UiPath Is Investing Some IPO Proceeds Toward A Microsoft-Level ‘World Class’ Channel
About three months after UiPath’s initial public offering netted the automation software company $692.4 million in April, its global channel chief tells CRN that he has big plans to grow UiPath’s channel this year through investing in global system integrators, large distributors and smaller breadth partners with more technical resources, more joint business development and other incentives.
And UiPath isn’t too worried about competition from tech giants such as Microsoft that are investing in their automation offerings, said Eddie O’Brien, senior vice president of partners at New York-based UiPath.
“Post the IPO, we obviously have some cash, so it is a good time to invest,” O’Brien said. “I’ve been very aggressive in asking for incremental investment. And (CEO) Daniel (Dines) has been super supportive.”
[RELATED: UiPath Channel Chief On A Wide-Open Market For Partners: ‘Eighty Percent Of Processes Are Still Not Automated’]
O’Brien is the company’s top channel executive who answers directly to Chief Revenue Officer Thomas Hansen. O’Brien’s resume includes chief channel officer at UiPath competitor Automation Anywhere, global channel chief at cloud storage company Dropbox and more than 15 years with tech giant Microsoft. He joined UiPath in June 2020.
O’Brien said that UiPath has more than 4,400 partners in its ecosystem at this point, with about 3,000 of them transacting through distribution giant Ingram Micro. But UiPath has its eyes on a much larger channel. Drawing on his Microsoft days, O’Brien wants a channel more comparable to the tech giant’s large partner ecosystem, he said.
“Let me quote Microsoft: 400,000 partners,” O’Brien said. “I ran the OEM (original equipment manufacturers) channel when I was there. I know what it’s like to have a world-class channel and the importance of it if you really want to be a global, corner-to-corner software and enterprise software company.”
Not only are UiPath’s eyes on a Microsoft-sized channel, but the company’s “a robot for every person” slogan that appears on UiPath’s website might bring to mind the old Microsoft early PC-ear mantra from the 1980s attributed to co-founder Bill Gates, “a computer on every desk.”
Microsoft’s investment in automation has led Wall Street analysts to speculate about competition between the tech giant and UiPath. When asked by an analyst about competition with Microsoft on UiPath’s June earnings call, UiPath CEO Dines said UiPath’s technology deploys at scale while Microsoft’s “approach has not tested large scale deployments.” UiPath’s competitive advantage is in deployment in multi-cloud, multi-platform environments and provides a “unique end-to-end horizontal platform,” he said.
“They are like comparing apples to oranges,” Dines said, according to a transcript of the call. “Our approach is extremely difficult to replicate. It requires a huge experience curve that we have built over the last 15 years. Our platform is a combination of UI, API and computer vision AI that is again extremely difficult to replicate. It is our secret sauce.”
When asked about his thoughts on vendors such as Salesforce and ServiceNow building automation into their platforms, Dines said that customers will still demand UiPath’s products and services because UiPath customers “are really afraid of vendor locking.”
“We being independent is really paying the same level of attention to major business application platforms,” Dines said. “This is actually what our customers are requiring from us, many customers are really afraid of vendor locking and this is an additional investment that will basically completely capture within a business platform. When you actually elevate your processes above the business applications, you can achieve much better flexibility in adopting cloud in migrating from one version of the platform to the other.”
In a July report, investment bank KeyBanc called UiPath “a leading software automation platform that is still in the early days of executing against the broader” $33 billion “hyperautomation” total addressable market, with “IT market challenges regarding hiring and retaining skilled talent as leading to increased demand for automation solutions.”
UiPath’s land-and-expand model, broad channel distribution and “automation innovation” differentiate it against other automation software platforms, according to the report. Its products eliminate data silos, centralize data across different systems and increase speed to production, with RPA (robotic process automation) bots taking two-to-four weeks to build as opposed to a six-month deployment of a new application, according to KeyBanc.
