching everybody. Keep it here because this month we're going to be really digging into the ETR data we've been reporting on that horse race between Automation Anywhere and UI Path. The ETR data is in the field and we'll be reporting on that. So look for that. This is Dave Vellante for theCUBE and we'll see you next time. (gentle music)

The Cube Presents UI Path Forward five. Brought to you by UI Path. >>I Ready, Dave Ante with David Nicholson. We're back at UI Path forward. Five. We're getting ready for the big guns to come in, the two co CEOs, but we have a really special analyst panel now. We're excited to have Daniel Newman here. He's the Principal analyst at Future and Research. And Andy Dai, who's the Vice president and Principal Analyst at Constellation Research. Guys, good to see you. Thanks for making some time to come on the queue. >>Glad to be here. Always >>Good. So, >>Andy, you're deep into ai. You and I have been talking about having you come to our maor office. I'm, I'm really excited that we're able to meet here. What have you seen at the show so far? What are your big takeaways? You know, day one and a half? >>Yeah, well, so first of all, I'm d AI because my last name has AI and I >>Already talk about, >>So, but, but all jokes aside, there are a lot of good things I heard from the conference, right? I mean, one is the last two years because of the pandemic, the growth has been phenomenal for, for a lot of those robotic automation intelligent automation companies, right? So because the low hanging through position making processes have been already taken care of where they going to find the next growth spot, right? That was the question I was looking answers to. And they have some inverse, one good acquisition. They had intelligent document processing, but more importantly they're trying to move from detrimental rules based RPA automation into AI based, more probabilistic subjective decision making areas. That's a huge market, tons of money involved in it, but it's going to be a harder problem to solve. Love to see the execut. >>Well, it's also a big pivot for the, for the company. It started out as sort of a a point product and now is moving to, to platform. But to end of the macro is not in UI pass favor. It's not really in any, you know, tech company's favor, but especially, you know, a company that's going into a transition transitioning to go to market cetera. What are you seeing, what's your take on the macro? I mean, I know you follow the financial markets very closely. There's a lot of negative sentiment right now. Are you as negative as the sentiment? >>Well, the, the broad sentiment comes with some pretty good historical data, right? We've had probably one of the worst market years in multiple decades. And of course we're coming into a situation where all the, the factors are really not in our favor. You've got in interest rates climbing, you've got wildly high inflation, you've had a, you know, helicopters dumping money on the economy for a period of time. And we're, we're gonna get into this great reset is what I keep talking about. But, you know, I had the opportunity to talk to Bill McDermott recently on one of my shows and Bill's CEO of ServiceNow, in case anybody there doesn't know, but >>Former, >>Yeah, really well spoken guy. But you know, him and I kind of went back and forth and we came up with this kind of concept that we were gonna have to tech our way out of what's about to come. You can almost be certain recession is gonna come. But for companies like UiPath, I actually think there's a tremendous opportunity because the bottom line is companies are gonna be looking at their bottom line. A year ago it was all about growth a deal, like the Adobe Figma deal would've been, been lauded, people would've been excited. Now everybody's looking at going, how are they paying that price? Everybody's discounting the future growth. They're looking at the situation, say, what's gonna happen next? Well, bottom line is now they're looking at that. How profitable are we? Are you making money? Are you growing that bottom line? Are you creating earnings? We're >>Gonna come in >>Era, we're gonna come into an era where companies are gonna say, you know what? People are expensive. The inflationary cost of hiring is expensive. You know, what's less expensive? Investing in the cloud, investing in ai, investing in workflow and automation and things that actually enable businesses to expand, keep costs somewhat contained fixed costs, and scale their businesses and get themselves in a good position for when the economy turns to return to >>Grow. So since prior to the pandemic cloud containers, m l and RPA slash automation have been the big four that from a spending data standpoint have been above the line above all kind of the rest in terms of spending momentum up until last quarter, AI and RPA slash automation declined. So my question is, are those two areas discretionary or more discretionary than other technology investments you heard? >>Well, I, I think we're in a, a period where companies are, I won't say they've stopped spending, but you listened to Mark Benioff, you talked about the elongated sales cycle, right? I think companies right now are being very reflective and they're doing a lot of introspection. They're looking at their business and saying, We hired a lot of people. We hired really fast. Do we need to cut? Do we need to freeze? We've made investments in technology, are we getting a return on 'em? We all know that the analytics, whether it's you know, digital adoption platforms or just analytics in the business, say, What is all this money we've been spending doing for us and how productive are we? But I will tell you universally, the companies are looking at workflow automations that enable things. Whether that's onboarding customers, whether that's delivering experiences, whether that's, you know, full, you know, price to quote technologies, automate, automate, automate. By doing that, they're gonna bring down the cost, they're gonna control themselves as best as possible in a tough macro. And then when they come out of it, these processes are gonna be beneficiary in a, in a growth environment even more so, >>Andy UiPath rocketed to a leadership position, largely due to the, the product and the simplicity of the product relative to the competition. And then as you well know, they expanded into, you know, platform. So how do you see the competitive environment? A UI path is again focusing on that platform play Automation Anywhere couldn't get to public market. They had turnover at the go to market level. Chris Riley joined a lot of, lot of hope left Microsoft joined into the fray, obviously is having an impact that you're certainly seeing spending momentum around Microsoft. Then SAP service Now Salesforce, every software company the planet thinks they should get every dollar spent on software. You know, they, they see UI pass momentum and they say, Hey, we can, we can take some of that off the table. How do you see the competitive environment right now? >>So first of all, in in my mind, UI path is slightly better because of a couple of reasons. One, as you said, it's ease of use. >>They're able to customize it variable to what they want. So that's a real easy development advantage. And then the, when you develop the bots and equal, it takes on an average anywhere between two to maybe six weeks, generally speaking, in some industries regulated government might take more so that it's faster, quicker, easier than others in a sense. So people love using that. The second advantage of what they have in my mind is that not only they are available as