Pactum

What it Does

Pactum is a young, AI-powered vendor that negotiates tail spend deals with the goal of delivering optimal results for both parties. It releases neglected capital from unmanaged long-tail vendors to reinforce EBITDA and “create value out of thin air.”

In other words, Pactum thrives on creating value through AI in areas that were previously inaccessible.

Pactum works by configuring negotiations based on the buyer’s pre-defined contract data and objectives. Suppliers access an instant message-style chatbot that presents the context of the negotiation and then attempts to understand which outcomes are desirable to the supplier until a new agreement is reached. In addition to tail spend deal term negotiation, Pactum also includes modules for contract generation/execution and reporting. Pactum generates a paper version of the new contract that the supplier can execute via DocuSign.

Why We Chose It

We named Pactum to the Future 5 for 2021 for several reasons. First, the idea behind the product is impressive and innovative. Pactum addresses tail spend inefficiencies in a revolutionary way, and its AI-based format makes the solution extremely straightforward from an ease of use standpoint.

The provider’s long-term vision also takes its current value proposition to an intriguing level, as Pactum envisions “bot-to-bot negotiations that will streamline global commerce.” The realization of this goal would not only increase efficiency of negotiations, but it would also remove humans from low-value and time-consuming positions. This would both increase savings and allow a company to focus its employees on bigger-picture tasks that are more profitable.

This leads us to another major reason Pactum was selected for the 2021 Future 5: as is, the software gleans value autonomously from areas that have traditionally been inaccessible. Not only does the company’s long-term roadmap lend itself to efficiency increases, but the software’s current iteration eliminates the need for employees to expend effort in low-value areas while simultaneously adding value to those areas. We believe that the solution’s current value proposition is innovative and useful, and its potential long-term applications make it an easy choice for the Future 5 list.

Any threats or challenges ahead?

In the near-term, Pactum faces the risk of limited or slower scalability. The provider’s deployment process is very service-heavy, which if not improved could limit the vendor’s scaling plans. (To be sure, the vendor has scaled its own team in the year since we first reviewed them, so it is working to address this challenge actively.)

Additionally, while tail spend negotiations are widespread, Pactum’s overall market also must be scrutinized. More progressive and/or established organizations may be better equipped to use Pactum to unlock hidden value, but less mature groups are not in the same position. These vendors could: (1) not even know who their tail spend vendors are; (2) not have contracts with their tail spend vendors; or (3) not have the working capital and/or knowledge/desire to improve efficiency in this area. Therefore, while Pactum can avoid these potential issues through strong sales and marketing campaigns, it is possible that the vendor finds its own technology too “ahead of the curve” to be widely adopted by diverse vendors.