Let’s Be Crystal Clear — in the Corporate World, Sustainability/ESG is NOT a Priority!

It’s never been, and now that the 47th is inaugurated, it’s less of a “priority” than it’s ever been in North America! If the Republicans get their way, they are going to roll back climate change legislation back to the Early Modern Era, and by that I mean the formal definition of the Early Modern Era, which Historians and Scholars will tell you was between 1914 and 1945.

Based on the fact that they managed to stack the Supreme Court to get their long-term goal (which was part of decades long planning) of overturning the 1973 decision of Roe vs. Wade, if you think they’ll be happy just dismantling the EPA and rolling back the 2007 Emissions Reporting Act, you’ve got another thing coming! They’re going to do their best to go back … way back … after all,

  • the 1999 Emissions Standard for Passenger Vehicles
    is going to get in the way of their fight against electric vehicles and China’s dominance (unless, of course, you buy a Tesla … at least until the 47th tires of First Buddy) and the return to big pollution muscle cars to soothe their big egos
  • the 1990 Oil Pollution Act
    is going to get in the way of fracking, piping, and other means to increase oil production, distribution, and burning
  • the 1984 Hazardous Waste Amendments to the RCRA
    is going to get in the way of chemical production and utilization, needed by big Food and big Pharma to eliminate anything from nature they don’t have a patent on
  • the 1976 Resource Conservation and Recover Act (RCRA)
    is going to get in the way of profit if they have to replant forests, repair environmental damage from strip-mining, minimize fresh water usage, etc. (after all, big companies like Nestle need those 59 million gallons of water more than the citizens of California do … and you can bet they are NOT the only corporate overtaxing public water systems instead of building their own desalination plants and using ocean salt-water … but yes, blame the Democrats)
  • the 1974 Safe Drinking Water Act
    requires them to spend a lot of money (that these governments apparently can’t afford) not only filtering and purifying the water that flows through municipal pipes, but monitoring the quality throughout the system since the dissolving and rotting infrastructure (which has not been properly invested in across the majority of the US since the 70s) makes it not only susceptible to leaks, but contamination from pollution
  • the 1973 Ocean Dumping Act
    prevents them from cheaply and easily disposing of their (hazardous) waste in the ocean (because it’s apparently too expensive otherwise)
  • the 1963 Clean Air Act
    means that they can’t burn anything or create chemicals that can pollute the atmosphere and us, when that’s often the cheapest or easiest route … after all, it’s not their fault certain chemical processes create by-products (that’s just nature, right?) and, at the end of the day, it’s our problem we can’t afford industrial air purifiers or decontaminators, right?
  • the 1955 Air Pollution Act
    means that these companies can’t operate if their plants could create hazardous by-products that would pollute the air en masse (if they cant’ afford to prevent the pollution, and apparently they can’t) … and …
  • the 1948 federal water pollution control act of 1948
    because this means they can’t just direct their chemical and hazardous waste to the nearest river (that runs to the ocean and takes it away) … and that’s apparently the only disposal method they can afford

… and, then, we are back to the early modern era!

And you know this is going to happen to the full extent possible as Big American AND Canadian corporations are already leaving the Global Corporate Alliance as they know they won’t be subject to to any goals once the 47th and his hand picked oligarchs get their way. It’s the Ferengi MBA Rules of Acquisition all the way now, and the best deal that makes the most profit is one that doesn’t have to pay the climate bill that WE are going to get stuck with when our health fails and WE have to pay rising medical costs.

So, please dear LinkedIn Procurement Evangelist, cut the bullcr@p about how this is going to be the year of Sustainabilty, how your application is going to save the world, etc. etc. etc. because, in big corporate, NO ONE CARES! (Do we have to remind you that the CEO role has the highest rate of psychopaths of any profession, even surpassing Lawyers?) As I already myth-busted in my series on 2025 2015 Procurement Predictions and Trends, we’ve had this BS pushed upon us for the past two decades, and some of us are tired of hearing about it. (SI should know! It ran the first cross-blog series on Sustainability back in 2008!)

