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Analyst Eye on the AI tech race

12/05/2023 By

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Artificial intelligence (AI) has (unsurprisingly) become a bit of a buzzword in the procurement industry, causing Spend Matters to devote an entire page to the question of AI in procurement. The buzz over the general applications of generative AI (GenAI), however, threaten to obscure the other radical (albeit niche) changes that our analyst team has deemed worthy of highlighting among this year’s Future 5.

Since its initial launch in November 2022, ChatGPT has dominated the center of AI discussions. But, as Spend Matters lead analyst Bertrand Maltaverne notes in his four-part ‘Autogmentation’ series on AI in procurement, “Compared to many other business functions, procurement and supply chains are functions of a predominantly numerical and optimization-related nature, which makes them more a field of application for traditional AI than GenAI.”

Still, the newness and indisputable breakthrough that GenAI represents compelled Spend Matters analysts to both write a short piece on how contract lifecycle management (CLM) uses GenAI and to give the technology special attention in the Autogmentation series. In CLM, special uses of GenAI include the drafting of tweakable legal clauses, summarizing the contents of existing contracts and automated redlining. CLM serves as a natural lab for GenAI as its processes rely so heavily on proactively developing text. A more general (if less exciting) application is the now omnipresence of chatbots in procurement solutions.

But as noted, most of procurement receives many benefits from the more traditional purposes of AI, such as pattern detection, data classification and decision support. Supplier management, for example, relies more on the sifting of massive data into actionable insights than the ability to automatically draft an invoice. Similarly, as Spend Matters analyst Abby Ommen notes, a lot of what AI offers procurement can fall under category of quality-of-life changes: “A more general instance of this trend in AI investment is how vendors in the supplier management industry are now using AI to auto-populate their vendor profiles to reduce the legwork new customers have to do up front. Similarly, analytics vendors are using AI to ease customer strain in many ways, like faster data-cleansing upon load.” These use cases do not make AI a necessary tool, but the extent that they ease the lives of procurement professionals will secure them a permanent spot in the industry landscape.

Some of the most interesting parts of this newest tech race are actually being run not by vendors that are automating the more rote parts of procurement nor those investing in broader uses of GenAI but those that have dedicated themselves to applying AI to one specific task. In fact, three of the five vendors the Spend Matters analyst team included in its Future 5 for 2023 warranted attention for their novel application of AI to address very specific challenges:

  • akirolabs augments human intelligence with AI-derived insights to help procurement teams analyze requirements and opportunities, strategize potential courses of action and realize the chosen strategy through performance management and scenario planning.
  • Calculum homes in on analyzing payments terms with its AI-driven solution, ADA, and offers AI-generated scripts for negotiations so that users can optimize their payments terms.
  • dSilo’s deep learning AI uses contracts as a primary data source, creating a more advanced use case than standard contract analytics, which typically do not incorporate as much data from other procurement processes with granular, clause-level insights.

While GenAI has caught the imagination and will certainly continue to open new avenues of innovation, it is still worth following how the autogmentation of difficult, data-heavy procurement processes will continue to change the game. Of course, any procurement professional should know how to cannily implement GenAI in their solution landscape — an issue that Bertrand Maltaverne will speak to in the next Analyst Eye!

Analyst Eye
AI - Artificial Intelligence