Acquisition Image : License: Creative Commons 3 - CC BY-SA 3.0 Creator: NY - Date first licensed: February 2016 Original Image: has announced the acquisition of Contextor, a software vendor of Robot Process Automation(RPA) software. SAP has followed up its massive acquisition of Qualtrics with an equally strategic if smaller one. In its press release SAP claims Contextor is: “a European leader in the design and integration of robotic process automation.” However, a recent Forester wave report put them as merely a contender in a very competitive market.

This is a smart acquisition and potentially a very good match. Forester calls out Contextor in its report for a lack of partner ecosystem, low number of seats sold and revenues. All something the SAP can change quickly. It also had a low score in its analytics capability. Again, something that could see SAP with SAP HANA accelerate quickly.

Contextor has seen significant grow in France, its home country, with more than 50% of its customers located there. Those customers have deployed more than 100,000 bots. If SAP can leverage its global sales operation for Contextor as part of its SAP Leonardo AI offering, that number could grow exponentially.

Integrated into SAP applications

SAP has stated that it expects to integrate Contextor into its SAP S/4HANA offering before the end of H1 2019. It will become part of the SAP Cloud offering and will also leverage SAP Leonardo Machine Learning such as conversational AI technology and document processing capabilities. Other SAP applications, one assumes, including SAP SuccessFactors, will follow in due course.

Markus Noga, head, machine learning, SAP (Image credit Linkedin)
Markus Noga, head, machine learning, SAP

SAP has some ambitious plans. It is expecting to leverage the Contextor RPA technology quickly. It expects to automate half of all business processes supported by SAP ERP software over the next three years. This is a huge sweeping statement and SAP will no doubt clarify it at some point. It seems likely that this will apply to SAP S/4HANA rather than all the legacy systems. It is what customers can take advantage of which counts after all.

Markus Noga, head, machine learning, SAP commented: “With intelligent RPA accelerated by Contextor, businesses will be able to achieve the high automation level necessary to become intelligent enterprises. The acquisition is a big step towards orchestrating process automation and will help SAP inject RPA capabilities into our applications, first and foremost into SAP S/4HANA.”

What does this mean

While SAP has not bought a market leader, the Contextor technology will supplement its own AI and ERP software well. If it can leverage RPA and deliver the promised solutions to customers in such a short timescale it will possibly steal a march on its competitors. In comparison Oracle has a partnership with UiPath, a leader in the space. The question is whether it will look to make an acquisition.

SAP did not disclose how much it paid for Contextor. However, the company has only raised €800,000 in funding to date and it is likely well below the recent valuations of UiPath. In March 2018 during its Series B funding Techcrunch had a valuation of $1.1 billion. Only six months later that valuation had risen to $3 billion when it raised $255 million during its Series C funding round.

RPA is hot at the moment and Contextor one of the hottest according to Analyst firm Aragon Research. Contextor were probably looking for funds to expand and SAP has provided much more and bought the company.

Oracle could look to acquire a smaller RPA vendor. However, that would probably mean its relationship with UiPath would suffer. The problem for Oracle is that UiPath is becoming expensive every month. Despite that, or even because of it, the company could be good value for Oracle. It is not afraid of making large acquisitions of high growth companies, for example NetSuite. Oracle has to decide whether its current relationship with UiPath will deliver the level of RPA for its ERP solutions that SAP is promising with this acquisition.



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