Tuesday, August 11, 2020

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AI Robotic process automation battle for a bigger prize: automation everywhere

THE FOURTH INDUSTRIAL REVOLUTION

 WITHOUT US



ANALYSIS BY DAVE VELLANTE 
AUGUST 08 2020


Robotic process automation solutions remain one of the most attractive investments for business technology buyers — this despite our overall 2020 tech spending forecasts, which remain at the depressed levels of -4% to -5% for the year.

Relative to previous surveys, we do see some softness in traditional RPA strongholds such as large financials, insurance and giant public and privates. But RPA relative to other technology investments remains at the top as the sector with the highest spending momentum – neck and neck with that of machine learning and artificial intelligence, and ahead of containers and even cloud computing.

In this week’s Wikibon CUBE Insights, powered by ETR, we want to update you on the latest RPA trends and share fresh ETR survey data with our communities.




Key points in this segment

Despite our tepid spending forecast for the year, demand for RPA software continues to grow at a 60% to 70% clip. Remember, RPA mimics human computer interactions using software scripts or robots that execute human tasks in a runtime assembly of discrete steps. The practice first became popular for back-office functions – mostly as unattended bots.

The pandemic appears to be accelerating front-office adoption and that’s creating a bit of a schism between front- and back-office processes, strategies and implementations. Digital transformation initiatives, in many ways, create the connective tissue between the front and back of the house. We see that connection as a linchpin of digital efforts.


The competition is capable

Competitive dynamics are heating up. The two emergent leaders, Automation Anywhere Inc. and UiPath Inc., are separating from the pack. Large incumbent software vendors such as Microsoft Corp., IBM Corp. and SAP SE are entering the market and positioning RPA as a feature. Meanwhile, the legacy business process players continue to focus on taking their installed bases on a broader automation journey. However, all three of these constituents are on a collision course in our view where a deeper automation objective is the “north star.”
Two material changes to our scenario

First, we have expanded our thinking on the RPA total available market and we are extending this toward a broader automation agenda more consistent with buyer goals. In other words, the TAM is much larger than we initially thought and we’ll explain why.

Second, we no longer see this as a winner-take-all or winner-take-most market. In this segment we’ll look deeper into the leaders and share some new data. In particular, although it appeared in our previous analysis that UiPath was running the table on the market, we see a more textured competitive dynamic setting up and the data suggests that other players, including Automation Anywhere and some of the larger incumbents, will challenge UiPath for leadership in this market. As with many developing software markets, the ultimate leader is not crystal-clear at this point.



The effects of the pandemic


Conventional wisdom suggests, and we agree, that the automation mandate has been accelerated by several years due to Coronavirus. Three points here: 1) Yes, COVID has put digital transformation on the front burner of executives’ priority lists; 2) Automation isn’t trivial and there’s a difference between wanting and achieving; and 3) We believe there’s another driver for the automation mandate that will survive a vaccine or herd immunity, and that’s the productivity gap.
Human labor alone can’t solve the world’s biggest problems

The chart below underscores this reality point and was first brought to our attention by author David Moschella.



Specifically, we’ve seen a noticeable decline in productivity in the U.S. and the EU since the personal productivity boom brought forth by the personal computer and the internet. The premise put forth by Moschella is that in order to solve the grand challenges of the 2020s and beyond, automation is a mandate.

Climate change, global competitiveness, aging populations and infrastructure, massive deficits, mass immigration, sustainable food sources and healthcare will all require huge injections of automation into the system to solve problems associated with these areas. Human labor isn’t the answer.




New thinking on the RPA total available market

The diagram below updates our expectations on the TAM for RPA. The first takeaway is we envision a market for business automation well beyond software bots, which are represented in the first two layers — that back-office and front-office divide, if you will. And we see those two coming together in the third layer through digital transformation initiatives. But we also envision a massive market for automated decision-making and very deep business integration where systems are communicating to each other and making real-time decisions.



We’re not going to go deep into this because it’s a bit academic, but suffice to say this is an enormous market comprising many layers of the tech and services stack. And this presents serious opportunities for multiple players.
RPA spending survey data

The chart below is one of our favorites because it plots two important metrics – Net Score (spending momentum on the y axis) and Market Share (pervasiveness in the survey – on the x axis) for the RPA leaders. Net Score is a simple but effective measure that for this last survey asks buyers, “Are you spending more or less in the second half of the year than you had originally planned?”