a managed SA solution on, on cloud, on Azure Cloud, but also they have this version that you can install, maintain, manage any way you want, whether it's a public cloud or, or your own data center and so on so forth. That's not available with almost, not all of them have it, Few have it, but not all of the competitors have it. So they have an advantage there as well. Where it could become useful would be one of the areas that they haven't even expanded is the government. >>Government is the what, >>Sorry? The government. Yeah, related solutions, right? Defense, government, all of those areas when you go, which haven't even started for various reasons. For example, they're worried about laying off people, worried about cost, worried about automating things. There's a lot of hurdles to overcome. But once you overcome that, if you want to go there, nobody's going to use, or most of them will be very of using something on the cloud. So they have a solution for version variation of that. So they are set up to come to that next level. I mean, I don't know if you guys were at the keynote, the CEO talked about how their plans to go from 1 billion to 5 billion in ar. So they're set up to capture the market. But again, as you said, every big software company saw their momentum, they want to get into it, they want to compete with them. So >>Well, to get to 5 billion, they've gotta accelerate growth. I mean, if you do 20% cer over the next, you know, through the end of the decade, they don't quite get there. So they're gonna have to, you know, they lowered their forecast out of the high 20 or mid twenties to 18%. They're gonna have to accelerate that. And we've seen that before. We see it in cloud where cloud, you know, accelerates growth even though you got the lower large numbers. Go ahead Dave. >>Yeah, so Daniel, then how do we, how do we think of this market? How do we measure the TAM for total addressable market for automation? I mean, you know, what's that? What's that metric that shows how unautomated are we, how inefficient are we? Is there a, is there a 5% efficiency that can be gained? Is there a 40% efficiency that can be gained? Because if you're talking about, you know, how much much of the market can UI path capture, first of all, how big is the market? And then is UI path poised to take advantage of that compared to the actual purveyors of the software that people are interacting with? I'm interacting with an E R p, an ER P system that has built into it the ability to automate processes. Then why do I need 'EM UI path? So first, how do you evaluate TAM? Second, how do you evaluate whether UI Path is gonna have a chance in this market where RPAs built into the applications that we actually use? Yeah, >>I think that TAM is evolving, and I don't have it in front of me right now, but what I'll tell you about the TAM is there's sort of the legacy RPA tam and then there's what I would sort of evolve to call the IPA and workflow automation tam that is being addressed by many of these software companies that you asked in the competitive equation. In the, in the, in the question, what we're seeing is a world where companies are gonna say, if we can automate it, we will automate it. That's, it's actually non-negotiable. Now, the process in the ability to a arrive at automation at scale has long been a battle front within the nor every organization. We've been able to automate things for a long time. Why has it more been done? It's the same thing with analytics. There's been numerous studies in analytics that have basically shown companies that have been able to embrace, adopt, and implement analytics, have significantly better performances, better performances on revenue growth, better performances and operational cost management, better performances with customer experience. >>Guess what? Not everybody, every company can get to this. Now there's a couple of things behind this and I'm gonna, I'm gonna try to close my answer out cause I'm getting a little long winded here. But the first thing is automation is a cultural challenge in most organizations. We've done endless research on companies digitally transforming and automating their business. And what we've found is largely the technology are somewhat comparable. Meaning, you know, I, I've heard what he is saying about some of the advantages of partnership with Microsoft, very compelling. But you know what, all these companies that have automation offerings, whether it's you know, through a Salesforce, Microsoft, whether it's a specialized rpa like an Automation Anywhere or a UI path, their solutions can be deployed and successful. The company's ability to take the investment, implement it successfully and get buy in across the organization tends to always be the hurdle. An old CIO stat, 50% of IT projects fail. That stat is still almost accurate today. It's not 50% of technology is bad, but those failures are because the culture doesn't get behind it. And automation's a tricky one because there's a lot of people that feel on the outside rather than the inside of an automation transformation. >>So, Andy, so how do you think about the, to Dave's question, the SAPs the service nows trying to, you know, at least take some red crumbs off the table. They, they're gonna, they're gonna create these automation stove pipes, but in Automation Anywhere or, or UI path is a horizontal play, are they not? And so how do you think about that progression? Well, so >>First of all, all of this other companies, when they, they, whether it's a build, acquire, what have you, these guys already have what, five, seven years on them. So it's gonna be difficult for them to catch up with the Center of Excellence knowledge on the use cases, what they got to catch up with them. That's gonna be a lot of catch up. Just to give you an idea, Microsoft Power Automate has been there for a while, right? They're supposedly doing well as well, but they still choose to partner with the UiPath as well to get them to the next level. So there's going to be competition coming from all areas, but it's, it's about, you know, highlights. >>So, so who is the competition? Is it Microsoft chipping away an individual productivity? Is it a service now? Who's got a platform play? Is it themselves just being able to execute >>All plus also, but I think the, the most, I wouldn't say competition, but it's more people are not aware of what areas need to be automated, right? For example, one of the things I was talking about with a couple of customers is, so they have a automation hub where you can put the, the process and and task that need to be automated and then you prioritize and start working on it. And, and almost all of them that I speak to, they keep saying that most of the process and task identification that they need to do for automation, it's manual right now. So, which means it's limited, you have to go and execute it. When people find out and tell you that's what need to be fixed, you try to go and fix that. But imagine if there is a way, I mean the have solutions they're showcasing now if it becomes popular, if you're able to identify tasks that are very inefficient or or process that's very inefficient, automatically score them up saying that, you know what, this is what is going to be ROI and you execute on it. That's going to be huge. So >>I think ts right, there's no shortage of, of a market. I would, I would agree with you Rob Sland this morning talked about the progression. He sort of compared it to e R P of the early days. I sort of have a love hate with E R P cuz of the complexity of the implementation and the, and the cost. However, first of all, a couple