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Increasing Corporate Valuations with AI, RPA and Automation IN ASSOCIATION WITH

DANILO MCGARRY

DIGITAL REPORT 2021

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Increasing Corporate Valuations with AI AI,, RPA and Automation

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DANILO MCGARRY / UIPATH / ISG AUTOMATION

Danilo McGarry, Chris Duddridge, UiPath and Wayne Butterfield, ISG Automation discuss how automation technologies can impact a company’s valuation

T

he benefits of automation can sometimes be communicated nebulously. In fact, automation technologies such as RPA

can sometimes positive impact a company’s valuation, as three industry experts describe.

Danilo McGarry is an automation industry 04

thought leader, with extensive experience in the industry. “I’ve been doing this for about 15 years before it was called automation,” he says. “I worked in many different industries - banking, oil and gas, healthcare - and I used to have my own consultancy firm as well. So I’ve been a client, a consultant, and I’ve also been an advisor to most of the automation companies out there today. So I understand the market well.“ That experience has convinced McGarry of the noticeable positive impact it can have on company valuations that stems from introducing automation technologies. “One way a company is valued is by taking the revenue of the company and times it by a valuation multiple that can be acquired from mergers and acquisitions (M&A) tables,” says McGarry.

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“The other way is by taking the EBITDA,

a P/E ratio too. Either way most valuation

the earnings of a company before inter-

methods take revenues or bottom line

est, tax, depreciation and amortization,

earnings as the starting point to reach a

and then times that by a valuation mul-

company valuation value”.

tiple as well. That multiple is basically

Automation can have a noticeable

determined by the price other similar

impact on such valuation calculations,

companies have been sold for in the

as McGarry explains. “If you have a

past.” McGarry adds that “Without get-

successful client-facing automation

ting too technical valuation methods

programme helping you generate reve-

can include discounted cash flows

nue, then that increases your revenue

(DCF) or earnings after tax multiplied by

number, if you have a higher revenue to

E X E C U T I V E P R O FILE : T:3000 mm

Danilo McGarry

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Title: Globally recognised automation industry thought leader and practitioner Industry: AI & Automation Previously one of the Heads of Artificial intelligence & Machine Learning at CitiGroup (3rd largest US bank, 17th largest Financial institution globally). Also previously senior management of Automation (RPA/Ai) in UnitedHealth Group (#5 on the Fortune 500). Advisor to the European Union Commission Ai Alliance.

Published in The Times Newspaper, Bloomberg InfoMoney and other leading publications. Danilo is an experienced international keynote speaker and recognised as a global thought leader in the realms of Automation, RPA, Ai and Innovation.

Ranked as top 10 people in the world for Automation

by Thinkers 360. Previous companies worked for include Motorola, JPMorgan, BNP Paribas, Royal Bank of Canada, UnitedHealth Group & CitiGroup. www.c www.da o mpa ni ny l o mc we ga bsit r r e. y . com

DANILO MCGARRY / UIPATH / ISG AUTOMATION

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“ A s automation can help a company save or make money, and because of the way valuation calculation methods work – that then means that a successful automation programme has a direct impact on the valuation of a company” — Danilo McGarry, Globally recognised automation industry thought leader and practitioner

multiple by the same valuation multiple then that gives you a higher valuation end of the day. Also, if you’re looking at making savings in the company internally through automation, then your EBITDA will be healthier than it was before - both because you’re helping the company save money and also getting more clients because of higher capacity.” The twin impact of savings and revenue generation make automation a no-brainer if it is done by a team that knows what they are doing.

“No matter which way you slice it, if the

Danilo McGarry | Automation and Valuation CLICK TO WATCH

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2:00

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automation programme is successful,

positive impact of automation is far

if it’s global, if it’s there to help the com-

greater than what can be tracked or

pany and it’s run successfully, it can

measured on paper.”

have an impact on the bottom or the

Wayne Butterfield concurs, empha-

top line – making potential impact on

sising that automation can cut costs in

valuation. The only tricky element to

other ways. “Reducing the number of

this is tracking this positive impact

errors that your organisation makes is

back to automation itself. Many of

another way you can cut costs. We offer

automation’s benefits are tangible but

many brilliant things in the workforce as

hard to measure given how involving

human beings, but one of the things we

such programmes can be, because

don’t offer is robotic consistency.”

of this it is often nearly impossible for a

Butterfield started in the automa-

large corporation to track all the bene-

tion space in 2010, while working at one

fits it brings effectively. Often the

of the UK’s largest telco firms, using www.da ni l o mc ga r r y . com

DANILO MCGARRY / UIPATH / ISG AUTOMATION

“We offer many brilliant things in the workforce as human beings, but one of the things we don’t offer is robotic consistency” — Wayne Butterfield, Global Head of Intelligent Automation Solutions, ISG-One

10 the technology to create operational

process side too. Hyper automation

efficiencies and reducing external

technologies allow companies to scale

spend on Outsourcing. “Being an early

in size, while keeping their people costs

adopter of any technology comes with

under control, as Butterfield explains.

its challenges, but also provides an

“With automation, you’re looking to

opportunity to tread new ground, and

reduce costs, increase throughput

innovate in the Enterprise. Butterfield is

and grow revenue, this trifecta is why

Global Head of Intelligent Automation

Automation is valued so highly. Back in

Solutions at pure play automation firm

the day, RPA was called operational

ISG Automation. “We assist clients big

agility software - but now RPA is a

and small on their automation journeys,

globally accepted term,” he says.

usually starting with RPA, but not stop-

Such technologies also allow

ping there. Differentiated performance

companies to scale in size, while keep-

does need more than just technology,

ing the same number of people, as

so we specialise in the people and

Butterfield explains. “With automation,

FP ISG FEB 2021 CLICK TO WATCH

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1:52

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E X E C U T I V E P R O FILE :

Wayne Butterfield Title: Global Head of Intelligent Automation Solutions Company: ISG Automation Wayne is an automation pioneer, thought leader and practitioner based in the UK. He heads up the AI & Cognitive Automation Practice for ISG Automation globally and is responsible for assisting ISG Automation clients on their journey towards AI, as well as hosting the weekly Bots & Beyond Podcast.

