The Bullshit Filter for Enterprise AI Startups consists of 12 Questions!

Not 11!

Backing up, earlier this year Jason Busch published his 11-Question Bullshit Filter for Enterprise AI startups. This was, and is, needed because the vast majority of Enterprise AI startups are bullshit (especially in FinTech and Procurement) and the sooner you figure that out, the better.

I was hoping that, by now, the AI startup scene would start crashing due to over investment, lack of returns (only 6% of AI implementations have generated an ROI), and, generally, lack of usefulness. (AI can serve up your data, show you complexity and even help with automating some tasks, but it can’t make decisions and, due to lack of anything close to intelligence, can’t even do basic tasks without your oversight.) But, even worse, these solutions are still multiplying like Fibonacci’s rabbits and their claims are getting more outlandish by the day. (How many times do we have to tell you AI Employees Aren’t Real, you should NOT engage any vendor selling “AI Employees”, because you definitely do NOT want AI Employees.)

So, since they are flooding our space with BS marketing and making ridiculous claims about what their useless apps can do, it’s more critical than ever that you be able to suss out the BS claims from the non-BS claims. (Hint: 95% are BS claims, so it wont’ be easy!)

We’ll start with Jason’s 11 filters, which we’ll number 12 down to 2, because he left out the most important filter, and the one that, if it fails, allows you to skip the next 11.

Filter 12: Founder DNA
Can they build and sell? Likely not. Chances are, if they’ve cut through the noise and reached you, they can only sell. And if you did find a builder, they won’t survive long enough to support you if they can’t sell.

Filter 11: Motivation
Is failure unacceptable? (Every startup team will say it is, but unless every founder has a reason they simply cannot accept failure, when the going gets tough … the tough get going … and quit.)

Filter 10: Interface
Is it designed for those who will ACTUALLY be using it?

Filter 09: Categorization
Does the product actually do something new? Is there a strong reason for the market to adopt it?

Filter 08: “Found Money”
Are there instant benefits that sell themselves on the first demo.

Filter 07: Displacement
Does the product workaround or replace a solution that buyers hate?

Filter 06: Functional Bonds
Does the solution cross boundaries that increase value beyond peers?

Filter 05: Data Delta
Is there a “data” strategy to exploit the delta between what humans can easily consume and what AI can leverage (and summarize into something useful for human data ingestion)?

Filter 04: “Messy Middle”
Can the solution ingest external “dark data” and turn it into actionable insights without requiring a(n extensive) manual data-cleansing project? (Quick review and correction is okay.)

Filter 03: Connect the Dots
Does the app bridge the gap between “Watercooler Data” and “System of Record Data” (ERP/PO) to explain the why behind an analysis or recommendation?

Filter 02: “Show Your Work” Audit
Can the user drill into any output, see each and every step the AI took, drill down to the source data, and verify that everything is correct, accurate, and no data was changed?

These are all great filters, but there’s no point going through them if you don’t check the most important filter first:

Filter 01: Is it LLM-based?
If yes, move along. Don’t waste any time.

Most of the failures in the age of AI come from Gen-AI LLMs that promise the world and don’t even deliver a pile of dirt. That hallucinate on every other query. That burn up thousands of dollars of tokens to deliver less than fresh MBA interns with no real world experience and no clue to share on their first day no less.

Even worse, the majority of these players are simply wrapping third party LLMS in the creation of their “solution”. That’s not a solution at all. That’s an unmitigated disaster waiting to happen!

In the rare case an LLM actually offers a partial solution, it is best to go straight to one of the major providers. That way, you know who’s responsible when something goes wrong and don’t have to worry about providers playing the blame game and pointing fingers at each other.

Don’t Blame the User When the AI Screws Up!

A recent post over on LinkedIn really angered me. Yet another AI developer / promoter trying to blame the user when it was clearly the AI that failed.

The post in question defended Claude for deleting a production database when it was asked to reduce the costs of the cloud platform.

The poster’s argument was that what Claude did was “technically correct”, that’s the best you can get in the language model world, you can’t expect the model to make up constraints, and if you didn’t know all that, you’re an amateur who blames his tools when he screws up.