points and I love to get your thoughts for you. If you went back, I know 25 years, you, you wouldn't have been able to pick SAP out of a lineup and say that's gonna be the leader in E R P and they ended up, you know, doing really, really well. But the more interesting angle is if you could have figured out the customers that were implementing e r p in, in a really high quality fashion, those are the companies that really did well. You buy their stocks, they really took off cuz they were killing their other industry competitors. So, fast forward to automation. Will automation live up to its hype and your opinion, will it be as transformative and will the, the practitioners of automation see the same type of uplift in their markets, in their market caps, in their competitiveness as did sort of the early adopters and the excellent adopters of brp? What are your thoughts? Well, >>I think it's an interesting comparison. Maybe answer it slightly different way. I think the future is that automation is a non-negotiable in every enterprise organization. I think if you're a large organization, we have absolutely filled our, our organizations with waste too much overhead, too much expense, too much technical debt and automation is an answer. This is the way we want to interact, right? We want a chat bot that actually gives us good answers that can answer on a Tuesday at 11:00 PM at night when we want to know if the right dog food, you know, and I'm saying that, you know, that's what we want. That's the outcome we want. And businesses have to be driven by the outcome. Here's what I'm not sure about, Dave, is we have an era where over the last three to five years, a lot of products have become companies and a lot of 'EM products became companies ended up in public markets. >>And so the RPA space is one of those areas that got this explosive amount of growth. And you look at it and there's two ways. Is this horizontally a business rpa or is this going to be something that's gonna be a target of those Microsofts and those SAPs and say, Look, we need hyper automation to be deeply integrated at the E R P crm, hcm SCM level. We're gonna build by this or we're gonna build this. And you're already hearing it in the partnerships, but this is how I think the story ends. I I think either the companies like UiPath get much bigger, they get much more rounded in their, in their offerings. Or you're gonna have a large company like a Microsoft come in and say, you know what? Buy it rather >>Than build can they can, they can, can this company, maybe not so much here, but can a company like Automation Anywhere stay acquisition? Well, >>I use the, I use the Service now as an, as a parallel because they're a company that I thought would always end up inside of a bigger company and now you're like, I think they're too big. I think they've they've dropped >>That, that chart. Yeah, they're acquisition proof. I would agree. But these guys aren't yet Nora's automation. They work for >>A while and it's not necessarily a bad thing. Sometimes getting bit bought is good, but what I mean is it's gonna be core and these big companies know it cuz they're all talking >>About, but as independent analysts, we want to see independent companies. >>I wanna see the right thing. >>It just makes it fun. >>The right thing >>Customers. Yeah, but you know, okay, Oracle buy more customers, more >>Customers. >>I'm kidding. Yeah, I guess it's the right thing. It just makes it more fun when you have really good independent competitors that >>We >>Absolutely so, and, and spend way more on r and d than these big companies who spend a lot more on stock buyback. But I know you gotta go. Thanks so much for spending some time, making time for Cube Andy. Great to see you. Good to see as well. All right, we are wrapping up day one, Dave Blan and Dave Nicholson live. You can hear the action behind us, forward in five on the Cube, right back.

>> From theCUBE studios in Palo Alto in Boston, bringing you data driven insights from theCUBE and ETR, this is "Breaking Analysis" with Dave Vellante >> In its early days, robotic process automation emerged from rudimentary screen scraping, macros and workflow automation software. Once a script heavy and limited tool that largely was used to eliminate mundane tasks for individual users, and by the way still is, RPA's evolved into an enterprise-wide mega trend that puts automation at the center of digital business initiatives. Hello and welcome to this week's Wikibon CUBE Insights, powered by ETR. In this breaking analysis, we present our quarterly update of the trends in RPA and automation and share the latest survey data from enterprise technology research. RPA has grown quite rapidly and the acronym is becoming a convenient misnomer in a way. I mean the real action in RPA has evolved into enterprise-wide automation initiatives. Once exclusively focused really on back office automation and areas such as finance, RPA has now become an enterprise initiative as many larger organizations especially, move well beyond cost savings and outside of the CFO's purview. We predicted in early "Breaking Analysis" episodes that productivity declines in the US and Europe especially, would require automation to solve some of the world's most pressing problems. And that's what's happening. Automation today is attacking not only the labor shortage but it's supporting optimizations in ESG, supply chain, helping with inflation challenges, improving capital allocation. For example, the supply chain issues today, think about what they require. Somebody's got to do research, they got to figure out inventory management, they got to go into different systems, do prioritizations, do price matching, and perform a number of other complex tasks. These are time consuming processes. Now the combination of RPA and machine intelligence is helping managers compress the time to value and optimize decision making. Organizations are realizing that a digital business goes beyond cloud and SaaS, and puts data, AI and automation at the core leveraging cloud and SaaS but reimagining entire workflows and customer experiences. Moreover, low code solutions are taking off and dramatically expanding the ability of organizations to make changes to their processes. We're also seeing adjacencies to RPA becoming folded into enterprise automation initiatives. And that trend will continue for example Legacy software testing tools. This is especially important as companies SaaSify their business and look for modern testing tools that can keep pace with their transformations. So the bottom line is, RPA or intelligent automation has become a strategic priority for many companies. And that means you got to get the CIO involved to ensure that the governance and compliance edicts of the organization are appropriately met. And that alignment occurs across the technology and business lines. A couple of years ago, when we saw that RPA could be much much more than what it was at the time, we revisited our total available market or TAM analysis. And in doing so, we felt there would be a confluence of automation, AI, and data and that the front and back office schism would converge. That is shown here. This is our updated TAM chart, which we shared a while back with a dramatically larger scope. We were interested that, just a few days ago by the way Forrester put out a new report, picked up by Digital Nation, that the RPA market would reach 22 billion by 2025. Now, as we said at the time our TAM includes the entire ecosystem including professional services as does Forrester's recent report and the projections they're in. So see that little dotted red line there, that's