He pioneered the use of RPA and chat bots while at Telefonica O2 & BT, and has helped hundreds of Clients on their own automation journeys since joining ISG Automation. www.da ni l o mc ga r r y . com

DANILO MCGARRY / UIPATH / ISG AUTOMATION

“ Removing repetitive, timeconsuming tasks that doesn’t add to the value of what an organisation is delivering [...] frees up time” — Chris Duddridge, VP Sales, UK & Ireland, UiPath

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you’re actually keeping your costs the same, but you’re increasing the amount of revenue that you can generate.”

That sense of unlocking productivity is reiterated by Chris Duddridge, who adds that “By removing repetitive, time-consuming tasks that doesn’t add to the value of what an organisation is delivering, it actually frees up time to drive far more into product design, or spending time with customers, for instance.

Duddridge is VP Sales for UiPath in the UK and Ireland. The company started with screen scraping and has developed into a leading end-to-end automation platform vendor. Our products are designed to support every organisation and employee within that by essentially unlocking all of the manual, repetitive, unnecessary tasks that we all do on a daily basis.”

The more that the concrete financial sense of automation is realised, McGarry believes, the more senior executives will buy in to introducing automation technologies. “Once people and companies realise the direct link of automation to the bottom line and thus to a company’s valuation, that should then reinforce the level of sponsorship from senior level management. It’s important, therefore, to www.da ni l o mc ga r r y . com

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DANILO MCGARRY / UIPATH / ISG AUTOMATION

UiPath “Together”: Automation in a Fast-Changing World CLICK TO WATCH

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1:52

14 emphasise education so that people get

behind the automation programme.

on board, because the more people

So you do it again, it goes pretty well

know about automation in the company,

and you think: this is interesting, let’s

the quicker transformation will happen –

scale it. Then it goes to the third round

it’s a journey.”

where it really ramps up and starts

Having that knowledge in mind

paying for itself. That’s the three-hit

inevitably helps overcome the often

automation wonder or automation

bumpy early adoption stages, what

cycle most companies go through as

McGarry refers to as the automation

they mature in their automation journey.”

three-hit wonder. “You normally start

Getting to that stage requires belief

the first time and fail because you

in the technology, as Duddridge reiter-

haven’t taken it seriously enough.

ates. “I can’t think of a single technology

Either you haven’t put enough money

project that can deliver a return on

behind it or enough seasoned pro-

investment from day one. Realistically

fessionals who have done it before

there is an investment period involving

“Companies that already had automation before COVID started had a significant competitor advantage” — Danilo McGarry, Globally recognised automation industry thought leader and practitioner

15 E X E C U T I V E P R O FILE :

Chris Duddridge Title: VP Sales Company: UiPath Location: UK & Ireland Chris Duddridge is VP Sales, UK & Ireland, for UiPath. He leads the UK and Irish teams in their mission to drive automation adoption in the region, helping customers achieve their automation goals using UiPath’s best-in-its-class hyperautomation platform. With more than 20 years in sales and technology, he is an experienced sales leader with a track record of helping small teams rise to market leader status. Passionate about technology, Chris is inspired by the potential of automation to transform the future of work. Highly motivated by teamwork, his key areas of interest are incentivising collaboration, creativity, and customer focus.

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“ Even with the right team and tech partnerships it takes time for an Automation programme to mature and bear fruit” — Danilo McGarry, Globally recognised automation industry thought leader and practitioner

the companies who had already gotten on board who were able to thrive.

“Companies that already had automation before COVID started had a significant competitor advantage,” says McGarry. ”Once COVID happened and everybody was scrambling to log in from home and get all that working smoothly, meanwhile, robots were functioning fine in the background keeping some vital processes alive. Companies that had

building capability, training people and

mature automation capabilities definitely

managing the change.” Butterfield adds

had an edge during COVID, and will

that a clear plan needs to be in place

again in any future pandemic or crisis’s.”

from day one. “You don’t want to stop,

Danilo emphasises that time must be

reevaluate your needs and end up doing

taken into consideration, however. “It’s

something different. Trying to do it on

important to note that even with the right

the cheap and not thinking strategically

team and tech partnerships it takes time

enough will mean the investment doesn’t

for an Automation programme to mature

provide what is expected. There are a lot

and bear fruit so that top and bottom line

of things that you need to be thinking

benefits can reap rewards. For such a

about, but getting the strategy correct

transformative programme such as

is vital.”

Automation and AI, it takes an all-inclu-

The benefits of automation have

sive environment to make it really work.

been demonstrated by company

Also, with any such transformative pro-

resilience in the face of the ongoing

grammes, it is a journey that can often

COVID-19 pandemic. With a number

take one to two years before it starts to

of reports highlighting automation as

bear fruit and potentially make any

the sector seeing the highest cash

impact on the company’s valuation”.

injection during the pandemic, it was www.c www.da o mpa ni ny l o mc we ga bsit r r e. y . com

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