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Blue Prism gets a boost as companies fret over weak UK productivity

The Office for National Statistics said earlier this year that productivity in the UK was falling the fastest in five years, leaving big business scratching their heads

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UK employees said that technology provided to them at work was the biggest single driver to boost productivity in a survey last year by The Work Foundation.

Nevertheless, the “productivity puzzle” continues to haunt Britain's economy and tech firms are raking it in as big business tries to solve it.

China is reported to be developing an army of industrial robots to turbocharge its economy and the need for Britain to follow is becoming paramount.

The UK has the second-lowest productivity in the G7 and without much prospect of closing the gap unless there are major changes in thinking.

The Office for National Statistics (ONS) said earlier this year that productivity in the UK had fallen the fastest in five years with workers doing 0.5% less work per hour in the quarter from April to June.

At the time, Tej Parikh, chief economist at the Institute of Directors, criticised businesses for not investing enough in the “new equipment and technology that drives up their performance”.

Automating the workforce

But instead of hiring more unproductive staff and burdening them with repetitive tasks in the age of online shopping, companies like John Lewis, Coca Cola, npower are all choosing to invest in automated “digital workers” to emulate tasks once performed by humans.

Leading this charge is robotic automation firm Blue Prism PLC (LON:PRSM), whose shares rocketed 35% last week after a storming trading update.

These “digital workforces” are part of an AI-driven software platform, created by Blue Prism, to which the company added 685 net new customers during 2019.

As of October, it had 1,677 total customers, an increase of 69% over 2018.

“Robotic process automation is fast emerging as a significant software category, customers are beginning to materially scale their deployments and Blue Prism is increasingly recognised as the product that can deliver this scale," said BluePrism’s executive chairman Jason Kingdon.

With customer retention at 96%, and deals increasing in size as the year wore on Blue Prism’s confidence is understandable.

Why in the UK?

Arguably, the UK has yet to produce its own tech blockbuster to rival the American giants such as Google, Facebook or Amazon, but perhaps automation is the place to change that.

“Britain is a melting pot for robotics innovation and the use of autonomous robot technology to assist human workers is a very real prospect for the future,” said John Lewis’s John Vary when the company partnered with Blue Prism.

Inevitably, there’s a hype cycle for certain technologies.

Investment and company valuations have soared in the AI and automation niches in recent years and on a sales multiple of more than seven times this year’s forecast of £98mln Blue Prism's 1,241p share price is undoubtedly looking some way ahead

The UK’s last big tech hope was Autonomy, a start-up that was bought by American computer giant HP for $10.3bn in 2011 but fell apart under its new owner amid acrimony and many legal actions.

But if it can keep up with the demand Blue Prism might yet be an answer to UK’s stagnating productivity and give Britain a real global tech powerhouse.

Quick facts: Blue Prism Group PLC

Price: 1350 GBX

AIM:PRSM
Market: AIM
Market Cap: £1.27 billion
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