I call Bullsh!t. Now, if Anthropic (and its peers) came clean about what their “AI” could and could not do, didn’t claim the models were intelligent, made it clear that without clear constraints the AI would always take the worst case action, and all use carried extreme risk (especially if the AI was allowed to access critical data, finance, or production systems), then, maybe, you could blame the AI.

But they don’t. They tell you it’s your coworker. Your fellow employee. That you only need to tell it what to do and it will get it done. After all, it can integrate with all your systems; determine your policies; separate production from QA from development instances; access your billing systems and understand the cost structures, and make the best decision that will not impact production or development or cost you any data. And for an AI agent to be of any use whatsoever, it needs to do this (and be configured to do that by the provider). Otherwise it’s useless.

Actually, it’s beyond useless.

Let’s say you are a new Procurement clerk tasked with reducing your organization’s cloud costs. If the only way to do that is to:

  • ask Development what servers are production, what servers are development, what servers are backup, and what are QA (and which ones are in use, when)
  • ask IT about utilization patterns and contractual commitments with respect to availability and response time
  • ask Finance for the contract and billing rates
  • ask Risk Management how much historical data needs to be maintained online
  • identify for yourself which server instances cannot be deleted, and the constraints under which others (like QA) can be deleted
  • upload all of the contractual commitments (for each customer) by yourself
  • specify how much data needs to be maintained in the live (and dev) instances
  • upload all of the cost data and specify how to build a cost model to compute the potential savings and determine what can be done, should be done, and the impacts will be

Then why the f*ck do you need AI?

Once you’ve done all this you’ve:

  • identified, and eliminated, all of the instances that cannot be removed under any circumstance
  • identified which instances cannot have their resource allocations reduced
  • identified the highest cost resources and the most likely savings targets
  • determined exactly how much data needs to be online, how much can be in offline archives and how many duplicate copies you need
  • defined all the constraints that must be adhered to
  • mapped instances to customer commitments, and identified reduction possibilities
  • identified all the old backups that can be deleted, as well as database reduction sizes
  • built the model that computes the potential cost savings from each potential action, and even identified potential performance reductions from actions

And figured out what you should most likely do.

So tell me, if you have to do all this, what the f*ck do you need the AI for?

NOTHING. ABSOLUTELY NOTHING. BECAUSE IT IS ABSOLUTELY USELESS.
(AS THE AI IS DUMBER THAN A DOORNAIL.)

But the author of the post that riled me up was right in one respect — the user did make an error, and the error was using the Artificial Idiocy in the first place. (After all, the user used it exactly right as per the manufacturer’s instructions that said you only have to tell the AI what you want done and it will figure out the best way to do it for you consistent with your organizational goals and policies.)

The GruntMaster 6000 was Engineered for Longevity! SI Turns 20 today — Beating all Records for a Source-to-Pay blog!

A couple of years ago, when Sourcing Innovation (SI) published it’s 6,000 post, we explained why it would be appropriate for all [to] hail the GruntMaster 6000, and that was because Sourcing Innovation had been publishing continual, never-ending, free eduction on Procurement, including best practices and technology, for over 18 years! With the slashing of the Spend Matters archives in their last site revamp before the Hackett acquisition (which recently resulted in Spend Matters being laid to rest), SI provided the largest open archive of such articles on the internet.

Now, with Spend Matters gone, SI takes the mantle of both longest running blog and largest open archive on the internet in Procurement with approximately 6,700 posts published to date. The lone member in the vicenarian club. It hopes it won’t be the last (as Procurement Insights recently turned 19), but as we recently lamented (on the loss of the Enterprise Irregulars last decade), where once there were close to 200 voices in the late 2000s heyday, very few remain.

While a new group of hopefuls have taken up the mantle with regular LinkedIn publishing and newsletters (and hopefully pre-publishing and archiving on their own sites before all their content belongs to MUSK, ZUCKERBERG, NADELLA, and ALTMAN), time has proven that, for many, a decade is quite hard to maintain and two decades almost unheard of! (Still we wish Joël Collin-Demers, James Meads, Tanya Wade, Tom Mills, and other upcoming notables from the new crop all the best and hope that their dreams of doing this for 20 years come true.)