Yes, Sustainability is the right thing, but no one cares about the right thing if it costs more! All you have to do is change how you ask the question to get the truth:

Is sustainability important to you?
Consumer: Most definitely! I only want sustainable brands!
Corporate: Yes! Our mission is to be the most sustainable …

How much more will you pay for a product/service that is proven to be sustainable?
Consumer Minority: Maybe 3% to 5%, it is important to me so if I have a few extra dollars, I’ll go sustainable and consume less.
Consumer Majority: Maybe 1% or 2%, money is super tight you know! Some months I struggle to pay all the bills and keep my children fed!
Corporate: NOTHING! If it doesn’t reduce costs, it’s not sustainable as a business practice!

Or, you could just ask the Founder of Trade Extensions (now Coupa Sourcing Optimization) who was one of the first to ask the questions this way back in their Sustainability Survey of 2014, over a decade ago, who more or less got precisely these answers. (They focussed on customers, and found that the vast majority would NOT pay more than 5%, ever, and if you wanted a majority of customers to buy into sustainability, you needed to keep cost increases under 2%!) Nothing has changed, especially as the average consumer buying power has continued to decrease across the First World as greater and greater shares of wealth end up in the hands of the 1%.

And yes, Europe might introduce a few new regulations and keep the ones they have, but all that does is relocate the multi-nationals to countries with leaders that don’t give a cr@p about the environment because they are so poor that they can’t even feed the majority of their people. And yes, Europe can regulate hazardous materials, etc. on what’s coming in, but all that does is ensure those companies that choose to stay in the market (while producing goods that just make the cut) charge more, because adhering to the regulation cuts into their profit, and after some of the worse run companies get forced out or leave on their own, there is less competition.

And as long as short term profit is the #1 motivation, nothing is going to change. So please STOP the preaching. No one cares, it’s not going to happen, and too many startups buying into this fantasy are, sadly, wasting time and resources on products and services no one is going to buy — especially in the SaaS/App space.

If you can’t invent more sustainable technology that costs less, it doesn’t matter how good your tracking software, reporting application, or advisory service offering is. Either solve a fundamental problem with revolutionary new cost-effective technology or stick to real Procurement, which, sadly, is a fundamental problem in most companies even though we’ve had decent solutions in Source-to-Pay for two decades!

Myth-busting 2025 2015 Procurement Predictions and Trends! Part 12

Introduction

In our first instalment, we noted that the ambitious started pumping out 2025 prediction and trend articles in late November / early December, wanting to be ahead of the pack, even though there is rarely much value in these articles. First of all, and we say this with 25 years of experience in this space, the more they proclaim things will change … Secondly, the predictions all revolve around the same topics we’ve been talking about for almost two decades. In fact, if you dug up a Procurement predictions article for 2015, there’s a good chance 9 of the top 10 topic areas would be the same. (And see the links in our first article for two “future” series with about 3 dozen trends that are more or less as relevant now as they were then.)

In our last instalment, we continued our review of the 10 core predictions (and variants) that came out of our initial review of 71 “predictions” and “trends” across the first eight articles we found, in an effort to demonstrate that most of these aren’t ground-shattering, new, or, if they actually are, not going to happen because the more they proclaim things will change …

More specifically, we began our discussion of the 10th prediction … AI.

AI continued

We began our discussion by noting that this was the only prediction where the visionaries were not in synch, and that the predictions ranged from continued adoption to adaption to analytics enhancement to seamless integration to true advancement in underlying technology, and with the exception of continued, mostly unbridled, and definitely unresearched, adoption, they are more-or-less all off the mark.

As for adaption, most vendors don’t understand the technology they’ve embraced well enough to properly adapt it for Procurement needs, especially where Gen-AI is concerned. So “adaption” will be limited.

(Gen-AI is fundamentally good at only two tasks:

  1. summarizing large documents
  2. creating natural language responses to queries based upon a large data archive

If your task can’t be fundamentally reduced to one of those two tasks, then Gen-AI is NOT good for the task!)

As for analytics enhancement, a few of the smarter vendors who understand the true power of traditional AI solutions (based on ML and automated reasoning) will look for ways to use AI to enhance analytics for better results, which are easily obtainable given the increases in computing power and explosion in readily available (verified) (third party) data sources, and those that do will get better results across the spectrum of applications for predictive analytics in Procurement.

