LevaData Brings Cognitive Sourcing Closer to Reality with Release of AI Advisor Leva

Next-generation sourcing upstart LevaData debuted at its customer event Thursday an artificial intelligence (AI) advisor for procurement, positioning itself as one of the first providers to offer live technology that enables cognitive sourcing.

Called Leva, the new solution ingests both historical business data and external market intelligence to provide real-time recommendations to procurement users ranging from optimal times to resource a category to personalized supplier negotiation strategies.

That proactive approach to technology is how LevaData hopes to revolutionize the way businesses source and procure. By offering an “always on” solution that can monitor supply markets and recommend optimal actions to users, Leva represents one of the first real steps to taking cognitive procurement technology from buzzword to reality.

“We’re incredibly proud to announce Leva, not only because it is the world’s first AI advisor for cognitive sourcing, but because it leapfrogs existing solutions that are focused only on procurement and sourcing process automation,” said Rajesh Kalidindi, founder and CEO of LevaData, in a press release. “Leva is revolutionary because it leverages the true power of AI, including crowd-sourced intelligence, predictive cost modeling and targeted evaluation of risks and opportunities, for the kind of strategic decision support that empowers sourcing and procurement functions to drive sustainable competitive advantage.”

Defining Cognitive Sourcing

As one of the first entrants to this emerging subset of the sourcing market, LevaData is trying to shape the field it plays on as much as it is trying to entice additional customers onto its platform. Key to this effort is defining a philosophy and set of steps for procurement organizations to support what the provider calls cognitive sourcing.

Sourcing becomes cognitive when the software enabling it autonomously takes in data and proactively recommends actions users should take. Such an approach is a natural progression beyond current e-sourcing solutions, which digitally automate the logic and workflows of sourcing but do not independently analyze and prescribe actions procurement should take.

To understand the difference, consider this parallel to the world of finance. Traders on Wall Street are always trying to predict the future, using the latest market data and forecasts to time their trades and optimize their margins. But what if a manager came up to a group of traders and told them they could trade once a year, and the only tools they could use were three-month-old market data in an Excel spreadsheet?

The traders would revolt, saying they could not do their jobs under these conditions. Yet when Richard Barnett, senior vice president of marketing and customer success at LevaData, asked attendees if they had ever been in the traders’ shoes before, nearly every hand in the room went up. The way procurement operates today is fundamentally at odds with the goal of acquiring the best deal with the least possible risk for the business.

LevaData’s proposed solution to this disconnect is cognitive sourcing. Instead of the usual n-step sourcing process that emphasizes workflows, Founder and CEO Kalidindi defined cognitive sourcing as a four-step cycle: sense, recommend, act and learn over time. The ultimate goal in using this updated process is to transform the procurement organization into a completely data-driven capability, one that can identify sourcing and negotiation opportunities as they arise and take appropriate action within just a few days rather than on an annual basis.

Leva Features 

Turning procurement into a data-driven business enabler requires, of course, more than a new mindset. Such a transformation is fundamentally digital, and a cognitive approach to sourcing requires a system powered by artificial intelligence and machine learning.

This is where Leva comes in. Billed as “the world’s first AI advisor for strategic sourcing and procurement,” Leva is not an autonomous sourcing agent capable of running your procurement spaceship in the manner of HAL 9000. It does, however, offer significant decision support and analytical skills that augment the capabilities of the everyday procurement user.

Right in the LevaData dashboard, for example, the user immediately sees a running list of notifications that indicates in dollars what opportunities and risk the system is “sensing.” These could be spurred by a change in commodity prices lowering the overall cost of a product component, or perhaps an upcoming regulatory change putting spend with a single-source supplier at risk.

As an advisor instead of just a tool, Leva aims to not just analyze an organization’s spend but also help users take action. The most prominent example of this in LevaData is the Negotiation Playbook, which Barnett said was by far Leva’s most popular feature.

Playbook works by recommending different negotiation tactics to use in the appropriate context and sequence with a given supplier. Drawn from a “proprietary ontology of 40 negotiation levers,” Negotiation Playbook evaluates response behavior, continuously searches for the best mutual outcomes and enables semi-autonomous sourcing events. Each recommendation also comes with probability ratings that assess the potential for success of each lever based on anonymized community benchmarks from past events.

(For more information on LevaData’s core features, check out our Vendor Snapshot on the provider: Background and Solution Overview; Product Strengths and Weaknesses; and Competitive and Summary Analysis.)

Adoption Challenges

Even with these innovative features, LevaData still faces the perennial challenge of getting procurement users to fully take advantage of the platform. With e-sourcing solution adoption still notoriously low, providers need to guide organizations through the process of learning and using the technology, and LevaData is no exception.

For many organizations that attended the event, the initial hurdle of using LevaData came down to, well, data. Most speakers said they still in some part rely on Excel to manage their sourcing data, but those who had worked with LevaData saw the partnership as an opportunity to slowly wean themselves off of what they knew was an outdated approach.

Take the case of Kevin Purser, head of global supply chain sourcing and procurement at Fitbit. When he saw LevaData’s technology for the first time, he asked Kalidindi, “How do we make this the way we run my day-to-day business?” While his team was not at the outset capable of running a continuous cognitive sourcing process, Purser wanted to take steps to get there.

To start, he set an intermediate goal to use Leva for costing and sourcing on a quarterly basis. This fit into Fitbit’s broader business needs. Since the company launches three to five new products every other season, in spring and in fall, procurement needed to stay on top of the supply market to support the rapid pace of new product development.

How exactly Purser’s team started this project, however, might be surprising. He said they started from the “almighty spreadsheet,” which they had thoroughly validated and already had faith in, to jumpstart the new strategy with LevaData. While the ultimate goal is to move away from the old system, the gradual stepping away from Excel has been key to keeping operations steady while introducing a more innovative approach.

A growing, well-funded company such as Fitbit has another advantage in its bid to reach cognitive sourcing maturity: talent. While the majority of procurement professionals in attendance believe big data analytics, AI and machine learning will play a role in their organizations in the near future, far fewer said they would have the necessary talent to execute a digital procurement transformation.

And therein lies the true challenge to enabling cognitive sourcing. Leva presents live technology to enable the approach, but an AI advisor is still just that: an assistant to a human. Procurement is only setting out on its journey to become a data-driven, digital, innovative capability for the business. Scaling this approach will require not just getting procurement’s master data act together but also hiring talent for the future that can use cognitive technology to its full benefit.

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