Net Score is derived by subtracting the lesses from the mores and is shown in the upper right of the chart in the green highlights. Note the total N in the survey is 1,192 and you can see the number of responses for each vendor in the upper right in the gray. We eliminated any RPA vendor that didn’t get at least 25 responses.


Net Score: Automation Anywhere and UiPath trade places

You can see on the x axis that Automation Anywhere and UiPath have essentially traded positions from our last update. This indicates that relative to the first half of 2020, Automation Anywhere customers expect greater spending momentum in the second half of the year than UiPath customers. UiPath at a 62% Net Score is still very high, but this marks the first time since our reporting that AA has taken the Net Score lead. And the small arrows show the general direction of their respective momentum, which we’ll drill into later.

On the chart you can also see Blue Prism and Pegasystems and though they’re significantly below Automation Anywhere and UiPath, these are respectable Net Scores for more mature players. Again, we don’t consider these two to be RPA specialists. Especially Pega: The company has established an automation play well beyond RPA and has built an awesome business. In many ways it’s benefiting from the hype being created by the newbies. This is a company with $1 billion in revenue and a valuation of more than $9 billion. The stock is near its all-time high and it took the company to an initial public offering with no outside capital.

One more thing on this chart: You can see Microsoft with Power Automate crashing the party with a 1.0 product that is making some noise.



A note of caution: Net Score is a forward-looking metric and measures spending momentum relative to past actuals or past expectations, depending on the time of year the survey is administered. For the July survey, ETR asks about second-half spending expectations relative to the first half. Although a higher Net Score is a sign of strength, readers must consider that if spending was soft in the first half, a company may show elevated Net Score levels as a result of an easier comparison. The reverse is also true: If a vendor had strong spending in the first half, it may have a more difficult compare in the second half, presenting a Net Score headwind.

Market share favors UiPath in the survey

On the x axis you can see UiPath has the Market Share lead, but we want to remind you what this is. Market Share is an indication of pervasiveness in the survey and is calculated by dividing the number of mentions for a vendor in a sector by the total mentions in the survey. So you can see that UiPath has the share of voice lead but is still under 10% of the total survey base. So there’s lots of room for this market to grow.

We want to make an important note because UiPath has historically been a collection of point products with a big emphasis on simple end-user adoption, whereas Automation Anywhere’s go-to-market typically involves going into large accounts and selling an end-to-end digital transformation initiative to the line of business.

As we stated earlier, these two and other companies are on a collision course because that is the big prize. UiPath has restructured its product and pricing strategy to go after this larger scale opportunity. But it stands to reason that UiPath has a bigger presence in the ETR data set thanks to its heritage. That makes Automation Anywhere’s No. 1 Net Score position even more impressive.

The other nuance is that ETR tends to be somewhat weighted to the information technology department side of the house, and although it most certainly picks up line-of-business spending, there’s a bias in the data. So that means RPA is most likely even stronger in the context of spending initiatives – and it’s already No. 1 relative to other sectors.
How Net Score has changed for the leaders

The chart below shows the change in Net Score or spending momentum for Automation Anywhere, UiPath, Blue Prism and Pegasystems over three survey periods, including last October, this April at the height of the U.S. lockdown and the most recent July survey.



Here you see that Automation Anywhere is accelerating and taking the lead over UiPath and is the only one on the chart growing Net Score. Again, UiPath remains elevated despite the relative decline from previous surveys. We have to caution you again that Pegasystems, for example, is crushing it in the market. The stock is up nearly 40% so far this year and over 60% for the last 12 months. So because it’s not so RPA-only focused and is not really an IT play per se, the survey data has to be digested in that context. But you do see Pegasystems coming down from elevated levels last October.
A time series view of Net Score

This next chart below simply extends the timeframe and shows more granularity of survey data back to January 2018, meaning 11 quarterly survey snapshots. This really underscores the power of the ETR platform and you can stretch the data over time.



You see Automation Anywhere overtakes UiPath for the first time since we started capturing the segment. UiPath and the others show a noticeable decline in Net Score this survey. Microsoft is an exception since it just started showing up in the data and is elbowing its way into the market.
A time series view of Market Share

This next chart below shows our other favorite metric, Market Share or pervasiveness in the data set over a time series.



Remember this data is based on mentions so it’s not an indication of spending amount. But it is a data point and we pay attention to it. You can see how UiPath broke away from the pack in October 2018 and that coincides with the company’s big push on events such as UiPath Forward and training. The company has really done a good job of building its presence and awareness in the market.