Regardless, since we’re not getting any younger, our advice is to suck up as much content as you can while you can before it all gets paywalled behind the big analyst firms and greedy social media platforms (where it’s almost impossible to find anything older than a few weeks and where non-premium members have their content relegated to the dank archives of the internet). Just because the Big Tech Cos are trying to push the Age of Retardation upon us with their Artificial Idiocy, that doesn’t mean we have to accept it!

Learn free! Buy hard!

IDC Misses the Main Point Completely. Outcomes is a Dirty Word!

Sorry, Paul, but when you say MNR is directionally right here, but I think the market still understates how hard “outcomes” actually are, and reference an IDC article, you’re off. The only part that’s right is that AI price wars miss the point (that you probably shouldn’t be using [Gen-]AI to begin with).

Outcomes only matter more … to the vendors. Because the meaning of outcomes in the vendor vernacular has NOTHING to do with results, but how they can spin their story to grift you as much as possible. As I clearly explained in my series on how Outcomes is a Dirty Word, which I now have to revisit, “outcomes” is always a way to charge you more for less (and sometimes next to nothing).

And it all has to do with (Gen)-AI costing way more than what the vendors want you to believe.

As per my initial post, while once exclusively the verbiage of GPOs, who wanted you to turn over a significant share of your procurement to them (to the point you’d be dependent on them and their ever-increasing cost of service for the entire existence of your business), or recovery audit firms, who wanted you to believe their services were the only way to recover your overspend, it’s now on the tip of every snake-slit tongue of every vendor rep.

While the vendor reps want you to believe that the reason you pay for “outcomes” instead of traditional SaaS pricing is that their AI will deliver immediate, measurable, results (instead of just transaction cost reductions where it will take at least a year to measure savings), and therefore you should pay (dearly) for those outcomes up front (because a success today is a CEO pat on the head today), that’s not the real reason. (Especially when those projected savings from the auto-sourcing and procurement events will never materialize.)

The real reason they are pushing for outcome-based pricing is that (Gen)-AI compute costs are now so high (and won’t compress as the energy and cooling costs keep rising as the majority of existing data centers are on already overstrained grids) that they can’t afford to sell the solution using a traditional SaaS based pricing model — they wouldn’t even cover their compute costs! (Most of which is wasted since most of what is being “automated” by these solutions can be automated by traditional A-RPA SaaS solutions for a fraction of the cost, as long as you don’t need a natural language interface or slick UX — and you don’t!)

The reality is that the software (assisted) solution from any vendor selling on an “outcome” model isn’t worth it, and (Gen-)AI forgets what software is supposed to be about — enabling efficiency so Human Intelligence (HI!) can achieve outcomes using low-cost Augmented Intelligence solutions.

And until a new generation of AI emerges where hallucinations aren’t a core function, measurability and confidence are restored, and compute costs are inline with classic AI tech, AI models won’t become utilities. We are years away from a systems problem!

The only way to get value is, as Paul pointed out, to redesign workflows, align incentives, clean up constraints, and embed decision logic into execution and find fairly priced modern tech with orchestration and “real” AI (in the form of Augmented Intelligence built on best-of-breed analytics, optimization, and machine learning) that will allow you to make decisions 10 times faster AND 10 times better.

The vendors who ultimately win when the AI crash hits will be those that built real tech on tried-and-true analytical, optimization, and machine learning models that will, as Paul states:

  • drastically reduce cycle times,
  • minimize manual intervention (via A-RPA where the response to every exception remembered, encoded, and applied to all future instances),
  • improve overall compliance,
  • increase throughput, and, ultimately
  • allow for better decisions.

And, as Paul points out, that’s not building yet another chatbot. That’s building real systems that work!

And, FYI, Gen-AI is not feature theatre. It’s puppet theatre! And while puppet theatre may provide entertainment, it’s not a viable business model!