Seamless integration is a ways off. The current level of integration, especially around Gen-AI, is quite choppy and most of the results are (much) worse than not using it. We’ve spoken to a number of vendors who integrated Gen-AI since (potential) customers wouldn’t even speak to them unless they had it, only to hear that those same customers wouldn’t buy the solution unless they could “turn it off” (where it is the “Gen-AI” they insisted they needed). All of the “orchestration” vendors think Gen-AI chat-bot integration for Procurement is cool. But it’s not. For example, it currently takes up to ten times as long to use a Gen-AI chat-bot to complete a requisition in a well designed e-Procurement system than to use an expertly designed catalog.

Take a simple example where you want medical gloves. In Gen-AI, you’ll have a process something like the following when interacting with “Gormless”:

  • Hey Gormless, I need some medical gloves.
  • … 5 to 15 second wait while it processes …
  • “OK Gary. I can help you with that. Do you want latex, polyvinyl, polyethylene, neoprene, cryogenic or surgical.”
  • The same ones I always order you Gormless idiot. Nitrile!
  • … 5 to 15 second wait while it processes …
  • “Sorry Garry. I had those classified under dentistry. Do you want small, medium, or large.”
  • The same ones I always order. Large!
  • … 5 to 10 seconds while it processes …
  • “OK, Got It. Now, do you want 50 packs, 100 packs, or 500 packs.”
  • I want 1000, whatever packaging is cheapest.
  • … 5 to 10 seconds while it processes …
  • “The 50 packs are cheapest. Do you want 20 of those.”
  • Cheapest per box? Or per unit?
  • … 5 to 15 seconds while it processes …
  • “I don’t understand Garry. The 50 packs are $10; The 100 packs are $18; The 500 packs are $85”.
  • The 500 packs, Gormless.
  • … 5 to 10 seconds while it processes …
  • “Got it. Two 500 packs. Do you want same day shipping for $29.99 or next day for free?”
  • Next Day is Fine.
  • … 5 to 10 seconds while it processes …
  • “Ok. You want two of the 500 packs of nitrile gloves, next day shipping. Shall I place the order?”
  • Yes, Gormless. Place the f6cking order please!
  • … 5 seconds while it processes …
  • “The f6cking order has been placed. Your F6cking Purchase Order ID is 984567.”

In an integrated and properly indexed catalog with a traditional search bar and priority sorting based on order history and preferred suppliers, you will:

  • open the catalog with a single click on the icon
  • type “large nitrile gloves” in the search bar and press enter
  • see, with pictures, images of all options in priority order, with the ones you always order first
  • click on it, see you have 3 options, with an already calculated cost per unit
  • select the “500 pack” option by entering “2” units next to it and pressing “buy it now”

You’re typing 3 words, 1 number, and clicking submit four times and you’re done in 15 seconds. Not 3 to 5 minutes of explaining your simple request to Gormless, the Artificial Idiot.

And this is just one example where trying to integrate state-of-the-art AI technology just to keep up with the hype train is making ProcureTech worse instead of better. So seamless integration is still quite a ways off!

What Should Happen? (But Won’t!)

1. Fuck Gen-AI.

As per our previous series, there are almost no valid uses for Gen-AI and very few valid uses for Gen-AI in Procurement. As we have indicated in previous posts, what Gen-AI is good for, and the only thing Gen-AI is good for, is massive text processing, summarization, and natural language query response generation to natural language queries. It’s only accurate with high probability, for non-critical decision support only, only when there is enough verified data for training. And then only of it is properly used by an expert who can identify when it makes a mistake (which it will do regularly). But any use that does not reduce to document processing and natural language response generation from natural language text blocks, in a manner where the response will be reviewed by a human before a decision is made (because accurate with high probability means it makes mistakes ALL THE TIME), is inappropriate.

2. Embrace Point/Function ML-based Predictive Analytics

With enough good, verified, numeric data, these algorithms, which have been researched, refined, and verified for decades, produce great results with high, known, confidence (compared to Gen-AI where the confidence is never known). (With enough data, the confidence can be 99%.+ Guaranteed. For many simple classification tasks, Gen-AI struggles to produce 70% accuracy. And that’s a good scenario!)

