Category Archives: AI

AI Employees Aren’t Real! Don’t Believe The Lunacy!

This should be so obvious that it shouldn’t need to be said, but with multiple companies still promising to (soon) deliver “AI Employees”, it apparently needs to be said.

First of all, why it should be obvious:

  1. There is no Artificial Intelligence. The tools are as dumb as a doorknob. The best you can get is Augmented Intelligence, which, by the way, is what you really need because it can provide almost instantaneous insights that would take a traditional analyst with traditional tools days to weeks (or months) to discover.
  2. An employee is a person. A PERSON! Not a piece of software.
    (As we don’t have AI, we don’t have autonomous robots, so we can’t even have the theoretical argument about whether or not a robot should be recognized as a person for legal means.)

Secondly, we’ve already seen how autonomous software agents don’t work (because they are not intelligent or people). Klarna, one of the first companies to fire the majority of its customer support team with the false claim AI can do that, quickly found it it really can’t and now has to hire back hundreds of support agents because what AI was really doing was the work of 700 really bad agents! And their customers didn’t want to talk to these bots (essentially because of how dumb and useless they were).

Thirdly, there have been no, and nor will there be with existing algorithms, stacks, and technologies, any magical emergence that will suddenly allow these “AI agents” to become intelligent and be able to perform their tasks autonomously. Because

  1. if Neural Networks were the right models, today’s models (constrained to commercial compute capacity) would put them on par with a pond snail, maybe a sea slug;
  2. compute power doesn’t double year over year anymore; Moore’s law is quickly becoming a historical footnote due to quantum limits; and
  3. there’s no more data to train them on — the big AI tech plays have already illegally stolen all of the copyrighted data on the internet, and that’s still not enough (and AI generated data just worsens performance because it’s not real, or good, data).

Moreover, we don’t need AI Employees. What we need are more productive employees! Employees that don’t waste up to 80% (or more) of their time doing more-or-less nothing but data wrangling trying to turn data into knowledge and knowledge into the insights needed to make a decision. Tasks that are purely tactical calculations and conversions that are precisely what computers were built for. Computers can do trillions of calculations a second error free, while we can only do a few, and not necessarily error free.

Which means what we really need are Augmented Intelligent Agent Assistants that do the computational tasks we need done and either

  1. automate processing that we would do almost thoughtlessly if we determined that the appropriate conditions were met or
  2. present us with the data, knowledge, and insights we need to make a decision and take action, including suggestions for that action if there are standard response patterns

Because, when the 80% time wasting tactical data processing is taken off of our plates, we will be at least 5 times as effective with these Automated Intelligent Agent Assistants, and that is what will propel organizations forward. Not dumb tech, and definitely not false promises of fake AI Employees that do not, and fundamentally cannot, exist.

Why Are We Inundated By AI Slop?

And I don’t just mean the slop produced by AI, which we should all know by now is 100% AI slop, but all of the human and “expert” guidance produced, or co-produced, by real people that isn’t much better!

In one way the answer is simple: there is a considerable lack of knowledge and understanding about AI, even among the firms and practitioners who are touted as, or claim to be, “the experts”. There is both a failure to realize this as well as admit this.

But let’s back up. Recently, THE REVELATOR asked, in response to a Gartner post (screenshots below, because Gartner has a habit of deleting posts where THE REVELATOR asks hard questions or points out major issues, asked for my “thoughts” on the infographic that referenced a two year old paper. A two year old paper that didn’t even mention a number of critical concepts that should have been discussed in reference to the AI capability and tooling breakdown the infographic presented, and all but one of those concepts should have been mentioned if it was a serious evaluation of AI technology at the time.

My thoughts on the matter would be obvious to anyone who’s read more than a handful of my articles, but I decided to step back and assume the real question was not “is this bad” but “why does this keep happening” — why do Gartner, and almost every other analyst and consulting firm (because it’s not just Gartner, so they shouldn’t be singled out), keep producing content that just doesn’t cut it — that doesn’t address the core issues, outline the challenges, discuss the plethora of failures (with an 88% tech project failure rate in the last published study with indications it could now be as high as 92% in AI), or provide any deep understanding of AI technology and how to differentiate between it?

The reason is two-fold. At best, the big firms have only a handful of employees who have a real understanding of the technology, but

  1. 100 times as many analysts and consultants taking advisory on the matter from vendors (who we have already told you have lured big analyst firms astray) and clients who know even less, and this is the workforce powering
  2. the relentless marketing machine (powered by AI content writers) that believes they have to pump out multiple articles a day to be relevant (even though not one of those articles has an original thought, insight, or suggestion on how to better make use of this technology because all AI bots can do is regurgitate someone else’s ideas and content)

The reality is that very few people understand advanced technology, especially new (or recently sexy) advanced technology. To truly understand this technology, you need the equivalent of a PhD — either years studying it in an academic environment or the equivalent number of years studying it in R&D labs or proof-of-concept implementation pilots.

A few years of “prompt engineering” an LLM or configuring pre-built models on Sci-Kit that “work the majority of the time for the use cases they tested” doesn’t cut it. Not even close!

