Technology has revolutionised manufacturing processes. Today’s robots can manoeuvre delicate objects and precisely position an 800kg car body. And they are connected to the broader manufacturing ecosystem – sharing data and programming, and constantly reporting performance.
Inevitably, assets in automation and robotics-focused funds have leaped over the past decade and while last year’s corporate transactions were down on 2019 activity, the year-end numbers looked more promising. By November 2020, The Robot Report tracked a total of 44 transactions for the month, worth $2.2 billion, which climbed to $3 billion in transactions for December 2020[1].
Fast forward to April 2021 and investor confidence is firmly back on the map. Last week, in fact, the automation software provider UiPath debuted on the New York Stock Exchange with a $1.3bn IPO, becoming Europe’s biggest tech export since Spotify. The roadmap for world-changing new applications has never been as obvious and this will likely result in superior earnings growth for the industry.
“We’re seeing a subtle revolution,” says Andrew Doman, Chairman of automation group Roboyo. “It’s world-changing, yes, but the overall pace of adoption is slow given the huge opportunity space, so the impact at the society level is more evolutionary than revolutionary.” Roboyo work with enterprise clients to harness a full spectrum of accelerated technologies, from robotic process automation to machine learning to artificial intelligence.
Market drivers
Much of the sector’s expansion is driven by “the art of the possible,” notes Doman. Of all the forces driving this disruption, demography and the correlated labour costs are among the most powerful. He says: “In countries where labour costs are high, in Germany and France for example, you typically see a lot of emphasis on automation.”
The rise in computational power and storage capacity has enabled companies to develop new technologies in double quick time. These technologies will impact all sectors, which means that the end market for IT and robotics companies is growing dramatically.
Doman says: “Intelligent Automation is one of the more exciting opportunities. Will chatbots ultimately remove the need for human intervention? I think the answer is increasingly, yes. In fact, we are already seeing this in some digital-first organisations with a millennial customer base.”
Global economic growth has been helping the robotics boom. Companies are starting to invest more and more in capital expenditure – and many argue this is a capital expenditure-driven cycle. These are clearly important drivers but at a base level our ever-present instinct for efficiency and convenience will always be a factor.
“Let's not forget that robots can improve customer service dramatically. Millennials very often prefer not to speak to humans. They are so familiar with the digital world. They don't want to have to tell a human about their problems – and they want a better customer experience on their terms.”
Attracting investment
Value and wealth in the sector has been crafted for years and this is likely to accelerate. Technology companies excite investors, but investors want to make sure they are not overpaying. Increasingly, value resides in the more innovative companies. Nvidia, for instance, a US semiconductor company, has used AI to teach an autonomous car to drive and Tesla, Mercedes, Audi, Volvo and BMW have adopted this technology. Another example is Yaskawa, a robot producer whose industrial robots are themselves manufactured by robots.
Doman adds: “Opportunities also exist in the low-code, no-code revolution that’s going on around us. This is a broader theme that makes it easier for business users, not just the IT team, to build and run applications. It overlaps with robotics because the low-code, no-code investment theme is a big threat to the legacy hardwired software platform.”
No-code, more specifically, relates to the ‘citizen developers’ – business users who can build functional but generally limited apps without having to write a line of code. Low-code, in contrast, centres on professional developers, streamlining and simplifying their work – developing enterprise-class applications with little or no hand-coding.
“Today, a lot of programmers are building specialised IT systems to do specialised tasks. Up until now there has been no alternative other than to engage an outside firm or place someone inside your own IT department to do that programming for you.
“So, the low-code, no-code revolution is really trying to bypass the need for programming experts. This is a major revolution. Take Microsoft Power Automate, for example. They already have the worldwide infrastructure which is a huge advantage. Their strategy is to introduce a low-code, no-code solution into existing frameworks like Microsoft Office and Microsoft Dynamics.
“Who knows what sort of penetration Microsoft can achieve with their robotics programme? It will be fascinating to watch.”
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[1] https://www.roboticsbusinessreview.com/investment/november-2020-robotics-transactions-fall-year-over-year/
