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Analyst Eye on procurement digitalization and the case for ‘Autogmentation’

digital procurement
Image by Gerd Altmann from Pixabay

Some time ago our senior analyst specializing in sourcing, SxM and ESG technologies, Bertrand Maltaverne, coined the term ‘Autogmentation’ when he was analyzing the hand-in-hand relationship between automation and augmentation during the procurement digitalization process.

Visit Spend Matters dedicated ‘Artificial Intelligence in Procurement’ page to learn more.

By Automation, we mean automating tactical tasks, whether repetitive, lower value or less strategic, thus removing the person from the task to bring about improved efficiency and speed. By Augmentation we mean augmenting the decision-making, and therefore outcomes, of the practitioner and the process with a new type of collaboration between people and machines.

While working on Spend Matters SolutionMap data, which ranks procurement technologies according to the outcome of demos, customer references and rigorous analysis, he was considering scenarios where solution providers were using AI capabilities (in its current state of assisted intelligence or augmented intelligence) and ML, versus those using more first-generation-style methods of automation like RPA and (preconfigured) rules-based workflows.

“In terms of automation,” says Bertrand, “if you look at the origin of document technology as an example, it went from the filing cabinet to microfilm to electronic document management systems (EDMS) and scanners converting paper to digitized documents on servers through to the cloud storage we have today. So, the move from analog to digital made everything faster, and instead of physically moving things around we are now following a digital workflow (digitalization). Automation is getting smarter, and when applied to tactical tasks they can be enhanced by defining precisely what the tasks are and the rules and conditions around them for automation.

“What we see now, and have been hearing about for a while, is a concrete example of that automation transcending workplaces, with AI at the forefront. First-gen technology was about the automation of simple tasks, like the manual activities of blue-collar workers on a factory assembly line. Now we are seeing the automation of complex process steps and thus decisions as automation enters the realm of the white-collar worker automating more cognitive tasks.”

So automation and augmentation work together to give us a better decision-making process.

“When it comes to generative AI, ChatGPT is one of the more tangible examples with eye-opening potential; it is raising lots of questions about the future of work and highlighting how the newest tech enables people to do things that were previously impossible (digital transformation) — something that has been in the air for a while yet is still very abstract.

“If we apply it to procurement, we start to see AI penetrating areas that were mostly untouched by tech. It brings even more automation but also augmentation, the latest element of the newest generation of tech. With AI, technology is now able to address complex and collaborative tasks, acting rather like a colleague or third-party consultant.

“Let’s take a sourcing event. You want to select the most appropriate suppliers. Previously you had to do a lot of work to search for a supplier, filter through, etc. There may be so many criteria to consider, including their performance, availability, their location and reach, ESG ratings and many others. It has become such a complex task that a human may not grasp everything, especially when everything is in a constant state of change. So you need assistance. That’s where augmentation comes in. These sourcing solutions are nowadays much more guided: they will recommend suppliers for you or tell you which criteria to consider or which to include.

“So ‘Autogmentation’ doesn’t mean you are no longer in the driver’s seat; the value of AI is that it augments your actions. Autogmentation is not just about going faster (automation) but also better (augmentation). It’s efficiency and effectiveness together.

“AI still has a long way to go, but it’s here and it’s changing jobs. The cooperation between people and machines is happening, even though not many people have yet been fully exposed to it. In terms of impact, there are two camps: those who think AI is going to kill jobs and those who believe AI is going to create them. I actually believe it’s going to be more about displacement: AI won’t take your job, but someone who has the skills and understands how to use AI might!

“ChatGPT has been the first ‘wow’ moment for many people in terms of what AI can really do for them in everyday use. Plenty of solution providers are starting to integrate it into their capabilities, which is especially noticeable in contract analytics. And I think more of that is coming.

Check out this series from Bertrand that goes deeper into “autogmentation.”

Series
AI in Procurement and 'Autogmentation' Analyst Eye
Topics
AI - Artificial Intelligence Digital Procurement