Huge Pricing Gaps Seen in Robotics Process Automation (RPA) Deals

Large companies are making haste to automate repetitive high-volume tasks, especially those in retail, manufacturing, banking, health care and telecommunications. Industry research indicates that 90% of all big enterprises will adopt RPA in some form by 2022.

Also, the vast majority of new spends by existing customers consistently goes to the original RPA providers for add-on capacity. This is great news for the suppliers of RPA systems, but let the buyer beware: we are seeing some of the software industry’s widest pricing gaps in these deals, many upwards of 60%.

The deals we have observed come primarily from three suppliers: UiPath, Automation Anywhere, and Blue Prism. We drilled down to see what buyer and seller behaviors lead to these gaps, and the following slide summarizes our findings.

Problems with RPA deals - starter packs, implementation issues

Like other IT vendors, RPA suppliers are expert at expanding their footprint once they get in the door. But these purchases are notable for the fact that many customers do not know if RPA is “right” for them, so to sweeten the pot, the vendor offers bundled starter packs to get them up and running on the solution, which sets up future purchases. Often, customer don’t buy enough of the software in their initial purchase, and once they see the value it provides, they move to add more licenses. However, since the packs are bundled, clients don’t understand the underlying costs of future purchases, which makes renewals and expansions very difficult.

Since RPA is still relatively new, buyers have not yet developed the internal expertise to install and maintain their RPA environment. There is usually a lot of work that precedes getting RPA solutions up and running – including the determination of which processes are the best fit for RPA. RPA pilot projects frequently require 4-6 months, as buyers struggle to unravel everything involved in their current processes and how best to automate them.

In addition, to get the full value of RPA licenses, the solution needs to be fully implemented (which is expensive and time-consuming when clients lack the expertise to do this themselves). Because of this, it’s painful to move off one RPA solution for another, as it calls for a significant investment in of time and money to develop a new solution.

Here’s the bottom line: buyers must work that much harder to compete with these vendors for better RPA deals. We urge IT deal makers to do the following three things before engaging with a supplier:

  1. Harness the resources in your organization to build an accurate demand for RPA

  2. Include competitors in your deal

  3. Inspect and negotiate clear contract terms that provide protection

At ClearEdge, we observed one client who recently was offered a significant discount on their preferred solution simply by using an RFP. To learn more about building leverage with your suppliers, view our blog titled Leverage: The Key to Every Deal, or contact your ClearEdge representative.

- This article is based on a presentation by ClearEdge Analyst Christina Costa.