Note that we’ve superimposed the chart in the upper left corner for context. It shows Net Scores in the green and Shared N in the gray and is sorted on Shared N. This refers to the number of mentions in the data set for each vendor out of the 1192 total responses. Some of these have small Ns, so we’re not going to put too much emphasis on this except that the UiPath escalation is notable.




Big market but the real money is with the buyers

We discussed the automation mandate and the COVID-19 wrecking ball effect. But it’s more than that. The productivity pressures on the U.S. and the EU in particular make it exceedingly difficult to throw labor at the world’s grand problems.

So that has opened up an enormous opportunity for technology companies and practitioners to drive automation. We said this during the initial big data era – in fact, Peter Goldmacher had this discussion with us on theCUBE in the early part of last decade. Those companies that can implement automation are going to be the big big winners. It’s not just the tech players. Of course as we’ve seen, many of the big tech companies are benefiting from enormously from mega-automation, but the broader set of industries has massive upside.

What this sets up is a multidimensional competitive environment. We have Automation Anywhere and UiPath battling it out to achieve escape velocity. Automation Anywhere just brought in Chris Riley to run go-to-market efforts, so you know it’s serious: He’s a player who understands complex enterprise selling. And UiPath is hiring engineers as fast as they can.

The other dimension is a classic battle of best-of-breed specialists such as AA and UiPath against the bundlers selling automation as a feature of their services. Microsoft, IBM, SAP and others all see automation as a huge opportunity and everyone’s going to hop on the bandwagon because this is worth at least hundreds of billions of dollars.

Please look for updates on the ETR Website and make sure to check out SiliconANGLE for all the news and analysis. Also, you may want to check out this ETR Tutorial we created, which explains the spending methodology in more detail. And remember these episodes are all available as podcasts wherever you listen.

Ways to get in touch: Email david.vellante@siliconangle.com, DM @dvellante on Twitter and comment on our LinkedIn posts.

Here’s this week’s full video analysis:


Image: geralt/Pixabay




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Twitter shows interest in acquisition as TikTok plans to sue over ban




BY DUNCAN RILEY 
AUGUST 09 2020

Twitter Inc. is reportedly the latest company interested in acquiring Chinese-owned social video app TikTok, just as app owner ByteDance Ltd. claims it will sue the Trump administration this week over a ban.

The saga of TikTok, highly popular among young online users, is colorful to say the least. With its roots in China, where it’s known as Douyin, the app has arguably become the largest challenger to U.S. social media tech companies in years.

Its Chinese ownership has led to accusations that the app is being used to spy on behalf of the Chinese government. Bytedance denies spying on behalf of the Chinese government and has established a separate arm in the U.S. to placate critics but with little success in terms of stopping criticism.

President Donald Trump had been threatening to ban the app in the U.S. for weeks and finally followed through on Thursday with an executive order that would, for all intents and purposes, ban TikTok within 45 days if it does not find new owners.

The order doesn’t state that TikTok the app is banned; instead, the U.S. will prohibit “any transaction by any person” with ByteDance. As The Guardian noted, the broad language is open to interpretation: It could simply mean that U.S. advertisers would be banned from buying ads on the platform, but it also could mean that even downloading the app would be considered a transaction.

Microsoft Corp. was the first major U.S. company to show interest in acquiring TikTok from ByteDance last week. The exact status of those talks remains unknown other than they are yet to result in a deal. Microsoft founder Bill Gates has come out against a potential acquisition, saying that the acquisition would be a “poison[ed] chalice” and “no simple game” because Microsoft would have to contend with a whole new level of moderation.

Twitter, which owned a predecessor to TikTok called Vine that it acquired in 2012 for $30 million before closing the service in 2016, is said to have held preliminary talks with ByteDance over a possible acquisition. TechCrunch reported that there are serious questions as to whether a deal might be possible given that Twitter may not have the capacity or investor support to raise the money required.

Twitter itself has a market valuation of $29 billion, whereas the parts of TikTok currently on the table — operations in the U.S., Australia, Canada and New Zealand at the least — could have a valuation of between $15 billion and $50 billion. Microsoft, by comparison, has a market cap of $1.6 trillion, with $136.6 billion in cash on hand as of November, and would easily win any bidding war against Twitter should it come to that.

Whichever company ends up possibly buying TikTok — and other bidders may yet emerge — the clock is now ticking. The ban goes into effect Sept. 15 if TikTok remains Chinese-owned at the time.

