When an area becomes hot, many vendors want to be in it, but when it cools down, they start reconsidering labels. In the case of robotic process automation (RPA), we’ve seen myriad vendors hailing from all types of automation diving in. The way we as analysts group vendors’ offerings into categories doesn’t always make it easy for vendors to find the perfect fit. Once categorized, if the desired “surfing of the trend wave” does not deliver the desired growth, then a shift may be required. And pivoting is often a sensible move, especially where there is a logical justification.

Recently, HFS talked with Redwood Software about its decision to move away from “RPA” as its preferred focus area and move forward with “finance automation.” Redwood also offers solutions in workload automation and report distribution.

Redwood broke into HFS’ recent RPA Top 10

Early in 2020, HFS released its Top 10 RPA Software Rankings, 2020, which examines RPA beyond its capabilities to move data around enterprises faster with less manual intervention. Rather, we were looking for vendors taking the opportunity to transform business operations, rewire business processes, and create new thresholds of value. Redwood Software is one of the vendors we analyzed.

HFS’ headline on Redwood is “most focused on out-of-the-box integration and pre-built automation with finance applications like SAP.” Redwood performed well, breaking into the Top 10 in two categories, largely based on its numbers:

• The first category is scale. We base the scale ranking on the vendor’s installed base, drawing on the number and scale of clients, revenue and growth, geographic and industry footprint, and the number of employees. Redwood’s strength is unsurprising because it is one of the longstanding vendors in the space; it was founded in 1993 to support IT-led functions like batch scheduling and workload automation. It launched the original version of its business process-focused Redwood Robotics in 2013. It currently has about 3,000 clients (including OEM clients), among which are big logos such as Arla Foods, Bacardi, and Faurecia, along with global insurance, telco, technology, and manufacturing companies.
• The second category is scalability and flexibility. This ranking reflects vendors’ ability to scale individual installations and flexibility to handle process automation, including factors such as accommodating process and environment changes, licensing model flexibility, tool scalability, and scaled engagements. Its strength here is also unsurprising; with origins in workload automation and batch scheduling (like Blue Prism), Redwood’s software can handle large volumes and orchestrated multiple processes effectively.

Redwood is pivoting away from the terms “RPA” and “robotics”

Redwood is deliberately distancing itself from RPA. “Finance automation” is its preferred label and the category to which it wants to belong, and, honestly, that’s where Redwood has always operated. The key focus will be on finance and accounting processes (F&A), especially record-to-report (R2R). The goal is to support the scalable automation of R2R in finance departments. The Redwood software website no longer has prominent mentions of RPA, although there is still a historical link to an HFS report on a Redwood Robotics Solution featuring Allianz. As enterprises continue to experiment with RPA as a general-purpose automation tool, aligning with this category pulled Redwood away from its core purpose of automating finance functions.

There is no need for exclusivity in process automation; embrace the power of “AND”

HFS always advocates a toolbox approach and discourages organizations from thinking about automation technology in terms of choosing one tool “OR” an alternative. Instead, approach automation with “AND” in mind—a range of tools that continuously evolves to deliver end-to-end automation. There is no need for exclusivity; organizations can have as many tools as fit the challenges they’re facing, the real challenges are knowing which one excels where and having a plan and a method for managing the combined technologies. For example, HFS is aware of various enterprise automation programs where Redwood and Blue Prism co-exist harmoniously. It’s interesting to note that Winshuttle (SAP automation) is promoting the power of “AND” with a Blue Prism and Winshuttle combo for end-to-end accounts payable invoice processing.

Redwood’s renewed focus on core strength areas is sensible; it did not fit neatly into the RPA category, and it was directly competing with software vendors with very different capabilities. Unlike most of its RPA brethren, Redwood connects directly to the systems it interacts with rather than going in through user interfaces (UI).

This pivot should give more scope for collaboration, with Redwood working to its own finance automation strengths and RPA vendors applying their more generic products to a broader range of use cases rather than each in opposition and defending turf.

The Bottom Line: Redwood surfed the RPA hype wave, and it is wisely returning to its differentiated focus on finance automation.

Redwood’s products and software have very specific applicability in finance departments with ERP systems, especially SAP. Redwood was not a perfect fit in the RPA category because the generic capability that is RPA goes far beyond finance and ERP.  

For software vendors, picking a category for a software product is challenging because the categories keep morphing and merging. Vendors need to pick a category where they can shine and that has enough traction in the market to increase chances of revenue growth and market impact. Analyst ratings often form the basis of a shortlist when organizations are looking to invest in a new area. But it’s not always easy for vendors to find a category that’s a perfect fit. This is very apparent in the RPA space where the category has a mix of vendors hailing from a variety of categories (BPM, document ingestion, and screen scraping) in the hype-filled RPA category.

Finance automation is where Redwood shines, and this is the term it is moving forward with. Redwood’s belief that an association with RPA is not a favorable one given disappointments in the market underpins this decision—a little distance is preferred. 

On a broader note, this could be a move we see repeated by other vendors –  the start of a shift away from the confusing term “RPA” and toward a set of distinct categories where the mixed bag of RDA/attended, RPA/unattended, screen scraping, and document ingestion is split into distinct pieces.