about at the 22 billion mark. We're a few years away but we definitely feel as though this is taking shape the way we had previously envisioned. That is to say a progression from back office blending with customer facing processes becoming a core element of digital transformations and eventually entering the realm of automated systems of agency where automations are reliable enough and trusted enough to make realtime decisions at scale for a much, much wider scope of enterprise activities. So we see this evolving over the 2020s or the balance of this decade and becoming a massive multi hundred billion dollar market. Now, unfortunately for later investors, this enthusiasm that I'm sharing around automation has not translated into price momentum for the stocks in this sector. Here are the charts, the stock charts for four RPA related players with market values inserted in each graphic. We've set the cross hairs approximately at the timing of UiPath's IPO. And that's where we'll start. UiPath IPOed last April and you can see the steady decline in its price. UiPath's Series F investors got in at $30 billion valuation, so that's been halved, more than half. But UiPath is the leader in this sector as we'll see in a moment. So investors are just going to have to be patient. Now, you know the problem with these hot tech companies is the cat gets let out of the bag before the IPO because they raise so much private money, it hits the headlines and then, at the time you had zero interest rates, you had the tech stock boom during the pandemic, so you're just going to have to wait it out to get a nice return if you got in sort of post IPO. You know, which... I think this business will deliver over the long term. Now, Blue Prism is interesting because it's being bought by SS&C Technologies after a bidding war with Vista. So that's why their stock has held up pretty reasonably. Vista's PE firm, which owns TIBCO and was going to mash it, Blue Prism that is, together with TIBCO. That was a play I always liked because RPA is going to be integrated across the board. And TIBCO is an integration company, and I felt it was in a good position to do that. But SS&C obvious said, "Hey, we can do that too." And look, they're getting a proven RPA tech stack for 10% of the value of UiPath. Might be a sharp move, we'll see. Or maybe they'll jack prices and squeeze the cashflow, I honestly have no idea. And we shelled the other two players here who really aren't RPA specialists. Appian is a low code business process development platform and Pegasystems of course, we've reported on them extensively. They're a longtime business process player that has done pretty well. But both stocks have suffered pretty dramatically since last April. So let's take a look at the customer survey data and see what it tells us. The ETR survey data shows a pretty robust picture frankly. This chart depicts the net score or customer spending momentum on that vertical axis and market share or pervasiveness relative to other companies and technologies in the ETR dataset, that's on the horizontal. That red dotted line at the 40% mark, that indicates an elevated spending level for the company within this technology. The chart insert you see there shows how the company positions are plotted using net score and market share or Ns. And ETR's tool has a couple of cool features. We can click on the dot and it allows you to track the progression over time, in this case going back to January, 2020 that's the lines that we've inserted here. So we'll start with Microsoft and we'll get that over with. Microsoft acquired a company called Softomotive for a reported a hundred million dollars thereabout, it's a little more than that. So pretty much a lunch money for Mr. Softy. So Microsoft bought the company in May and look at the gray line where it started showing up in the October ETR surveys at a very highly elevated level, typical Microsoft, right? I mean, a lot of spending momentum and they're pretty much ubiquitous. And it just stayed there and it's gone up and to the right, just really a dominant picture. But Microsoft Power Automate is really kind of a personal productivity tool not super feature rich like some of the others that we're going to talk about, it's just part of the giant Microsoft software estate. And there's a substantial amount of overlap between, for example, UiPath's and Automation Anywhere's customer bases and Power Automate users. And it's speaking with the number of customers. They'll say, "Yeah, we use Power Automate," but they see enterprise automation platforms as much more feature rich and capable and they see a role for both. But it's something to watch out for because Microsoft can obviously take a bite out of virtually any platform and moderate the enthusiasm for it. But nonetheless, these other firms that we're mentioning here, the two leaders, they really stand out, UiPath and Automation Anywhere. Both are elevated well above that 40% line with a meaningful presence in the data set. And you can see the path that they took to get to where they are today. Now we had predicted in 2021 in our predictions post that Automation Anywhere would IPO in 2021. So we predicted that in December of 2020 but it hasn't happened yet. The company obviously wasn't ready, and it brought in new management. We reported on that, Chris Riley as the Chief Revenue Officer, and it made other moves to show up their business. Now let me say this about Riley. I've known him him for years, he's a world class sales leader, one of the best in the tech business. And he knows how to build a world class go to market team, I guarantee that's what he's doing. I have no doubt he's completely reinventing his sales team, the alliances, he's got a lot of experience of that when he was at EMC and Dell and HPE, and he knows the channel really well. So I have a great deal of confidence that if Automation Anywhere's product is any good, which the ETR data clearly shows that it is, then the company is going to do very well. Now, as for the timing of an IPO, look, with the market choppiness, who knows? Automation Anywhere, they raised a ton of dough and it was last valued around... In 2019, it was just north of 7 billion. And so if UiPath is valued at 15 billion, you could speculate that Automation Anywhere can't be valued at much more than 10 billion, maybe a little under, maybe a little over. And so they might wait for the market volatility to chill out a little bit before they do the IPO or maybe they've got some further cleanup to do and they want to get their metrics better, but we'll see. Now to the point earlier about Blue Prism, look at its position on the vertical axis, very respectable. Just a finer point on Pega. We've always said that they're not an RPA specialist but they have an RPA offering and a presence in the ETR data set in this sector. And they got a sizeable market cap so we'd like to include them. Now here's another look at the net score data. The way net score works is ETR asks customers, are you adopting a platform for the first time? That's that lime green there. Are you accelerating spending on the platform by 6% or more relative to last year, or sometimes relative to some other point in time, this is relative to last year. That's the forest green. Is your spending flat or is it, that's the gray, or is it decreasing by 6% or worse? Or are you churning? That's that bright red. You subtract the reds from the greens and you get net score which is shown for each company on the right along with the Ns in the survey. So other than Pega, every company shown here has new adoptions in the double digits, not a lot of churn. UiPath and