February 2, 2020
Growing up I watched Charlie Chaplin’s movies and one that captivated me both because of how funny it was, but also because of the amazing critique of the human costs of the ongoing Industrial Revolution (https://www.youtube.com/watch?v=6n9ESFJTnHs). While the emergence of the service economy through the 20th century led to a wider usage of human capacity, there were still a lot of repetitive, rules-based tasks that emerged. In the last 20 years, most of these have been outsourced to lower cost locations through Business Process Outsourcing. The digitization of processes, increased broadband availability and advances in Artificial Intelligence now allow more and more of these jobs to be performed by “digital robots” through an emerging process called Robotic Process Automation (see figure).
Sources: Polaris Market Research, Somar Analysis
Robotic Process Automation (RPA) is the configuration of technology and software to substitute human workers performing high volume, highly repetitive, rules-based tasks. There are several advantages to businesses and consumers from the use of RPA:
• Reduced error rates to as low as 0% as well as higher regulatory compliance;
• Reduced manual labor up to 95% and reduction of processing costs by up to 80%;
• Increase processing time to up to 5x faster;
• Harvest data that can be used for process improvement;
• Serve customers 24/7 without interruption;
• Free employee time to provide a higher touch and more personal service to customers;
• Low implementation and running costs providing paybacks on the investment as low as 6 months and ROIs as high as 100%+.
The first wave of business opportunity from RPA will be in the providers of this technology. The second, and potential larger wave will be from entrepreneurs that will leverage this technology to disrupt existing industries and / or create new ones. Somar is monitoring both and will update its investors on existing investments in our monthly letter.