 Live from Las Vegas, it's theCUBE, covering UiPath Forward America's 2019. Brought to you by UiPath. Welcome back everyone to theCUBE's live coverage of UiPath Forward here at the Bellagio in Las Vegas, Nevada. I'm your host, Rebecca Knight, co-hosting alongside of Dave Vellante. We're joined by Kathy Tornbaum. She is the Distinguished VP Analyst at Gartner. Thank you so much for coming on theCUBE. Very welcome, nice to be here. And Guy Kirkwood, he is the Chief Evangelist at UiPath. Thank you so much. Thanks, Rebecca. So we're hearing so much, these mantras, these catchphrases of UiPath, automation first, a robot for every person, we're rebooting work. This is the themes that Guy was howling up on the main stage, Kathy. Beyond that, I'd like to hear from you a little bit about what you're seeing in the RPA space at the moment. What are the trends and the themes that you think are most salient? I think the most fascinating thing about RPA right now is that it's really highlighting the problems that organizations have. All their accidents of history are really being brought up by RPA. And then you've got these digital darlings that they're trying to compete with, the Greenfield site kind of people. And some of those don't have beautiful back offices, but let's not go there for a minute. So RPA is an opportunity for companies to link their digital dreams with their existing legacy nightmares. And those legacy nightmares include all of the things that Guy was talking about today, the drudgery, the dreariness, those mundane tasks that take up so much of our time. Absolutely. I mean, if you think about it in organizations, typically less than 15% of the applications that they're using have got some sort of application programming interface. So if you don't have a way of linking them, you end up with this long tail of applications that aren't linked together with people literally being swivel chair integration between the applications. Why can't you just string a bunch of APIs together and automate that way? Well, in fact, there's a guy called Ian Barkin who works for Symphony, one of the organizations that was set up to create automations for organizations. So one of the services businesses since been acquired by Sykes. And he describes it as process sediments and it builds up in businesses in the same way that sedimentary rock builds up over millions of years. And digging through that so that you can actually become more efficient is very difficult to do. So doing it on an API level means you've got to join up all those things individually. Whereas using RPA, if system A has a user interface and system B has a user interface, you can just use RPA. So, Cathy, you've been following process automation as a category for a number of years. Why RPA? Why is it so hot? Why now? We've heard that it's the number one software category. Fastest growing, yeah. Fastest growing. We've seen spending data that confirms that. Why now? Is the digital competition that companies are facing and the recognition that they cannot continue to be quite as bad at some of the things that they are bad at. So it's really that business transformation story back again, business process re-engineering. The same story that we had with BPO like 10 years ago but now with robots instead. Yeah, it's interesting. I was on a show last weekend and it was the CEO of SUSE. SUSE, how do you say it? Anyway, SUSE, she said to me, well, digital transformation is really about business transformation. And you kind of said the same thing. Any thoughts on that? I mean, you look at the start of the outsourcing market, the BPO market 20 years ago, the very first deals were actually IT outsourcing deals that then transformed the business using IT as the enabler. So the first deal that I got involved with ever in the outsourcing market was Perot Systems with a British energy company. And then we were putting in business process re-engineering consultants who actually transformed the business using IT as enabler for that. There is no difference now. In fact, one of the partners here, one of our original customers, actually put together a plan where we did the implementation, soup to nuts, so that we could find out how we fit into that whole transformation piece. And our team put together a whole package on all the learnings that we got out of that. And I had to laugh because they were exactly the same things that every transformation program has had for the last 30 years. You know, if you look at kind of the history of certain segments, and I wonder if Cathy, if you see RPA is one of them. Like if you could have figured out who was implementing ERP the best, you didn't know SAP was going to become the leader. But if you could have figured out who was adopting ERP, you could have made a lot of money in the stock market because those companies had a huge productivity boost. Kind of the same thing with big data. Nobody really made any money in big data, so-called big data, right, a dupe. But the guys who applied it probably did pretty well. You see RPA is similar where the practitioners are going to actually be the ones that add more value to the industry than the new limited billionaires. It's almost the opposite. So the more RPA a company needs, it means the worse they did it, managing their ERP in the first place. So they're kind of a mess. They need to be cleaned up. Yes, if you've got 124 ERPs that don't talk to each other and you want to close your books in any kind of reasonable timeframe, you're going to be a massive adopter of RPA, which basically means the more rubbish you are and activity, the more opportunity there is to automate more of that. So what are the metrics that matter when you talk to your clients? Well, what I try and encourage clients to do is to really focus on business outcomes. So much as Guy probably doesn't want me to say this, I don't really care how many scripts, aka robots you've built or how many run times you've deployed. What I care about is the business impact that you've managed to achieve. So whatever KPIs are important to you. So are you managing to collect more revenue? Are you managing to make your customers happier because you're managing to like, decrease average handle times or increase right first time activities? So anything that you're doing that actually improves the good old business metrics is just going to be fantastic. So those are sort of metrics that really