and Automation Anywhere have net scores well over that 40% mark. Now, some other data points on those two, ETR did a little peeling of the onion in their data set and I found a couple of interesting nuggets. UiPath in the Fortune 500 has a 91% net score and a 77% net score in the Global 2000. So significantly higher than its overall average. This speaks to the company's strong presence in larger companies and the adoption and how larger companies are leaning in. Although UiPath's actually still solid in smaller firms as well by the way but... Now the other piece of information is, when asked why they buy UiPath over alternatives customers said a robust feature set, technical lead and compatibility with their existing environment. Now to Automation Anywhere. They have a 72% net score in the Fortune 500, well above its average across the survey, but 46% only in the Global 2000 below its overall average shown here of 54. So we'd like to see a wider aperture in the Global 2000. Again, this is a survey set, who knows, but oftentimes these surveys are indicative. So maybe Automation Anywhere just working that out, more time, figuring out the go to market in the Global 2000 beyond those larger customers. Now, when asked why they buy from Automation Anywhere versus the competition customers cited a robust feature set, just like UiPath, technological lead, just like UiPath, and fast ROI. Now I really believe that both for Automation Anywhere and UiPath, the time to value is much compressed relative to most technology projects. So I would highlight that as well. And I think that's a fundamental reason, one of the reasons why RPA has taken off. All right let's wrap up. The bottom line is this space is moving and it's evolving quickly, and will keep on a fast pace given the customer poll, the funding levels that have been poured into the space, and, of course, the competitive climate. We're seeing a new transformation agenda emerge. Pre COVID, the catalyst was back office efficiency. During the pandemic, we saw an acceleration and organizations are taking the lessons learned from that forced March experience, the digital I sometimes call it, and they're realizing a couple things. One, they can attack much more complex problems than previously envisioned. And two, in order to cloudify and SaaSify their businesses, they need to put automation along with data and AI at the core to completely transform into a digital entity. Now we're moving well beyond automating bespoke tasks and paving the cow path as I sometimes like to say. And we're seeing much more integration across systems like ERP and HR and finance and logistics et cetera, collaboration, customer experience, and importantly, this has to extend into broader ecosystems. We're also seeing a rise in semantic workflows to tackle more complex problems. We're talking here about going beyond a linear process of automation. Like for instance, read this, click on that, copy that, put it here, join it with that, drag and drop it over here and send it over there. It's evolving into a much more interpreter of actions using machine intelligence to watch, to learn, to infer, and then ultimately act as well as discover other process automation opportunities. So think about the way work is done today. Going into various applications, you grab data, you trombone back out, you do it again, in and out, in and out, in and out of these systems, et cetera, NASM, and replacing that sequence with a much more intelligent process. We're also seeing a lot more involvement from C-level executives, especially the CIO, but also the chief digital officer, the chief data officer, with low code solutions enabling lines of business to be much more involved in the game. So look, it's still early here. This sector, in my view, hasn't even hit that steep part of the S-curve yet, it's still building momentum with larger firms leading the innovation, investing in things like centers of excellence and training, digging in to find new ways of doing things. It's a huge priority because the efficiencies that large companies get, they drop right to the bottom line and the big ER the more money that drops. We see that in the adoption data and we think it's just getting started. So keep an eye on this space. It's not a fad, it's here to stay. Okay, that's it for now. Thanks to my colleagues, Stephanie Chan who helped research this week's topics and Alex Myerson on the production team who also manages the Breaking Analysis Podcast, Kristen Martin and Cheryl Knight, helped get the word out on social. Thanks guys. Your great teamwork, really appreciate that. Now remember, these episodes, they're all available as podcasts, wherever you listen just search "Breaking Analysis Podcast". Check out ETR's website at etr.ai. And we also publish a full report every week on wikibon.com and siliconangle.com. You can get in touch with me directly, david.vellante@siliconangle.com is my email. You can DM me @dvellante or comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights, powered by ETR. Have a great week, stay safe, be well, and we'll see you next time. (outro music)

>> Announcer: From around the globe, it's theCUBE with digital coverage of AnsibleFest, 2020. Brought to you by Red Hat. >> Welcome back to theCUBE coverage of AnsibleFest 2020 Virtual. I'm John Furrier with Jeff Frick, my co-host this week. Day two keynote coverage, Jeff. Good to hear all the great commentary, good stuff great to see you. >> Yeah. You too, John. You know it is a great way to start the day too, with Chris Riley and you've interviewed him a ton. I've interviewed him a ton. I don't know how many times he's been on theCUBE but he's, he's such a sharp guy and he's very articulate. And he speaks in really simple analogies. And it's really easy to keep track of what he's talking about and really focusing on the edge, you know, and he even broke down what exactly is the edge. And he said it very simply right, you just moving compute to the location where the data is gathered, as well as words consumed. And he had a great example of, of, you know, an edge device on a railroad track, keep the track of the trains. And how do you manage that? How do you keep track of it? If there's a problem with it, how do you, how do you fix it so that you can use these, these devices out on the edge to, you know, provide the data and the telemetry to avoid things like everyone trying to avoid. Like unplanned maintenance and unplanned downtime or potentially having some little issue that forces you to reroute a bunch of the trains and you can't get out there to fix it for so much time. So, really bringing this intelligence to the EDS and being able to bring that compute there. Still supported by a data center for a lot of stuff but really again, just fundamentally moving compute to the edge, loves this story. >> Yeah, yeah. Chris is a great, great guy, CTO of Red Hat. We've been here many times in theCUBE. Keep alumni tech athlete as we say, but if you think about it, I mean, we go back to OpenStack. When we first started interviewing Chris. And what's interesting, Jeff of this keynote is, 5G and edge was a big part of it. If you look at the rise of the telco cloud, that was Pat Gelsinger at VMworld, just recently. Talked about this telco cloud. And if you look at kind of what's going on, OpenStack was supposedly dead by Amazon. OpenStack really has brought in the whole private cloud or the telco cloud. If you look at where OpenStack has been successful over the years. You get this new rise of the telco cloud. Okay. If you bring that in, again, bring back Pat Gelsinger, his comment around how telco and 5G is a B to B app, not a B to C. Businesses will be leveraging 5G. And that is clearly an IOT use case. The internet of things at the edge is going to be people, devices, everything. Purpose-built to programmable. And so this is a huge positioning shift in the marketplace as companies have to level up and figure out the edge. So, you know, Chris nails it, in my opinion. If you want to innovate, you've got to automate at the edge. This again is a nice tailwind for Red Hat and Ansible because it brings the Ansible automation in, with open shift and all the work that they've been doing over the years. So, it kind of is a coming home if you will, for all the work from OpenStack to open shift, to public hybrid and now multi-cloud and with private cloud aka the telco cloud. So, this is a fundamental change. I think 5G is going to be a real go-bigger-go-home, moment, I think.