Laboratory automation is beginning to become an indispensable survival tool for laboratories facing difficult market competition. However, estimates suggest that only 8% of laboratories will be able to afford total laboratory automation systems. Therefore, automation vendors have developed alternative hardware configurations called 'modular automation', to fit the smaller laboratory. Modular automation consists of consolidated analyzers, integrated analyzers, modular workcells, and pre- and post-analytical automation. These terms will be defined in this paper. Using a modular automation model, the automated core laboratory will become a site where laboratory data is evaluated by trained professionals to provide diagnostic information to practising physicians. Modem software information management and process control tools will complement modular hardware. Proper standardization that will allow vendor-independent modular configurations will assure success of this revolutionary new technology.