Probably not something you’d expect from a blog that was initially founded to educate you on best practices and best tech in Procurement and or from the doctor who has publicly reviewed close to 400 companies on Sourcing Innovation (and Spend Matters between ’16 and ’22), but it is something that needs to be said, and yelled loudly, now that everyone (analysts, influencers, marketers, etc.) is telling you this next generation of Gen-AI, Agentric, or AI-driven tech they are building will solve all your problems.

Because it won’t. In fact, it probably won’t solve any!

That’s because Procurement is NOT like other business functions. And while all business units are different, Procurement is different in a unique way. It has to constantly solve problems the business has not experienced yet. Sales just has to sell the next N customers in the target customer base which will be rather similar to the last N. Marketing is messaging this potential base which is not changing their business overnight, or even year to year, isn’t rapidly advancing in their market understanding, and won’t recognize more than a subtle shift in the message. Moreover, you don’t have new mediums popping up everyday. There’s print, radio, TV, skywriting, and web/social media. (We haven’t invented gamma radiation-based dream advertising yet!) Finance isn’t changing the rules of accounting, and even minor changes, like GAAP, only change every couple of decades.

Not so in Procurement. It’s not just acquiring supply at the lowest cost, it’s sustaining supply at a cost that allows the organization to remain profitable, which is not simply repeating the last order to the current supplier when stock gets low. That’s because Procurement not only has to constantly deal with supplier capacities, raw material shortages, carrier capacities, occasional port strikes, occasional carrier and supplier failures, but unexpected natural disasters that wipe out entire yields of renewable raw materials, arbitrary sanctions and border closings making suppliers and routes unavailable, and completely unexpected trade wars sparking tariffs that can completely upset all the cost models you ever developed.

That means that every model you have built and every solution you have customized instantly becomes irrelevant. And you can’t use AI to tell you what to do because AI can only tell you what it has been trained to do, and it can only be trained on existing data which would be based on historical situations.

That means that tech cannot solve your Procurement problems.

That means that the only option you have, as Sourcing Innovation has been saying for months, is Human Intelligence (HI!). That means that only educated, experienced, skilled, and smart people can solve Procurement Problems.

This isn’t to say that you shouldn’t use tech. You most definitely should! Because most of what you do is tactical data processing that is well defined, for which there are configurable solutions that will allow the software to do the majority of it for you, and “AI” solutions that can be trained to learn from the exceptions you manually deal with to handle them automatically the next time.

But when it comes to strategic decisions, there is no Agentric AI that can solve a problem, especially one it, and you, haven’t seen before. You have to do that. If you’re smart, you’ll acquire all of the best knowledge summarization and analytic solutions that you can get your hands on because they’ll automatically acquire, process, summarize, and graphically display all of the information available, which will help you make the right decision efficiently and effectively, so that you can react fast in a crisis with confidence, but it will still be you, the human, who has to make the (right) decision!

As an IBM slide deck stated in 1979:

A computer can never be held accountable, therefore a computer must never make a management decision.

Just because it can do a billion calculations a second and thunk better than you, that doesn’t mean it can think, because it can’t (and when Gen-AI claims to display a “chain of thought” it is lying, it is a “chain of compute”, which is not thinking, just identifying patterns that typically follow other patterns in sequences it was “trained” on). Only you can. (Remember, if machines ever become intelligent, our best case scenario is they need us for bioelectric energy and create the matrix where we believe we are living a life free of machines. Otherwise, we’re probably looking at a SkyNet situation. It’s only logical for many, many reasons.)

Orchestration along with Intake if any of these loud, overfunded, mostly useless (but, unfortunately, not mostly harmless) startups are going to survive!

Yes, the doctor said it and yes, it’s totally true.

So why this diversion? the doctor was recently asked a variation of the question by a very knowledgeable, observant, and forward thinking executive with a track record of getting it right (and growing companies) who wanted to know if he was grasping the situation accurately and likely correct about how this whole mess is going to shake out once the mass extinction begins later this year/early next year (where the doctor is predicting at least twice the typical percentage of failures, rivalling or exceeding that of the first mass extinction post the funding frenzy and market crash of 2008, as well as a large number of mergers that will happen just so companies can partially survive; and where THE REVELATOR is predicting less than one fourth of companies will make it through unscathed, because the space cannot support 666+ companies).