companies should be focusing on, not how many scripts they've built. That's absolutely pointless. I mean, are they focusing on that? I mean, when you talk to them? Yeah, lots of people, yeah. Yeah, in terms of ROI, I mean, we hear from customers that it has made them more accurate and more efficient. They're at their cost saving on human hours of the mundane tasks. But when you were up on the main stage talking about how we're rebooting work, we're changing this moment, is it sparking the creativity, the imagination, the time spent on strategy and the more higher level things? I mean, is that, I mean, that seems like that's the goal of return on investment. It is within those organizations that are the most mature. So what we're seeing is a bifurcation really of the market between those organizations that are just starting and scaling up what they can internal centers of excellence. Those organizations that are using the partners behind us, those organizations that are using external parties to help them develop that. So Deloitte, for instance, they are something from managed service business. And instead of using people, they use automation. So Deloitte Fly Accident has a BPA business in Spain, but they're now turning that into an automation heavy business and then providing that managed service. And then the smartest customers, including SMBC, who we heard from yesterday, are actually turning their back office cost operations into a front office revenue generator. Now that is radically different from what we've seen per the past. So Kat, they're going to ask you on the plane out here, somebody texted me a picture of the latest hype cycle. And they said, they knew I was going to UiPath. They said, RPA has entered the trough of disillusionment. I said, oh, awesome. Gartner's, you know, Cathy's coming on. I can ask her about that. What's your take on that? I think as Guy says, some people have already sailed through the trough. They've already gone through the challenges, or some of the challenges, and they've already found these fantastic productive things. I mean, we're estimating that people will like save close to a million dollars for a large company. We're just not having to do rework of getting it wrong first time with re-keying that data. So where there's some fantastic savings available, you know, some of the ones have gone through the trough and done that. A lot of the other ones are kind of, they don't understand the limitations of RPA and all those other partner tools that they need to put with it. So don't understand it can't handle unstructured data by itself. It needs a sister tool. So what Gartner's talking about right now is this concept of hyper-automation where you look across all the different activities that you would need to sort of replace a person. So the people that are heading into the trough is sort of this second wave of adopters that Guy talked about that will really struggle because they didn't understand the limitations in the first place. Well, you know, sometimes, you know, things like the magic quadrant and the traffic distance, they're somewhat misunderstood sometimes. People, you know, they see them, Gartner's very clever with the way it works things, but so how should we think about that hype cycle? I mean, it's actually, in a way, it's progress, isn't it? For an industry where they start catching that trough? What Gartner says is all industries have to go through that type of growing pains. And I think that, you know, we're seeing that. UIPath expanded massively, you know, and that's always a challenge for companies as they grow very rapidly. And as companies try and, as I say, you know, take these wrong metrics. So I think things like UIPath buying process gold is fantastic. It's a really, really good move for them. And I expect to see a lot of other process mining companies acquired, brought into the RPA fold, because there's four reasons why companies are going to go into this disillusionment, right? These are the main challenges with companies trying to use that RPA properly. One is they don't know what the processes are. So process gold will give you a really good indication. They don't know about the microscopic level and they don't know about the macro level. So things like digital twins will be something else that we would expect to see very closely partnered with companies like UIPath. And they don't know how to orchestrate their resources. So other companies like Innate that can help you figure out how to do that will become, so it's kind of like we're sort of breaking down a lot of what happened in other software categories and rebuilding them all up in the way that the business can actually adopt them, hence the AI fabric sort of idea. So they don't know the processes, politics. People will lie to you about what they do all day, right? So you can sabotage your process. And there's a lot of silos within organizations that hate each other and throw things over the wall. So that all needs streamlining and the more you can do across silos, the more successful any automation project would be. Then you've got when you take a person out of a process, you take their eyes, their ears, their mouth, the nose, how are you going to replace that when you're trying to take them out because you've got the keyboard fingers thing with the RP-80. You need all these other activities replaced, replicated, supported. And then you've got the economics of production. So actually making sure that the scripts that you've built are actually worthwhile and are going to be cost effective. That's something that we're studying at the moment. So you've got all these different barriers from all these different angles that are really going to push this thing into the trough for a little bit. And that's why it's great that RPA companies are looking at ways to mitigate that for their customers. I mean, we see it as the understandings. So RPA is really good at dealing with structured data, rules-based activities, deterministic things. That's why in regulatory, highly regulated environments, it's very effective and the regulators love this sort of stuff because it's deterministic. When you look at AI, then we look at it in four ways. So you've got process understanding, which is the process gold acquisition. You look at conversational understanding because ultimately robots are going to be controlled by voice. So you have to understand, the