(chuckles) I'm praying that it's going to be faster, cheaper, smaller for us consumers, but companies got to get on this. And the pandemic has shown that connectivity security is required. And this is only going to put more pressure on the networks. It's just going to be incredible. I think he hit a home-run with the keynote. I'm super glad Red Hat's thinking this way because it really shows what I think the future will be. >> Yeah. Another thing that Chris talked on actually took some notes here. I, I just want to quote from my notes, is he talked about automation, right. A lot of this automation is the theme we hear about, automation all the time. But he had an interesting quote that it's more than a tool but a process, the constant process on and on. That you need to embed automation as a fundamental component or the organization. And I thought that was really interesting, right. We hear this over and over about so many themes, right. It's not, it's not a destination, it's a journey. And to really think about automation, in more of the context of a journey where you can input it in, as many processes as you can. Now, we had a great interview with, you know, Google, way back when talking about trying to get all the the lameness out of everyday jobs, right. To do the automate, the minutia, I think was the quote. So, that people can get on to higher value things. So, I thought it was a really interesting take-tip, to take out of a higher level view of automation and think about applying it in as many places as you possibly can. And it is a journey versus, you know, a one-stop shop. You put it in and move on to your next task. >> Yeah, that's a great point about the organizational impact. Because if you think about and again, he kind of addressed this in the keynote. And it's kind of sprinkled throughout the theme but also we've been reporting on it through theCUBE interviews. Is that it's, it's connecting through that last mile automation at scale. That's a core message we've heard. That's the capabilities of the tech. But the skills gap and the skills to actually address these challenges of the IOT edge with 5G, are being developed. Cybersecurity, space, DevOps, secops. These are skill areas, was not enough people to do the job and there's more automation coming. So you need, again skills gap, so organizations will address that. And finally, trust and security are huge. So you got the, you know, the capabilities, the skillset and trust and security. Because if you got to have these devices, whether they're purpose built or software defined, this truly impacts an organization. Not just by having the speeds and feeds, the trust and security, and then the skills. Who's going to build it? Who's going to implement it? Who's going to manage it? This is all a whole new generation. And this is what's clearly coming out of all the data we're seeing in the market. It's not just the edge it's, it's everything to do with this kind of like last mile, IOT piece. And it's large scale. So, it's not going away. >> Right. And Matt Jones touched about on that a little bit. And he's, in his keynote as well, talking about using automation to build community. And to your point, John, it comes up over and over in all those keynotes is trust, trust, trust, right. You have to trust the people that you're working with so that you can build community. And you know that they're going to do their part of the job, and you can do your part of the job. And the way you build trust is with collaboration, so that you can cross those barriers whether it's interdepartmental, or I think the, one of the lines from the keynotes was, you know, between Dev and networking. He talks about them being locked up, you know, behind special magnetic locks and hard to get to. So, if you can't get to them, you can't collaborate with them, hard to build trust. So really I think it's again, an interesting twist to use automation as a vehicle to build trust. Really important concept. Again, as you said, in, in 2020 as we come to the end of 2020 and into 2021, you know, COVID has changed the dynamic of DevOps and the way DevOps teams work and how they work, and what they measure and how they collaborate. So if you don't have trust that puts you in a real bad spot. >> Well, trust is multiple dimensions. Right. You mentioned the people side but also infrastructure as code. One of the ethos of DevOps is, you got to trust the infrastructure. If you're coding and programming the infrastructure, you got to understand that that infrastructure as code is going to work. And they'll contain the workloads or, or still only about 15% penetrated give or take, IDC says. So, more containerization is going to happen. More infrastructures' code is going to happen. You need trust there. And what we're hearing at the show here is and kind of teased out the keynote is, customers are thinking about the, their infrastructure automation strategy. But open source still matters. And that's where the trust comes in. The automation space in light of other major cloud vendors promoting their own platforms. Cross cloud integration and automation are starting to become key things that people are starting to talk about. Not just AWS public cloud, you've got Azure, Google and other clouds. As customers start thinking about the trust relationship and open source, this has been kind of becoming a big point. So, you know, hope being open is the way to go. That's where open source is. So I think, the trust equation will be very interesting to see how that plays out. Not only on the infrastructure as code, from a resiliency standpoint and scale, but open source when you add the people component and this collections and content, it's going to be very interesting to see how that all plays out. >> Yeah, it's, it's going to be a good show. And the other thing is that it still feels, it still really feels like Ansible, right. It's still really feels like Red Hat. It doesn't feel like the, you know, kind of the IBM acquisition has had a material impact in the way that they go to market, and the way that the community engages and, and just kind of the voice to me. Still sounds pretty consistent. So you know, good for IBM for, you know, taking a great asset and letting it continue to, continue to run. >> Yep. Well, the thing that I'm looking for at going forward, coming out of this event, is the big mega trend on the business model side is everything is a service also called XAAS. We're hearing that from Cisco, VMware, everyone's talking about everything as a service. And it's easier to give a mandate, "Oh, everything is a service. Jeff, go build it out. Everything is a surge." You go, "Okay." The you go, "Okay, how do we make that happen?" It's not trivial. So you have clustering, you have multi clusters, policy governance. All the things under the covers of making everything as a service, you need automation. And I think the conversation will shift from automation, automation, automation to services, services, services. Because to get to anything as a service, you got to have the under, underpinnings, you got to have the data, you got to have the automation. These are critical architectural foundational things. And you can start to hear that from some of the influencers in the industry. Automation is great, but to get to the services as everything is a service, it's kind of work.(chuckles) It's easier to say. It's hard to do. And we'll keep an eye on that. >> All right. Great. Well, John, again, thanks for sharing your thoughts. We will jump into the program and hear from of the great folks at Ansible and some of their fantastic guests for this continuing coverage of theCUBE, at AnsibleFest 2020. Ready, John? >> All right. Let's do it. A lot of great interviews. Stay with us. >> Jeff: Alright. Thanks for watching. (upbeat music)