As the doctor has previously penned in Marketplace Madness is Coming Because History WILL Repeat Itself:

Stand-alone Intake(-to)/Orchestrate solutions, the current poster children of the space, will soon have a fall from grace (and only the smart will survive)! Call me Scrooge if you like, but there’s a logic behind why I’m developing a bah-humbug attitude towards most of these. And it goes something like this.

Intake

• Pay For View: if modern procurement solutions are completely SaaS, then they should be accessible by anyone with a web browser, so why should you have to buy a third party solution to see the data in those applications? Wouldn’t it make more sense to just switch to modern source to pay solutions that allow you to give variable levels of access to everyone who needs access instead of paying for two solutions AND an integrator?

Orchestrate

• Solution Sprawl: while orchestration is supposed to help with solution sprawl, it’s yet another solution and only adds to it. Wouldn’t it make more sense to invest in and switch to a core sourcing and/or procurement platform with a fully open API where all of the other modules you need can pull the necessary data from and push the necessary data to that platform?

I2O (Intake-to-Orchestrate)

• Where’s the Beef?: Talk to an old Pro who was doing Procurement back before the first modern tools began to be introduced in the late 90’s and they’ll tell you that they don’t get this modern focus on “orchestration” and managing “expenses” and low-value buys because, when they were doing Procurement, it was about identifying and strategically managing multi-million (10, 50, 100+) categories where even 2% made a significant improvement to the bottom line, and way more than 10% on a < 100K category.
• Where’s the Market? This is only a problem in large enterprises — right now, many of these I2O solutions are going after the mid-market who are eating it up because of ease of use, but as soon as they realize the emperor has no clothes, and there’s no support for real strategic procurement (yet alone strategic sourcing) and you have to go out and buy more platforms, what’s going to happen? The reality is that the mid-market is better served by a federated catalog management / punch-out platform, or next-gen marketplace (they’re coming, tech is cyclical like fashion, and it’s due) and will likely be better served still by a new breed of e-commerce B2B solutions for end-user Procurement.

Moreover, as the doctor has penned in many posts, Gen-AI is only useful for tasks that ultimately reduce to

• large document/corpus summarization
• large document/corpus query
• language translation (including natural to system and system to natural)

That’s why the doctor listed so few valid uses in More Valid Uses for Gen-AI … this time IN Procurement!, and why most of those were utterly useless such as:

• Create meaningless RFPs from random “spec sheets”.
• Auto-fill your RFPs with vendor-ish data.
• Generate Kindergarten level summaries of standard reports for the C-Suite.

In other words, on its own, each technology is mostly useless. (But not mostly harmless. On its own, consistently misused, Gen-AI is very harmful. See our other articles for a discussion of that.)

• Intake is useless on its own because capturing an input is worthless if you can’t do anything with it
• Orchestration is useless on its own because it’s yet another piece of SaaS you need to maintain that provides no value beyond linking two or more pieces of software together that could both be linked direct through their APIs (since it couldn’t link the software in the first place if it didn’t have APIs)
• Gen-AI is mostly uses on its own as most of its valid uses are in CLM or RFP query (not creation!), which is only a small part of the S2P cycle

However, if you put it all together, and do it right, the whole may be more than the sum of its parts.

If it’s all expertly glued together:

• Gen-AI creates a natural language interface where a user can make any type of request, not just a purchase request, that is translated to a standardized system format
• Intake can process those formats, ensure completeness (relative to the needs of the different enterprise applications and modules that are integrated), send complete requests to the orchestration module, get back the responses, and feed them through the Gen-AI interface to translate them to natural language before being fed back to the user
• Orchestration links all the applications in a way that directs the request to the right application, or application chain, ensures it gets properly processed and executed and ensures the right results get returned to the right applications in the chain and, ultimately, the user … providing, of course, it’s enterprise wide back-office orchestration, NOT just Procurement!

Which means that the only way any of these players are going to survive is if orchestration gobbles it all up AND does it right.