“UiPath win-rates remain solid vs. incumbent automation platforms with a broadening partner base helping unearth new opportunities, key to expanding UiPath‘s market presence and capturing share,” according to the report. “While competition vs. Microsoft has become an increasing topic of investor conversation, the Company continues to see Microsoft’s automation solutions as more rudimentary, particularly for larger organizations, and likely more suited to the SMB (small- to medium-sized business) market.”
Tech Giants Invest In Automation
During Microsoft’s own earnings call in July, CEO Satya Nadella said that the company’s Power Platform product “has become the leading business process automation and productivity suite for domain experts across all functions.”
He also highlighted the automation capabilities of collaboration app Teams, calling it “the new front end.”
“It‘s where people meet, chat, call, collaborate and automate business processes all within the flow of work,” he said.
Microsoft CFO Amy Hood told listeners on the call that Power Apps and Power Automate provided “strong momentum” that drove Dynamics 365 revenue to 49 percent growth year over year, “reflecting growing demand for our modern solutions to build apps and automate workflows.”
Gartner’s Magic Quadrant for RPA report published in July called both Microsoft and UiPath leaders in the market. Mcirosoft was not considered a leader in 2020, a reflection of Microsoft growing its influence in automation.
The report highlighted strengths and weaknesses with UiPath’s products. The products had strong brand awareness, the company wants to target a broad range of users and its low-code app builder UiPath Apps should help draw in more users, according to Gartner.
But UiPath still lacks a web-based RPA development environment and faces competitors with automation capabilities “that may surpass or match UiPath’s offering, especially in terms of complex orchestration, decision automation and case management,” according to the report.
“New RPA customers often discover that UiPath’s pricing model is more complex than those of other RPA products they evaluate,” the report continues. “UiPath’s pricing and packaging strategy also changes, as evidenced by its introduction of developer personas and subsequent elimination of them within one year. That said, UiPath has launched simplified starter packs for new customers and is piloting consumption-based pricing options (such as per-minute pricing), which may reduce entry costs for customers.”
As for Microsoft’s Power Automate RPA suite, strengths included using all of Power Platform for a single, unified, end-to-end platform for automation, integration and low-code application. Microsoft has “15.8 million deployed bots driving 1.5 million actions daily. Its Azure-based RPA offering is accessible to 1 billion people. Power Automate provides rich integration with Microsoft’s ecosystem of widely used apps,” according to the report.
Microsoft offers a free version of Power Automate Desktop to Windows 10 users. Power Automate’s sales ecosystem includes more than 400 partners, according to Gartner..
On the negative side, Microsoft’s RPA offerings depend on Windows, has a complex pricing model and a “confusing” navigation among Teams, Power Automate Desktop and Power Automate service on the cloud, according to the report.
In July, Microsoft announced plans to acquire Suplari, a company that offers data analysis software for companies to manage supplier spending, and use the company’s capabilities to improve its Dynamics 365 product with more automation around spending analysis and a way for users to predict the best spend management actions.
Other tech giants also have automation on the mind. In June, IBM closed its Turbonomic acquisition. IBM plans to use the company’s application resource management and network performance management software to automate customers’ “entire enterprise with capabilities like robotic process automation (RPA), AIOps, ARM and process mining,” according to a blog post from the time.
In March, ServiceNow announced plans to acquire Intellibot, a Hyderabad, India-based developer of RPA technology, to natively build Intellibot’s RPA technology into its flagship Now Platform, extending the system’s core digital workflow capabilities by making it possible for customers to more easily automate repetitive tasks within end-to-end business processes.
UiPath CEO Praises Channel
For the quarter ended April 30, UiPath reported annual recurring revenue of $652.6 million, an increase of 64 percent year over year, and revenue of $186.2 million, a 65 percent increase year over year.
The company has more than 8,500 customers worldwide, including more than 1,000 with annual recurring revenue of $100,000 or more and more than 100 customers with annual recurring revenue of $1 million or more, according to the company.
On the call, Dines said a “large and growing ecosystem of go-to-market and technology partners” contributed to the company’s success.
