ISG Provider Lens™ Intelligent Automation - Solutions & Services - Intelligent Business Automation - U.S. 2021

According to the Q3 2021 ISG Index™ report, the global market for technology and business services grew at its fastest pace ever in the third quarter, propelled by surging demand for cloud computing and other digital capabilities. The Americas region grew strongly across the board in the third quarter, both versus the previous year and quarter over quarter, and set annual contract value (ACV) records in all segments. Combined ACV from managed services and as-a-service contracts increased by 37 percent to 11.6 billion, its highest level ever, and the first time the region has surpassed $10 billion in a quarter. As-a-service ACV increased by 51 percent when compared to the last year, to a record $6.9 billion, the fastest growth rate for this segment since ISG began tracking it in 2014. Within as-a-service, IaaS increased by 53 percent, to reach $4.6 billion, and SaaS increased by 48 percent, to reach $2.4 billion. Managed services increased by 21 percent, to reach $4.7 billion. Within managed services, ITO increased by 26 percent, to reach $3.4 billion, and BPO was up by 9 percent, to reach $1.3 billion.

The COVID-19 pandemic has driven digital transformation initiatives. While large digital programs may be still on hold, automation and other initiatives that can bring immediate benefits are in great demand. ISG, as an advisor that has helped several of the world’s leading enterprises navigate their intelligent automation journeys, sees broad-based market support for technology services, including intelligent automation, as enterprises accelerate digital investments coming out of the pandemic. Despite disruptions due to COVID-19, the majority of intelligent automation solutions and services providers reported an average 19 percent annual growth in their top line during FY2020-2021 and expect a minimum of 20 percent growth in FY2022.

The ISG Provider Lens report for Intelligent Automation this year compares service providers and technology vendors for their solutions and services during these difficult times, and positions them based on their current portfolios and outlook. This comparison has been done across five quadrants ¯ Intelligent Business Automation, Artificial Intelligence for IT Operations (AIOps), Conversational AI, Intelligent Document Processing (IDP), and Process Discovery and Mining ¯ that represent the services and products that typical enterprise clients are acquiring in the intelligent automation space.
The world of technology is moving at a rapid pace, and it is difficult to know which emerging technologies to rely on. These five intelligent automation capabilities will help businesses build the proper foundation to make sure their processes help instead of hinder future business planning. These technologies are already becoming a reality in some leading organizations and will become the norm by 2025. Getting on board early will accelerate existing automation efforts and pave the way for a future autonomous enterprise.

Intelligent Business Automation

The market in North America, the U.S. in particular, is the largest in intelligent business process automation solutions and services adoption and has reached a certain maturity of a higher level compared to other geographies with the increase in engagements over the years. Large enterprises in the U.S. are more transformation focused and are increasingly leveraging new-age technologies to accelerate their digital transformation journeys, at scale. However, both small and midsize businesses are gradually making headway with intelligent automation adoption as more companies are keen to accelerate their digital transformation journeys. From an industry perspective, banking, financial services and insurance (BFSI) is at the forefront for adopting intelligent business automation solutions and services, followed by healthcare and pharmaceutical, retail and telecom.
A collection of automated process discovery technologies is starting to make waves by helping enterprises understand processes in a new perspective. Although not focused solely on automation opportunities, these technologies will provide process-related insight not gained by any other means. Process mining, task mining and the up-and-coming conversation mining are all tools that can improve process discovery and improvement initiatives.
Furthermore, many organizations have not received the return they expected from automation. This is often because the processes are not monitored over a long enough period and are not understood well enough. Process intelligence can add data and intelligence layers to improve the way enterprises monitor the ongoing health of their processes. As workplaces become increasingly hybridized with on-site and remote workers, monitoring processes and staff will become crucial. Process intelligence will gain information and knowledge out of staffing needs, budgeting, SLA projections and more, even when processes are still being completed by people. Intelligent automation will penetrate an organization only so far, at least with the way current processes are designed. Unless enterprises plan on transforming every process in the business to be suitable for automation, process intelligence will become a necessity.