3. Embrace (Strategic Sourcing) Decision Optimization

As we’ve noted in previous entries, this technology has produced great results for almost 25 years, but yet the majority of organizations have not yet adopted it when it should be used, at least to generate a baseline, in every sourcing (and logistics) scenario! Moreover, it’s not just limited to cost optimization, it can also optimize carbon/GHG emmissions, delivery times, risk, or any combination of with the right data. It’s a value-generating life-saver for any organization.

Just remember. If you want true advancement, let us remind you that the majority of advancements in “AI” technology over the last seventy years (and you read that right, 70 years because “AI” is not new and has been under active research for over seven decades, with the first program generally considered to be “AI” written in 1956) has taken close to two decades to be ready for industrial use. Gen-AI still needs at least another decade (if not more) to reach the reliability we need to depend on it for critical use. Right now, as the disclaimers say, it can, and will, be wrong way more often than you think.

So while the focus on “AI” will continue, the focus should back off from experimental technologies unproven in Procurement when we have existing analytics, optimization, and ML-based predictive analytics that, in the right hands, with good data, can achieve results that many would organizations would consider a miracle. Leave the experimental stuff to the research labs and the creative teams, who aren’t impacted if what is generated is totally useless, as the creatives may still be able to use the useless garbage as inspiration.

Myth-busting 2025 2015 Procurement Predictions and Trends! Part 11

Introduction

In our first instalment, we noted that the ambitious started pumping out 2025 prediction and trend articles in late November / early December, wanting to be ahead of the pack, even though there is rarely much value in these articles. First of all, and we say this with 25 years of experience in this space, the more they proclaim things will change … Secondly, the predictions all revolve around the same topics we’ve been talking about for almost two decades. In fact, if you dug up a Procurement predictions article for 2015, there’s a good chance 9 of the top 10 topic areas would be the same. (And see the links in our first article for two “future” series with about 3 dozen trends that are more or less as relevant now as they were then.)

In our last instalment, we continued our review of the 10 core predictions (and variants) that came out of our initial review of 71 “predictions” and “trends” across the first eight articles we found, in an effort to demonstrate that most of these aren’t ground-shattering, new, or, if they actually are, not going to happen because the more they proclaim things will change …

In this instalment, we’re again continuing to work our way up the list from the bottom to the top and ending with “AI”.

AI

“AI” is the only “prediction” or “trend” that would not have appeared ten years ago. (Ten years ago it would have been “analytics”, the favourite precursor technology.) There were 10 predictions across the eight articles, and this was the only category where they were not in synch (because the technology, as well as the usage thereof, is not only still evolving but not well understood). Given the vendor hyper-focus on AI (and especially Gen-AI) over the past few years, it is yet another “prediction” or “trend” that is not new, as we are still in the (over)hype(d) cycle, but one that should be adequately addressed as it’s where we have the biggest gap between expectation (pushed by the vendors and the analyst firms and the consultancies) and reality.

Before we go any further, here were the ten predictions from the articles:

  • Advancements in AI and Automation
  • AI: overhyped or underestimated?
  • AI and The Digital Transformation Revolution will Continue
  • Artificial Intelligence in Procurement
  • Automation and Artificial Intelligence
  • Digital Transformation, Automation, and AI
  • Focus on AI Talent in Procurement and Skill Upgrading
  • From AI adoption to AI adaption
  • Integration of AI and Advanced Analytics
  • We’ll Evolve from AI Adoption to True Integration

They range from continued adoption to adaption to analytics enhancement to seamless integration to true advancement in underlying technology, and with the exception of continued, mostly unbridled, and definitely unresearched, adoption, they are more-or-less all off the mark.

The analyst firms are still overhyping this technology to the max (despite continuing to publish studies that 85%+ of technology projects fail)). At least six (6) in seven (7) vendors are overhyping (Gen-)AI to the max, if not nine (9) in ten (10). The Big 3 (Google, Microsoft, and, of course, “Open”-AI) are promising miracles for all who adopt their technology. It’s being marketed as the ultimate panacea, the magic elixir of your dreams, and the silicon snake oil that actually works (among other things). And when you combine the facts that most people don’t have the mathematical and technological background to understand what a given “AI” technology is and, as Bertrand kindly pointed out, humans are biologically wired to be lazy, most are happy to close their eyes, cover their ears, sing “la la la la la la”, and buy in to the BS promises hook-line-and-sinker. So, whether the technology is right or not (and we’ll give you a hint, it usually isn’t), they’ll buy it. (And then blame the vendor when it fails to deliver, who will blame the consultant for improper implementation and training.)