“On the go-to-market side, we grew our worldwide partner base by more than 35 percent year-over-year to more than 4,000,” he said. “We also expanded several partnerships, including Deloitte, which is now the first GSI (global system integrator) to become a certified UiPath service network partner. They now have the most advanced training and resources to deliver UiPath implementations with a certified level of quality and rigor.”
Investments In Ingram, Certifications
One of the key investments from UiPath this year to grow its partner ecosystem is an expanded partnership with Ingram Micro, O’Brien said. That relationship with Ingram Micro started in 2018. But the companies announced three months ago an effort to provide breadth partners with more opportunity identification, design thinking, advisory services, licensing and training.
“I can‘t wait 35 to 40 years to have a 400,000 partner ecosystem,” O’Brien said. “I’ve got to find a way of getting there faster.”
Ingram Micro called its “advanced solutions portfolio” that includes UiPath products and services “one of the organization’s fastest-growing global practices” in a May statement announcing the new partnership.
And UiPath is a leader in automation, O’Brien said. According to International Data Corp.’s 2020 global RPA market share report, UiPath holds a 32 percent market share. Automation Anywhere holds about 18 percent. Blue Prism holds about 11 percent.
Gartner’s 2020 worldwide market share analysis for RPA shows UiPath with a 29 percent market share, Automation Anywhere with a 13 percent share and Blue Prism with a 10 percent share.
“The entire automation space has really taken off in the last four or five years,” he continued. “UiPath only shipped their first enterprise software about five years ago.”
Along with working with Ingram Micro to build its breadth channel more focused on midmarket customer, UiPath is investing in its partnerships with GSIs. UiPath’s GSI partnerships include Accenture and Capgemini. And O’Brien wants to do more joint solutions, increase the number of resources dedicated to GSI enablement and practice building.
One of the top goals for O’Brien is to grow automation consulting practices at the GSIs to help with demand generation.
“The conversation, the demand, the engagement with all our GSIs has rocketed,” O’Brien said. “The growth trajectory there is very, very positive.”
Part of O’Brien’s strategy includes a team of managed partner representatives all over the world. More than 100 UiPath representatives manage about 10 to 12 partners. “They are high touch, strategic, managed partners, below the layer of these global GSIs,” he said.
UiPath also created a services network for partner enablement and developed exams for partners to prove automation prowess.
“We‘re getting big names now to be USN certified,” he said. “We’re enabling them to take that leap into the digital transformation automation space and start creating demand in their own customer ecosystem.”
O’Brien said that existing UiPath partners can expect changes to the program. He wants to evolve past the standard tiered partner system of diamond, gold and silver partners.
“We‘re really putting some thought into what partner program 3.0 looks like,” he said. “I’d like to try some innovative things. We’d like to break away from the pack, to be honest, with just a state of the art, fully automated enterprise partner program. We have a partner program for you, wherever you are in your automation journey. That’s how we’re positioning this.”
‘Plenty Of Room’ In The Channel
Matt Gallo, a partner and chief revenue officer at Sunrise, Fla.-based UiPath partner Accelirate, told CRN in an interview that he’s not worried about crowding in the channel as UiPath recruits more partners.
“This market’s so huge, if I even got 1 percent of this market, I’d be a $1 billion company,” Gallo said. “When you‘re talking about needing a sliver of a sliver of a sliver to be a big healthy business, there’s plenty of room for everyone.”
UiPath has the benefit of being a player in automation earlier than Microsoft and offering an automation platform that does more, he said.
At this point, UiPath is “100 percent of our business,” Gallo said. The company’s products and services have provided a comprehensive automation one-stop-shop for customers. And for Accelirate, UiPath products and services have helped the partner grow customers’ spending over time.
“Me as an implementation partner, what I look for is the ability to not only get into a client, but to then perform services, grow and keep them growing,” Gallo said. “As their platform’s expanded, that‘s allowed me to take on more and more projects within clients. So a client that maybe had a six- to nine-month lifecycle now becomes a multi-year — actually, ongoing— lifecycle.”