system has to understand that, let's say you're sitting in a bank and the robot doesn't understand something. You say, okay, robot's sticking that in the Wells account. It has to understand that Wells in this case means Wells Fargo. It doesn't mean a hole in the ground in the water at the bottom or a town in Somerset in the UK because they're all Wells. So getting those ontologies correct is so important. So that's conversational understanding, document understanding, because as Cathy said, companies are still wading around in paper. So understanding what those different documents are and how to action them is going to be really important. And finally, you're looking at visual understanding. So understanding and viewing things on the screen is exactly the same as humans do. So it's getting that combination right. So for RPA to live up to the hype, there's a lot of hype and it's a good thing. It's fun to track. It's got to go presumably beyond cleaning up the crime scene if you will to this new vision so that you and guy just laid out. What is the distance between, I don't know, sometimes I say paving the cow path, which gives you a nice hit. But as you say, it's just companies got messed up to this vision of this, actually the guy from Pepsi today talked about it, this fabric of automation across the organization. How big of a gap is that? It's very different by every different company on the planet really in terms of their accidents of history, what their IT application landscape looks like and what their business landscape looks like. And when you try and put the two things together, that's where you find the opportunities for any type of automation. Oh, come on, that's such an, it depends answer. At the macro, in your expert opinion, will RPA live up to the hype? So many trends haven't, you know, enterprise data warehousing, big data, do all that stuff. You think RPA has the potential to crack through that? You mentioned a very good point. I think the most successful companies are the ones that actually will take the person that's managing the data and analytics of how their process is performing and doing that with their automation strategy. And there are very few companies that have actually worked that out. They've still got totally two walls and they just meet up here at the CEO. So unless companies actually take a more active business outcomes approach and look at their end-to-end processes of order to cash and source to pay, these problems will carry on for some time. Well, that's a great point. I mean, so it's data, it's machine intelligence, I guess cloud for scale. You guys made a SaaS announcement today. It's automation first to use your buzzword. You need it all to come together. And it's really developing those best practices in your role as Chief Evangelist in helping understand what the most successful companies do and then making sure that's implemented. Well, that's why I spend more of my time listening than I do talking. Because the very nature of being a Chief Evangelist is the best job and the worst job total in the world. It's the best job because I spend my entire time talking to people like Cathy who know about what's happening within the market and then feeding it back into our organization so we can make the right bets. So we can make the right acquisitions, develop the right things. The bad thing about the job is that I keep getting in an order number of people on LinkedIn saying so pleased that Jesus has entered your life. And not that popular. I'm just kidding. It's in the title. There's always this age old debate in the industry of best of breed versus kind of sweet approach. You know, you see an SAP, for instance, acquired an RPA company in four talks about it. And then you get the specialist, UiPath. How do you see that shaking out as the industry gets kind of more consolidated? How do you see a company like UiPath thriving, continuing to thrive? Gartler is going to predict, coming in on new predictions series, that roughly 20 to 30% of enterprise adoption of AI, machine learning activities for process based activities will go through the RPA market. So, and with the IBPMS market sort of combined together the process management because RPA has managed cleverly to capture the imagination of the business person. So actually there's a lot of IT departments that are talking to us about how do we enshrine this activity for shadow IT that's happening in the business and make it successful, put governance plans in place so it will actually be successful in the way that it's actually now dealing with its own crime scene to use on its own rubbish in a much better way. And I think that responsibility of business to understand how it can automate things and how it can manage things will really help a lot. So I think the RPA players are well-placed to either be acquired into that bigger set of the established large, you know, BMOS software providers, or to kind of, you know, kind of keep blazing a trail for independence of the business. I'm not so sure about this idea that everybody should be programming their own scripts. I think that's a challenge. And I think the new interfaces will help mitigate some of the problems that we've seen with that approach. That hasn't been, that hasn't been very well done. Historically, that's another area that'll probably be a bit trough of disillusionment. But actually well-managed RPA projects have actually got a really good chance of delivering back very interesting benefits for businesses. Yeah, as a discreet innovation category. It does kind of feel that way. Oftentimes those markets are winner take most. You know, the winner makes a ton of dough. Number two makes a little bit of money. Number three kind of breaks even and everybody else gets consolidated or goes out of business. So you know, you guys go big or go home. That's kind of- Well, that's one of my- I'm sure. Tomorrow morning I'm doing my predictions for next year. And one of them is that the challenger RPA vendors and indeed the service organizations that are small are going to continue to consolidate and get acquired next year. So that's a 2020 prediction for us. Great. Well, Guy and Kathy, thank you both so much for coming on theCUBE. It was a great conversation. Thank you very much indeed. Thanks for coming. Thanks you guys. I'm Rebecca Knight for Dave Vellante. Stay tuned for more of theCUBE's live coverage of UiPath.