So how accurate were these predictions? Did any hit the mark? Come back for Part 12!

Need a Good Solution? Make sure you ask the right questions off the bat … not just the hard ones!

It’s only been a few months since our last post on the topic of vendor selection where we flat out said that if you want a good solution from a good vendor, you need to start off by asking the hard questions off the bat , and gave you the 1-2-3 punch you should start with, but it seems that some vendors have come up with new tricks and you now need a 1-2 pre-qualification phase before the 1-2-3 knockout combo before you can decide if a vendor’s solution is worthy of your consideration.

Now that we have the richer enterprise vendors deploying fully AI-agents to make their standard pitches, create their demos, and, in some cases, even handle their fund-raising and sales cycles, you don’t know if you’re even talking to a human! And you need to talk to a human. An “AI” will only tell you what it is programmed to say and only feed you what it thinks you want to hear, and we all know how that is a recipe for disaster.

Thus, the first question you need to ask in the pre-qualification one-two punch is:

1. “Please tell me whether or not you are an AI construct, knowing that this conversation may be recorded and that if a falsehood is spoken, it may be used against your employer in a court of law, especially if the intent of such falsehood was to deceive us. Also, we retain the right to ask you to prove your response at any time.”

If you get a “yes” response, you must immediately disconnect and eliminate the vendor from your consideration. If they won’t even let you talk to a lowly pre-sales person in a third world country, what chance will you ever have of speaking to a real support person if something goes wrong?

If you get past this question, then the next question is:

2. “Is your offering built around, or just, someone else’s LLM/Gen-AI/AGI (including, but NOT limited to, ChatGPT, Claude, Azure, etc.) offering in a new wrapper? Again, this conversation may be recorded and we retain the right to use everything you say against your employer in a court of law, especially if the intent of the falsehood was to deceive us. Also, we reserve the right to an independent audit of your solution at any time upon purchase thereof.”

If you get a “yes” response, you again must immediately disconnect and eliminate the vendor from your consideration.

i. As SI has repeatedly informed, you there are only a few valid uses for Gen-AI on its own, and even fewer valid uses for Gen-AI in Procurement.

ii. Why should you pay a steep markup to a third party for a shiny wrapper when you can just license the source at a fraction of the cost?

Now, if you have confirmed you are talking to a real vendor rep offering you a real solution built by the vendor PRIMARILY on their own stack (and not just a third party’s in a shiny wrapper) that does something useful for at least some Procurement departments, then you hit-them with the one-two-three punch we gave you last fall:

3. Can, and will, you show me (not tell me) live … preferably on use cases or data I give you on the spot?

Again, the most critical point is you don’t want a canned demo, you want a live display showing you that their solution will do what you need it to do. (Not necessarily the way you envisioned, your process might not be the best or the most technologically friendly, but in a way that will solve your problem.)

4. Once you show me the core use cases, can, and will, you explain the breadth of use cases you developed your solution for and how they are specific to my business?

You want a vendor who can do more than answer a specific question when asked, and tell you the standard script on what their product does. You want a vendor that knows the real world problems that businesses have and who tirelessly works to build a solution to solve those real-world problems.

5. Once we tell you the extent of your solution we feel is appropriate, can you talk us through what the implementation and integration to our environment would require without bringing in a paid third party “expert” consultant? And how long will that take?

It may be a great solution during the demo, but the reality is that it is only a great solution for you if your team adopts it, which will only happen if it works on the technology platform and in the technology ecosystem they are forced to work in. It needs to seamlessly get the required data in from other applications, make it easy for the users to do their tasks, and then push out the needed alterations and decisions to other systems in the ecosystem. An app that stands alone will never get used and will fail even before the implementation starts.

If you get through these 5 questions, you have a real vendor with a real solution which will solve your problems to some degree, and one who should definitely be on the RFP shortlist, if not fast-tracked to negotiation if they solve a critical problem in a way that just works for you.