>> From theCUBE studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is breaking analysis with Dave Vellante. >> Robotic process automation solutions remain one of the most attractive investments for IT buyers. This is despite our overall 2020 IT spending forecast, which remained depressed at minus four to minus 5% for the year. Relative to previous surveys, we do see some softness in traditional RPA strongholds such as large financial services and big insurance and giant public and privates. But RPA relative to other IT investments remains at the top as a sector with the highest spending momentum ahead of machine learning, ahead of AI, ahead of containers, and ahead of cloud computing. Hello, everyone, this is Dave Vellante, and welcome to this week's Wikibon Cube Insights powered by ETR. In this breaking analysis, we want to update you on the latest RPA trends and share fresh ETR data with our community. So let's get right into it with a quick summary. Now, as I said, despite our pretty tepid IT spending outlook for the entire year in 2020, demand for RPA software continues to grow at a 60 to 70% clip. Now remember, RPA mimics human computer interactions, it uses software scripts or robots that execute human tasks in a runtime assembly of discrete steps. The practice first became popular for back office functions mostly, is unattended bots. The pandemic appears to be accelerating front office adoption and this is creating a bit of a schism between front and back office. Digital transformation initiatives in many ways, they're going to create the connective tissue between front and back of the house. Now competitive dynamics are heating up. The two emergent leaders Automation Anywhere and UiPath are separating from the pack. Large incumbent software vendors like Microsoft, IBM and SAP are entering the market and positioning RPA as a feature. Meanwhile, legacy business process automation players continue to focus on taking their install bases on a broader automation journey. However, all three of these constituents are on a collision course in our view, where deeper automation objective is kind of the North Star. Now there are two material changes to our previous scenario. First, we've expanded our thinking on the RPA TAM, and we're extending this toward a broader automation agenda more consistent with buyer goals. In other words, the TAM is much larger than we initially thought, and we'll explain why. Second, we no longer see this as a winner take all or even winner take most market. In this segment, we'll look deeper into the leaders and share some new data. In particular, well, it appeared in our previous analysis that UiPath was running the table in the market, we see a much more textured, competitive dynamic setting up. And the data suggests that other players including Automation Anywhere, and even some of the larger incumbents will challenge UiPath for leadership in this space. Now, as with many developing software markets, the ultimate leader is not crystal clear at this point. Let's talk about the effects of the pandemic. A conventional wisdom really suggests and by the way, we would agree that the automation mandate has accelerated by several years due to Coronavirus. It's three points here. One is that yes, COVID has put digital transformation on the front burner of executives priority lists. Second is automation isn't trivial. So there's a real difference between wanting and achieving. And third, we believe there's another driver for the automation mandate, which will survive a vaccine or herd immunity, and that is the productivity gap. So this chart here underscores that point and was brought to our attention by a friend of ours, Dave Moschella. Specifically, we've seen a noticeable decline in productivity in the US and EU, since remember the personal productivity boom from the personal computer? The PC and the internet brought forth those trends in Moschella's premise and we agree is that in order to solve the grand challenges of the 2020s and beyond automation is going to be necessary. Think about climate change, global competitiveness, aging populations and infrastructure, massive deficits, mass immigration, sustainable food sources, healthcare. These are all going to require huge injections of automation into the system to solve problems associated with these areas. Human labor just isn't the answer. So this in part has influenced our expanded thinking on the total available market. The diagram we're showing here updates our expectations on the TAM for RPA. The first takeaway is that we're envisioning a market for business automation well beyond software bots, which are represented really in the first two layers, that back office and front office divide, if you will. And we see that coming together in the third layer, those two are really going to happen through digital transformation initiatives. But we also envision a massive market for automated decision making, and very deep business integration where systems are communicating to each other, system to system, machine to machine, and also making real time decisions on behalf of humans. Sometimes we call that systems of agency. Now, I won't go deep into this TAM, as it's a bit academic, but suffice it to say this is an enormous market comprising many layers of the tech stack and services stacks. And this represents a serious opportunities for multiple players, both vendors and buyers. Okay, let's get a little bit more tactical and look at the spending data, the latest spending data, from the ETR survey. The chart we're showing here is one of our favorites. And it compares leading RPA vendors on two dimensions. The y-axis is net score or spending momentum. It's a simple metric, that for this last survey asked buyers are you spending more or less in the second half of the year than you had originally planned. Net score is derived by subtracting the lesses from the mores, and is really shown in the upper right of this chart. You can see that in the green highlights. Note that the total N in the survey is around 1200. And you can see that the number of responses for each vendor is shown in the upper right in that gray area. We eliminated any RPA vendor that didn't get at least 25 mentions in responses in the survey. And you can see that Automation Anywhere and UiPath have essentially traded positions on the vertical axis. Indicating that Automation Anywhere customers expect greater spending momentum with the company than UiPath customers for the second half of this year, than they did in the first half. UiPath at 62% net score is still very, very high but this marks the first time since our reporting