Whether the ban stands is another matter. According to the South China Morning Post, TikTok intends to file a federal lawsuit as soon as Tuesday. The lawsuit will argue that the president’s action is unconstitutional because it failed to give the company a chance to respond and that the U.S. government’s national-security justification for the order is baseless.

The due process argument is one made before by Huawei Electronics Co. Ltd., another company banned by the Trump administration in a lawsuit that was struck down in February.
Image: TikTok



Reddit hacked and defaced with pro-Trump messages in English and Chinese


BY DUNCAN RILEY 
 AUGUST 09 2020

Reddit Inc. is the latest company to be hacked, with some 70 groups on the site defaced with pro-Donald Trump messages.

The hack occurred on Friday and involved those behind the attack accessing accounts belonging to moderators of popular subreddits with millions of subscribers, including r/space, r/food, r/Japan, r/nfl, r/cfb and r/podcasts.

The messages posted by the hackers were pro-Trump in both English and simplified Chinese text. The Chinese text in one case (pictured) asked whether former president Barack Obama was a Kenyan, a reference to so-called “birther” conspiracy theories, along with a shout-out to YouTuber David Pakman.

How the accounts were compromised is unknown, but Reddit said it was investigating the incident. On a support thread, Reddit did note that the moderators of the compromised subreddits had not been using two-factor authentication on their accounts. The same thread also added that users should look for signs of a compromise, including an email notification that their password or email address on their account had been changed.

Still, the lack of two-factor authentication doesn’t explain how those behind the hack obtained passwords for the targeted accounts to begin with.

“Most of these popular subreddits are actually ran by volunteers, which makes it tough for Reddit to enforce certain security requirements as it currently stands,” Zack Allen, director of threat intelligence at cybersecurity company ZeroFOX Inc., told SiliconANGLE. “The accounts were probably compromised from a credential-stuffing attack (reused passwords from well-known breaches, like the ones from ShinyHunters and/or GnosticPlayers), phishing or a combination of both.”

Matthew Gardiner, principal security strategist at cloud cybersecurity firm Mimecast Ltd., noted that it’s becoming ever more clear that every participant in these social networks must also adopt the “zero-trust” model – that is, not assuming anything is true unless they can independently verify it.

“This Reddit hack and the recent Twitter hack were easy to discern as bogus, but what if the cybercriminals had been a bit more nefarious and a bit more believable?” Gardiner asked. “It is scary to think what actual damage they could do if they really tried.”


Image: Tim Pool/Twitter SCREENSAVE


Kodak Shares Drop After Loan Paused Amid Insider Trading Allegations

BUSINESSMimi Nguyen Ly Aug 11, 2020
Kodak World Headquarters stands in Rochester, New York on Jan 19, 2011. (Guy Solimano/Getty Images)

Eastman Kodak shares fell on Monday after a federal agency put its $765 million loan on hold last week.

“Recent allegations of wrongdoing raise serious concerns,” the U.S. International Development Finance Corporation (DFC), an independent U.S. government agency that provides financing for private development projects, announced late Friday on Twitter. “We will not proceed any further unless these allegations are cleared.”

On July 28, we signed a Letter of Interest with Eastman Kodak. Recent allegations of wrongdoing raise serious concerns. We will not proceed any further unless these allegations are cleared.
— DFCgov (@DFCgov) August 7, 2020

The agency had signed a letter of interest with Eastman Kodak on July 28 to provide the company with a $765 million loan. President Donald Trump announced the deal on the same day.

The federal loan was intended to launch Kodak Pharmaceuticals to produce active pharmaceutical ingredients for generic drugs, to help reduce the United States’s reliance on other countries. The deal marked Trump’s 33rd use of the Defense Production Act.

Kodak shares skyrocketed more than 1,100 percent just two days after the deal’s July 28 announcement. It reached a high of $60 a share on July 29.

Kodak shares closed at $14.88 on Friday, and at $10.73 by Monday.

Sen. Elizabeth Warren (D-Mass.) sent a letter on Aug. 3 asking the U.S. Securities and Exchange Commission (SEC), an independent U.S. government agency that regulates the country’s securities industry, to investigate “potential incidents of insider trading” before July 28.

“There were several instances of unusual trading activity prior to the announcement of this deal, raising questions about whether one or more individuals may have engaged in insider trading or in the unauthorized disclosure of material, nonpublic information regarding the forthcoming loan awarded under the Defense Production Act,” Warren wrote in her letter (pdf).

