Robotic workers—aka, robotic process automation, or RPA—automate tedious and repetitive tasks at banks, but an executive at Nordea says the indirect costs of licensing bots for interactions with third-party software could outweigh the efficiencies they bring.

Agnieszka Belowska-Goslawska, head of the Robotics Center of Excellence at Nordea, says that software providers now treat digital employees as a separate category to human workers in their policies. She says she started noticing the trend in early 2020, when some of these vendors, which she declined to name publicly, told the bank they were rethinking their licensing models.

“They want to have a different licensing model [for RPA], which makes the business case much worse,” Belowska-Goslawska says. The Nordic bank deploys over 550 bot workers in a range of activities in anti-money laundering operations, client-facing services, and back-end processes.

Last year, the bank moved from two vendors to a large, international provider of robotic tech after the companies changed their licensing terms, effectively increasing fees. One of the companies, a niche player in the space, used to charge per user of the software, but introduced new definitions that distinguish digital users from human users.  The cost of moving to the new provider was still large, Belowska-Goslawska says, but Nordea believes it will be worthwhile in the long run.

“We said, ‘OK, the cost of rebuilding is still high, but if you look into long-term business case, it’s much better to rebuild those robots and use other solutions to save money,’” she says. 

As an example of how providers are changing their fee structures, Microsoft announced a new license option last year for Office applications to support “unattended” scenarios—situations where bots are running automation without collaboration of a human (though it adds that these apps have not been designed for unattended usage at scale). The company says in its Microsoft 365 license overview from May 2020 that if an “RPA solution interacts with Windows or Office, then you will need a license. There is no such thing as ‘unlicensed access’ for RPA solutions.” Microsoft declined to comment further on its announcement.

Belowska-Goslawska says such changes to licensing models could “kill or devastate the automation journey,” though she adds that Nordea is still pursuing automation. One company that Nordea did mention as a partner for its bot applications is Blue Prism. Belowska-Goslawska says these new licenses add to the overall cost of using RPA, even if Blue Prism itself doesn’t raise its prices.

“If you think about the total business case for robotics, you should not only consider the Blue Prism costs: if there are any other costs attached to digital employees, you need to look into those [and examine] what you are doing. I don’t think many people do it, because often other licenses or software are handled separately. But for us, we are looking into that for the whole business case,” she says.

End-user firms are of course free to move to cheaper solutions, as Nordea did, but she adds that the expense and difficulty of migrating to another supplier can be a deterrent.

“When [our previous vendor] decided to put a super expensive license on the bots, we were looking for alternative solutions,” she says. “I think we found one where it’s much cheaper. But of course, there is a huge cost and burden to reveal those robots to the new infrastructure. So it’s always an arbitrage [around] what’s the right solution you have to take, plus there are multiple upgrades of the systems you have to take for your robots to get the service and stability you require.”

Justified expense

Ian Stevens, a partner at law firm CMS, says the sophistication of RPA technology, the variety of tools and applications it can interface with, and the uses to which it can be put are rapidly evolving, as a robot can work 24 hours a day and perform tasks many times faster than a human ever could.

“So unless the vendor adapts its licensing model, it stands to lose revenue. Where once it may have sold multiple user licenses, now it may only sell one, used by a nominally human-supervised robot. So vendors are now developing new licensing models and pricing aligned to how customers deploy and use their products,” he says.

As firms adopt more automation, their use of software is evolving, and traditional licensing models don’t necessarily reflect the increased productivity and value customers can get from the use of their software anymore. It might, seen in that light, be justifiable to license a robot’s 24/7 use of a solution at a higher price than a human’s use during normal business hours, he adds.

However, he says, where “deployment is on-premise, the argument for differential pricing based on the customer’s deployment model may not be as strong—but can still be argued,” he says. “The position is likely to be different where the license fee is calculated by reference to transaction activity or other volume-based metrics, as the benefit the customer gets from higher intensity use of a single installation is likely to be reflected in an increased price payable to the vendor,” he says.

Stevens believes it’s good business practice for RPA vendors to warn their clients when marketing their services that additional charges could be incurred down the line when the RPA interacts with third parties’ software.

“Pricing and licensing models need to reflect the manner in which the software will be deployed and used, and customers need to be made aware of any differential pricing that will apply for automated use. Vendors will want to be able to audit that usage to check the correct license fee is being paid,” he says.