AIOps

With accelerated digital transformation initiatives across businesses as a result the COVID-19 pandemic and the growing convergence of many technologies such as AI, machine learning, big data and analytics, the Americas market has seen an increase in IT spending, as documented above.
ISG sees that commoditization of open-source technologies has lowered the barrier to entry for global system integrators (GSI) in this space, providing many options for data acquisition, storage and visualization tools. The development of domain-agnostic AIOps platforms has been a priority. In the last two to three years, we see that majority of the GSIs, specifically the midsize IT service providers, have invested heavily in specific business units to develop an AI-led IT operation platforms, frameworks and various accelerators to address the needs of enterprises, from complex traditional IT landscape optimization perspective.
We believe the U.S. market to be more mature and have the largest share in the global AIOps market when compared to other regions due to its technologically advanced economy. The AIOps market is expected to grow substantially in the U.S. over the next two to five years. Major factors fueling the AIOps growth in the U.S. are increasing infrastructure complexity and scale with growing data volume, increasing awareness and adoption of AI-based IT solutions, and a structural shift to more cloud adoption and digital transformation coming out of the pandemic. Organizations in the banking and financial services industry are the frontrunners in terms of AIOps adoption and are heavily focused on cybersecurity compliance requirements.

Conversational AI

Conversational AI solutions such as chatbots, virtual agents and voice assistants have become extremely popular over the last few years, especially in the previous year, with accelerated adoption due to COVID-19. The key factor favoring the growth of the market is increasing demand for enhancing the customer support service to strengthen customer retention initiatives. North America accounts for the largest market share of the global conversational AI market in terms of adoption, followed by APAC and Europe. North America has seen rapid technological advancements and is home to several vendors that lead the substantial conversational AI market. Furthermore, increasing governments’ investments in AI-based technologies are also responsible for fueling the growth of the conversational AI market in North America. BFSI, healthcare, e-commerce, retail and telecom are some of the key sectors witnessing great demand for conversational AI.
Leading players in this space provide robust integration capabilities, extensive omnichannel access, explainable AI, affinity to low-code conversational AI for citizen developers, out-of-the-box, pre-trained, industry and domain-specific solutions, and support multiple languages. Voice is becoming an increasingly popular deployment model for new clients for supporting customers, and mobile apps are quickly gaining on web/chat apps. Persona-based chatbots and hyper personalization shall drive the next wave of adoption. Public cloud is the most prevalent hosting model, followed by private cloud and on-premises. Heavily regulated industries such as banking and healthcare prefer on-premises implementations. As the level of awareness about chatbots, virtual assistants and digital personal assistants and their benefits increases, and vendors make their solutions more powerful, comprehensive and amenable for wide-scale adoption, the market is expected to surge in the near future.

Intelligent Document Processing

COVID-19 has caused enterprises to rely more on intelligent document processing (IDP) solutions. With many employees working from their homes and having limited or no access to physical documents, digitization and IDP automation are becoming increasingly necessary now and for the future. IDP solutions are growing rapidly due to several factors, including the growing requirement for enterprises to streamline their processes by processing large volumes of documents with accuracy and speed, the increasing investments in digital transformation, and the expanding use of cloud-based document processing solutions.
In terms of revenue contribution, North America continues to be the largest market for all major IDP software providers, followed by APAC and continental Europe. Companies in this region are progressive in the case of AI, NLP, machine learning and computer vision adoption, thus propelling the growth of the IDP market. While enterprises of all sizes are the leading users of IDP solutions in the U.S., adoption is growing fastest among small and midsize firms.
Furthermore, there is a shift from standard IDP solutions to pre-built solutions for specific industries and processes such as know your customer (KYC), claims processing and GDPR compliance, resulting in a faster time to value and shorter deployment time. IDP adoption is most prevalent in the banking, financial services, insurance and healthcare industries; however, the demand for intelligent document processing has increased outside such industries such as travel, logistics, telecom and manufacturing to derive actionable insights from unstructured documents. Government and other public sector organizations are also investing in IDP solutions to reduce manual work and improve efficiency and compliance.

Process Discovery and Mining

In light of the COVID-19 pandemic, it has become even more important to discover, monitor and optimize processes. As a vital and integral part of the intelligent automation ecosystem, process discovery and mining enable continuous process optimization, accelerating enterprise digital transformation. Over the past two years, the process discovery and mining market has grown at the fastest rates within the intelligent automation space. There have been many established software companies that have entered the market through acquisitions over the past few months, including SAP by acquiring Signavio, IBM through myInvenio, and Appian through Lana Labs. Process discovery and mining are also budget line items in enterprises of all sizes. 2021 marks the year that process discovery and mining “crosses the chasm” from the early adopter stage to the early majority stage.
Despite Europe being the leading market in terms of adoption of process discovery and mining, North America is witnessing the fastest year-over-year growth. It is likely that North America will have the highest adoption rate in one to two years compared to the other continents. Increasing awareness of process discovery and mining technologies is helping countries in this region to realize immense growth potential. The majority of process discovery and mining deployments are in the manufacturing, banking, financial services and insurance (BFSI) and healthcare industries.

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