Microsoft (MSFT) Acquires Softomotive to Strengthen RPA

Zacks Equity Research
·4-min read

Microsoft MSFT announced the acquisition of robotic process automation (RPA) software provider Softomotive, during Build 2020 conference.

However, the financial terms of the deal have been kept under wraps. Per Crunchbase data, Softomotive raised around $25 million in funding as a private entity.

Per the terms, Softomotive’s WinAutomation will become a part of Microsoft’s automation platform Power Automate. Notably, WinAutomation platform enables customers to create their own bot that aids them in automating manual business processes.

The combined offering will provide customers with additional options to automate Windows based tasks. It will also facilitate RPA connectivity to new software applications from companies including SAP SAP, and Citrix.

Moreover, customers will be able to run multiple workflows and automations at the same time and on the same system, which will boost efficiency of their bots and reduce latency. WinAutomation was made available for free to all customers with an RPA attended license in Power Automate on May, 19.

Markedly, Softomotive currently has a global customer base of about 9000, which is a positive. This is likely to bolster Microsoft’s top line in the upcoming quarters and boost investors’ optimism in its stock.

Notably, shares of Microsoft have returned 17.7% year to date compared with the industry’s rise of 9.8%.

Microsoft Corporation Price and Consensus

Microsoft Corporation Price and Consensus
Microsoft Corporation Price and Consensus

Microsoft Corporation price-consensus-chart | Microsoft Corporation Quote

Strengthening RPA Capabilities Holds Promise

Growing use of business process automation (BPA) backed by AI and software robots is likely to boost demand for RPA solutions, as it enables enterprises to boost productivity and performs repetitive tasks without human intervention. The Softomotive buyout is a part of Microsoft’s focus on developing robust RPA capabilities and expanding its footprint in the RPA space.

Notably, the company launched UI Flows in April which added RPA capabilities to the Power Automate platform. This allowed enterprises to automate their legacy apps and manual processes through UI-based automation for both attended and unattended scenarios.

Moreover, solid demand for RPA services in the market driven by the digital transformation taking place across all industries, bodes well for Microsoft’s growing RPA strength over the long haul.

In fact, Power Automate is already used by more than 350,000 organizations every month owing to enhanced features like AI-based data understanding through AI Builder and UI-based application automation through UI flows. Thus, the integration of Softomotive’s capabilities is anticipated to aid Microsoft acquire more customers in the days ahead.

Furthermore, Microsoft’s flexible and low-cost business model for RPA is expected to boost adoption among smaller enterprises. Markedly, the service is available in two tiers – $40 per user/month for attended RPA bots and $150 per month for each unattended RPA bot.

These factors are expected to aid Microsoft in expanding its presence in the RPA market, which per Grand View Research data, is expected to witness a CAGR of 33.6% between 2020 and 2027.

Competitive Scenario

Nevertheless, other tech players like International Business Machines IBM, Appian APPN and UiPath, aren’t far behind in the RPA game, given its alluring growth prospects.

Notably, Appian acquired RPA provider Jidoka in January to strengthen its platform and make it a one stop shop for Automation, with some of the best solutions for workflow, AI, and RPA.

In the same month, IBM expanded its partnership with RPA provider Automation Anywhere to roll out a new RPA offering which aids business enterprises in driving automation projects with improved stability and at lower ownership and maintenance costs. The offering comes with enhanced features like Control Room and Bot Insight, which gives users better control over bots.

Further, RPA startup UiPath acquired ProcessGold and StepShot in October, 2019. The acquisitions were aimed at bolstering UiPath’s existing RPA strength with added capabilities. Notably, UiPath Explorer Expert will leverage Stepshot to identify and improve well defined business processes, while UiPath Explorer Enterprise will use ProcessGold tech to identify variations in less well-defined processes and recommend optimal courses of action.

Nevertheless, Microsoft’s deep focus toward strengthening RPA offerings is likely to strengthen its market position in the space and enable it to offer advanced services to enterprises that boost business productivity.

Zacks Rank

Microsoft currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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