1Mby1M Deal Radar 2010: Automation Anywhere

Automation Anywhere makes intelligent software to automate business and IT processes ranging from network automation to Web data extraction to application integration. The company competes in a mature market, yet one that is still vital owing to the popularity of what Gartner calls “'[business process analysis] for the masses’ […] embedding BPA into the everyday organization” and the “increased use of automated and nonautomated “’as-is’ process discovery and cloud-based modeling to improve communication and collaboration.”

Founder and CEO Mihir Shukla spent years in the startup world in various engineering capacities. Startups he worked at included Kiva Software, Internet Shopping Network, OmniSky, and InfoSeek. While he was at a company called E2Open, he managed the procurement and installation of a large, million dollar-plus business process automation tool. It was this experience that convinced him there could be a way to bring business process automation tools to more people for less money. He established the San Jose–based company in 2003 as Tethys Solutions.

The company has products for various tasks grouped under Automation Anywhere (AA) Server to control and scale functions, AA Standard and AA Premiere software for task management and automation, and AA Integration Pack to integrate applications such as Java, mainframe terminals, e-mails applications, SAP, Oracle, and so forth. Automation Anywhere has several pricing levels ranging from $700 to $7,000 and sells a perpetual license per seat. Many customers start at the $700 level then move up.

Shukla calls business process automation a well-established space, an industry “about documenting everything and automating some things.” Automation Anywhere looks at their customers’ problems a bit differently in that it focuses only on automating things. Shukla believes that so many businesses could benefit from his type of product that it is a billion-dollar-plus market, but his belief is still hypothetical. A Gartner report published in February of this year estimates new-product licenses and maintenance revenue at $420 million in 2009 and believes that this mature market will continue to grow at 10% to 15% a year. Gartner’s estimate does not include consulting and services revenue. Automation Anywhere’s target segments are financial services, healthcare, and technology companies, although it serves other segments.

There are numerous competitors, including AutoMate (from Network Automation), Dolphin, UC4, All Star, and bigger players such as IBM and HP. It’s a fragmented market, with some competitors, like Automation Anywhere, offering solutions for various functions and suitable for different segments and others taking a more niche approach by building, for example, BPA tools for customer relationship management or Microsoft SharePoint.

The company is completely self-financed. Shukla says he cut down house expenses to pay for it. Facing the very real risk of losing everything he had in starting this company and financing it himself was a powerful motivator. His wife, Neeti Mehta, who is also Automation Anywhere’s director of marketing, was the one who inspired him to take this risk. The couple were thinking about whether or not to go ahead, and Mehta said, “If we don’t do it now, when will we?” The company gets frequent VC calls, but they are not looking for financing right now. Shukla says that they are not opposed to it in theory, but with their current profitability, there is nothing to gain from it at the moment.

Revenues are about $3 million annually, and Automation Anywhere has been profitable for the past four years. The company has a high-margin business model and is doubling every year. More than 25,000 companies are Automation Anywhere clients, including 69 of the Fortune 100, nine of which were added in 1Q 2010. Clients include Tesco, Microsoft, 3Com, Harley-Davidson, Bose, The New York Times, Shell, and Cathay Pacific.

Automation Anywhere plans to continue to invest in direct sales market as well as developing partner networks. The number of leads coming in is increasing quickly: Automation Anywhere doubled revenue in 3Q of 2010 over 2Q of 2009. Shukla is trying to manage this growth in a way where the quality of the product and the quality of customer care does not decrease with his growth. He thinks he is leaving some money on the table to ensure that Automation Anywhere grows at the right pace and builds a foundation for being a much bigger company.

Shukla thinks when the company hits $12 million to $15 million a year in revenue, he will start to look for someone larger to acquire Automation Anywhere. He sees a larger, more mature distribution channel as a key element in reaching more than $100 million in revenues, which is his goal. He suspects Automation Anywhere will look to be acquired in two to three years. Until then, he say, he has all the resources he needs to grow the company.

Recommended Readings
Deal Radar 2010: Nimbus Partners
CIO Priorities: Deloitte Consulting

This segment is a part in the series : 1Mby1M Deal Radar 2010