Just Remember, You Asked For This!
If you’ve been following SI, you know SI hates prediction posts, because all they end up being is hopeful fantasy because no one wants to hear the sobering reality off the bat in the new year.
But given how dangerous and costly the hopeful fantasy has become, SI is going to swallow its disgust and give you what you want for — a realistic prediction post for 2026.
1) Gen-AI hype will continue for most, if not all, of the year. The market has figured out how to not only maintain the bubble, but blow it bigger than it’s ever been blown before. So despite all the “burst is imminent” predictions, the market, and the US in particular, is going to miraculously maintain, and even grow, the bubble. (As Mr. Stephen Klein has posted multiple times, they’ve got it all figured out!
2) On the flip side, the failure rate from (Gen-)AI-first solutions will remain above 90%. Almost-back-to-back Gen-AI studies in late 2025 by MIT and McKinsey found a 95% and 94% failure rate respectively. This will improve slightly, but based upon other indicators I’ve seen, stay around 92%.
3) I2O won’t save you — especially in direct!. Yes, Joël Collin-Demers, it is true that most of the big players I2O (Intake-to-Orchestrate) players will add “direct” support, but this “support” will basically be limited to BoM (bill-of-material) import and the ability to bulk buy the components on a BoM by BoM basis. And it will be less powerful than leaders like DirectWorks (now Ivalua), Pool4Tool (now Jaggaer), and EffiGo had a decade ago! Direct requires a lot more than bulk-buying a bill of materials. A LOT more!
4) Supply Chain risks (esp. around Wars, Tariffs, and Natural Disasters) will continue to accelerate, as well as losses due to (Cyber)Fraud, Natural Disasters, and Stock-outs, but investments in risk mitigation and management will continue to be minimal.
5) The same lack of investment goes for supplier/third party 360 solutions for proper integrated risk-and-compliance assessments up front during on-boarding. This is becoming more and more critical because even good suppliers can be risky when you dive into the factory locations, shipping lanes, ownership, etc.
6) Talent will continue to be a huge concern, but instead of actually investing in people, companies will continue to invest in “AI automation” in the hopes that they can fill the gap with tech (even though the tech has zero intelligence and is only as good as the real world experience of the techs who code it).
7) The M&A mania will hit a high about mid-year as the PE firms compete for the few remaining solutions with “unicorn” potential while simultaneously scooping up as many BoB assets to fill holes and acquire talent as the fire sales hit fast and furious. (Remember, I’m projecting double to triple the usual failure rate over the next year or so, 10% to 15% as compared to the typical 5%. We ended 2025 close to 6.5%, but after two years of depressed sales and all the (over)funding going to “AI” startups, a lot of good, niche, solutions are going unfunded and unnoticed, rapidly running out of funds, and need to get bought or shut their doors.
8) “Alt Suites” continue to proliferate as mid-market vendors and PE firms try to roll up their point-based vendors / BoBs (Best of Breeds) into a process/alt-function based offering that they feel will give the newly created vendor a unique angle to get attention (and sales).
9) Software-backed services continue to gain momentum as mid-market consultancies fight for limited budgets and large consultancies try to keep costs down, but in the interim, expect more Deloitte-style failures (where they’ve been caught twice publishing AI-generated cr@p as human analyst work — in Australia and Canada) among firms trying to cut costs with Gen AI-based software.
10) The Big Consultancies and Big Analyst Firms won’t help you! They’ll all publish their annual studies, which, as we pointed out in our You Don’t Need to Read Another State of Procurement Study for the Next 5 Years, but 90% of the “results” will be the same as this year, with just a re-ordering of the barriers, concerns, risks, etc. The only differences will be the “risk-du-jour” and “tech-du-jour”, which will likely be a new spin on supply chain risk and Agentic AI, but the conclusions will be “engage them to help you with a tech-du-jour plan that will solve all your problems” but in reality be a “let’s do a massive project to underpin your entire Procurement operation with tech-du-jour that will require a year of process definition of study, a year of implementation, and then years of training to customize the tech to your processes (i.e. train the tech enough so it actually works okay” that will cost you millions (upon millions) of services dollars but not actually deliver any ROI in the short (and even mid) term.
So, now that you finally got a realistic 2026 Procurement predictions post — tell me, how does it make you feel?