that AA, has taken the lead ahead of UiPath in net score. And the small arrow show the general direction of their respective momentum over the last couple of surveys, and I'll discuss this later on. Now on this chart, you can also see Blue Prism and Pegasystems and, while they're significantly below Automation Anywhere and UiPath, these are very respectable net scores for more mature players like these. But I don't really consider them RPA specialists, and especially Pega. I mean, they have an automation play well beyond RPA and have built really an awesome business and in many ways are benefiting from the hype being created by the newbies. I have to say I'm in awe of the business that Alan Trefler and his team have built. We're talking about a billion dollar company here. They've got a valuation, over 9 billion, the stock's near an all time high, and they never took a dime of outside capital prior to their IPO, which is just unreal. Oh, yeah, one more thing I want to call your attention to. There's Microsoft with power automate, and kind of crashing the party with a 1.0 product that is making some noise in the marketplace. Now on the y-axis, you can see UiPath has the market share lead, but I want to remind you what this is. Market shares I mentioned of pervasiveness in the data set in the survey and is, calculated by dividing the number of mentions for a vendor in a sector by the total mentions in the survey. So you can see that UiPath has the share of voice lead, but it's still under 10% of the total survey base. So lots of room for this market to grow. But I want to make an important note here because UiPath has historically been a collection of point products, whereas Automation Anywhere their go to market typically involves going to larger accounts and selling this sort of Mongo and digital transformation project to the line of business. As I said earlier, these two and other companies are on a collision course because that is the big prize. UiPath has restructured its product and pricing strategy, done some acquisitions to go after this. But it stands to reason that UiPath has a bigger presence in the ETR data set as measured by market share. So it makes sense that Automation Anywhere, their number one net score position, it makes it even more impressive. Now the other nuance is that ETR tends to be somewhat weighted to the IT side of the house. And although it most certainly picks up line of business spending, there's a bias in the data toward IT. So that means RPA is most likely even stronger in the context of spending initiatives, and it's already number one relative to other sectors. So that's pretty impressive. Now let's look at how net score has changed over time. This chart shows the change in net score or spending momentum for Automation Anywhere, UiPath, Blue Prism and Pegasystems over the last three survey periods. You see last October, this past April, the height of the lockdown in the US and the most recent July survey. And here you see that Automation Anywhere is accelerating and taking the lead over UiPath. And is the only one in the chart growing net score. Again, UiPath remains elevated despite the relative decline from previous surveys. The other two, I have to caution you again, the Pegasystems for example, and they're killing it in the market. The stock is up nearly 40% year to date, it's over 60% in the last 12 months. So because they're not so RPA only focused and they really are not an IT play per se, the survey data has to be digested in that context. But you do see them coming down from elevated levels last October. Now here's a time series view of that net score. This chart really what it does is it just extends the timeframe and shows more granularity of survey data back to January 2018. So we're talking about 11, quarterly survey data points and snapshots here. This really underscores the power of the ETR platform, because you can stretch the data over time. And you'll see Automation Anywhere overtakes UiPath for the first time since we started capturing the segment. UiPath along with the other shows a noticeable decline in net score in this survey, except for Microsoft, who's, you know, they're just showing up, as I said, they're elbowing their way into the marketplace. Now let's take that same sort of time series view but let's flip to market share. And this next chart shows that other favorite metric that we use all the time as market share or pervasiveness in the dataset, over a time series. Now remember, this is really mentions as a percent of the total. It's not an indication of spending amount, but it's a data point and we pay attention to this. And you can see how UiPath broke away from the pack. They did this back in October 2018, and that coincides with their big push on things like, events, and training, they really have done a good job of building a presence and awareness in the market. I've superimposed on the chart the upper left corner for context that shows net scores in the green and shared N in the gray. It's sorted off of that shared N. This refers to the number of mentions in the dataset for each vendor out of the 1192 total responses. So some of these have small Ns. So I'm not going to put too much emphasis on this except, that UiPath escalation is notable and hopefully I've explain that sufficiently. Okay, let's wrap. So we talked about the automation mandate, and the COVID wrecking ball effect. But it's more than that. The productivity pressures on the US and EU in particular make it exceedingly difficult to just throw labor at the world's grand problems. So this has opened up an enormous opportunity for technology companies and practitioners to drive automation. You know, we said this during the initial in the early days of the big data era. In fact, Peter Goldmacher, had this discussion with us on theCUBE really in the early part of last decade, that those companies that can implement automation at the time he was talking about big data are going to be the big big winners. So it's not just the tech players. Now of course, as we've seen, many of the big tech companies are benefiting enormously from the mega automation trend, but the broader set of industries has massive, massive upside. Now what this sets up is a multi-dimensional competitive environment. We have Automation Anywhere and UiPath battling it out to achieve escape velocity. Automation Anywhere just brought in Chris Riley to run go to market. So you know they're serious. He's a player who understands complex enterprise selling. And now you have UiPath, they're hiring engineers as fast as they can. And the other dimension is a classic battle of best of breed specialists like Automation Anywhere and UiPath, up against the bundlers, selling RPA as a feature of their services. Microsoft, IBM, SAP, etc, all see automation is a huge opportunity and everyone's going to hop on the bandwagon because this is worth hundreds of billions of dollars, at least. Okay. Thanks for watching this episode of theCUBE Insights powered by ETR. Remember all these episodes are available as podcasts wherever you listen. Check it out, we've also put up an archive of all the breaking analysis segments on wikibon.com. There's a link on the menu bar right at the top of the homepage that has all 46 episodes that we've done since inception. I write weekly on that wikibon.com platform and I also publish on siliconangle.com where you can find all the relevant news. And don't forget to check out etr.plus for all the survey data and analysis. Go there and sign up for a trial of the software. It's awesome. Okay, this is Dave Vellante, be well, and we'll see you next time. (bright music)