The Wall Street Journal on July 29 reported that local media outlets in Rochester, New York, may have published some articles and Twitter posts about the deal before the official announcements by Trump and the DFC on July 28.

According to the WSJ report, Kodak reportedly sent a news advisory to news outlets ahead of the official announcement, and did not indicate that news of the $765 million loan deal was not intended to be released until later.


On Aug. 4, the outlet reported, citing anonymous sources, that the SEC was investigating the situation.

When asked on Aug. 4 to comment on reports that the SEC had opened an investigation into the Kodak deal, Trump said, “We’ll do a little study on that, and we’ll find out … If there is any problem, we’ll let you know about it very quickly, but I wasn’t involved in it.”

Press Secretary Kayleigh McEnany said on Monday that the administration is “certainly aware of the Kodak allegations and take them seriously.” She noted that the DFC put the deal on hold as soon as the administration became aware of the allegations.

The Epoch Times has reached out to Kodak for comment.

Kodak announced on Aug. 7 that it has started an “internal review of recent activity by the company and related parties in connection with the announcement of a potential loan by the U.S. International Development Finance Corporation to support the launch of Kodak Pharmaceuticals.”

“The company does not intend to make further public comment on the committee’s work during the pendency of the review,” Kodak’s statement read.

White House trade adviser Peter Navarro commented on the situation on Twitter, writing, “VERY disappointed last week’s great deal with Kodak tarnished by allegations. Absolutely RIGHT move by DFC! We must redouble efforts to bring our pharma manufacturing home!!”

VERY disappointed last week’s great deal with Kodak tarnished by allegations. Absolutely RIGHT move by DFC!
We must redouble efforts to bring our pharma manufacturing home!! #BuyAmerican https://t.co/2OfAjJFHKH
— Peter Navarro (@PeterNavarro45) August 7, 2020


From The Epoch Times
VOICE OF THE GALUN FONG GANG 
SUPPORTERS OF TRUMP




Google blames software update for Home speakers recording users


BY DUNCAN RILEY

UPDATED AUGUST 10 2020

The ongoing joke around smart home devices is that they are spying devices that people opt to put in their homes and offices. Various companies have always denied this, saying that the devices are only triggered using “wake words.”

As it turns out, that’s not always true.

Google LLC has admitted that its Google Home speakers were recording users even when they hadn’t said, “OK Google” to the device.

The issue came to light after a Reddit user recently wrote that he had received a notification from his Google Home device saying that it had detected a smoke detector going off, but the device should not have been listening in. Other users then chimed in to say that they had also received notifications for events such as glass breaking. The feature is meant to be available only to users who subscribe to the Nest home security service.

Google claims that the feature was “accidentally” turned on after to a software update.

“The issue was caused by a recent software update and only impacted a subset of Google Home, Google Home Mini, and Google Home Max speakers,” a Google spokesperson told Yahoo News U.K. “We have since rolled out a fix that will automatically disable sound detection on devices that are not part of Nest Aware.”

Joseph Carson, chief security scientist and advisory chief information security officer at privileged access management firm Thycotic Software Ltd., told SiliconANGLE that this is a reminder that when you have a microphone nearby, it’s likely recording.

“The important message to any vendor with active smart microphones is that transparency and consent for the users when the device is recording is critical, especially at a time when many employees are working from home and sensitive business details might be leaking via nearby smart devices,” Carson said. “The good news is that Google reported the privacy incident and made an improvement to notify and alert the user when a recording have been made.”

Mohit Tiwari, co-founder and chief executive officer of data store and object security company Symmetry Systems Inc., took a more conciliatory tone, noting that “accidentally recording audio/video can stem from mundane errors, rather than malicious intent on Google’s behalf — they’ve probably too much more to lose from this kind of news than from eavesdropping. While it sounds dramatically bad, in most cases, the underlying cause is that integration-testing big software systems and putting production-time seatbelts on them is a very hard problem.”

More broadly, he added, there are several challenges to users’ privacy from smart-speaker systems. “Permissions on things like Android/iPhone are already very challenging — people just say yes to ‘do you want to give this wallpaper app access to SD card and internet?'” he said. “Things like accelerometer or air-pressure sensors can leak browsing history or location. And speakers add the additional layer that instead of a check-box, the input is a machine learning classifier which can err in unpredictable ways. So being able to precisely say ‘we will only listen to this dictionary of words and delete everything else’ is probably some ways away.”