You need to understand the core algorithms and the fundamental mathematics that underlies them, and that’s not easy. Even classical curve-fitting, nearest neighbor, clustering, regression, and knowledge graphs can be much more intricate than you think. The complexity intensifies when you migrate to multi-layer (feedback) (deep) neural networks, semantic technology built on ML(F)(D)NNs, and now LLMs which don’t just use very advanced statistical processing to map an input of a fixed type to an output in a fixed set (that can computed with mathematical confidence) but an arbitrary input to a generated output using layered feedback statistical calculations on parts of the input that are statistically stitched together (like Frankenstein’s monster, but worse) to make parts of the output, which means that hallucinations are a core feature of these platforms (as well as behavior that is much, much worse). Furthermore, if you’re trying to put it all together, them, unless you understand the limitations in interplay between different algorithms and models … good luck. (And, unless you understand the underlying mathematical models and their strengths, and limitations, good luck with that too!)

And this isn’t easy, especially when you need to start asking questions about computability (and decidability).

To put this in perspective, I have an earned PhD in Computer Science (specializing in data structures and computational geometry, but also included study of late 90s “AI” (including ML, Expert Systems, and Neural Networks) and when you earn one of these degrees, don’t wimp out (and try to stick to coding or “software engineering”, and take all of the (cross-listed with Mathematics) logic and theory courses, at least when I studied, you studied the classics in fundamental algorithms, automata, P vs NP, computability and decidability. If you do well in these advanced courses, you leave with the nagging feeling that you still don’t really understand what you studied (and tested on) — and you don’t! For example, it’s not just P vs NP — it’s P vs NP Hard vs NP Complete. And P isn’t always P, because if it’s n^8, well, that might as well be NP Hard for practical purposes! And categorization in NP is way harder in practice than it is in theory. And advanced algorithms often perform no better than stupid simple ones and it takes years to “see” why. And so on.

It takes years to get a grip on and really understand the fundamentals, which is what you need to understand to get a grip on what you can and can’t do with advanced algorithms in the fields of optimization, predictive analytics, and AI — which each take additional years of study, research, development and implementation experience to understand what they can and can’t do and evaluate new developments from technical papers, not marketing BS and fairy tales weaved by master storytellers that would leave PT Barnum in awe.

Script kiddies, “prompt patsies” (they are not prompt engineers, that is utter BS), consultants, and analysts with no formal background in CS or appropriate areas of STEM and limited experience beyond installing someone else’s software and doing a few parametric modifications don’t understand this. Not even close! (And don’t even have the background to understand where there understanding is [more] limited!) But yet, this is what most of the firms are asking of their consultants and analysts everyday, which is why we get so much AI slop that completely misses the point.

You have too many people without the deep background and experience being told that everything they do has to be “AI” (even if they have no clue what it means) because of all of the funding being poured into it, too many more “influencers” (or should I say silicon snake oil peddlers) trying to take advantage of the confusion, not enough deep understanding, and almost no one willing to cut through the noise and say “wait a minute; the AI they are selling is not the AI you are looking for“.

That, and everyone forgetting, as happens every hype cycle, that context matters. But that’s another article, because context doesn’t matter if you don’t know what you’re doing.


The original post of joy pain.




Even in the age of “AI”, SaaS Startup Valuation Isn’t That Hard

The Prophet recently penned a long LinkedIn post on The New Diligence Questions for SaaS in an “AI”-dominated world that, on a first read, makes it sound like diligence is going to get insanely difficult unless you’re backing AI (because, apparently, AI is going to replace everything and everyone).

The reality is that AI doesn’t really complicate the equation, especially if you already realized that a lot of software is becoming a commodity and making the right investment is all about focussing on what’s not commodity and then, when you find that subset of potential investments, which one of those is the most user friendly. And you can narrow down to a good potential investment pretty quick with just 3 short questions:

What data is being captured, created, or curated?
Tech replicates quickly, and easier to build now than ever. But good data is scarcer and scarcer.
What unique algorithmic capabilities does the platform possess that can’t be accomplished by today’s, and likely tomorrow’s, AI?
Orchestration, workflow, NLP, et.? Sorry but that’s all pretty common place. We’ve had we-based middleware since a year after the world wide web was invented (and orchestration is just middleware 3.0), workflow for decades longer, NLP for decades (although LLMs now make it easier to use and more accessible), etc. You need to look for unique algorithmic capability that can’t be plug and play from open source components or learned by dumb AI (like advanced optimization, new types of mathematically sound predictive analytics algorithms, etc.)
Does the platform enable users, through Augmented Intelligence capabilities, to be 10X as productive as they would be without it?
i.e. where data collection, processing, workflow, etc. etc. etc. can be fully automated, is it? does it employ NLP interfaces to the extent possible for non-technical users?

This is what defines winning software, not plugging in overhyped 3rd party LLMs and AI tech that is still, more-or-less, experimental, hallucinatory, and fundamentally flawed.

Once you have successfully answered these questions, chances are that there is nothing else super significant to answer about the tech (beyond the standard due diligence process, inc. security and privacy reviews where needed) and you can focus on the business and market questions. Does the market exist, and does the business have the right people, processes, and support to capture the market.

So, in other words, if the platform

The SaaS play has value, and you can move onto the business and market analysis.

The only real question will be how to define the market and the new market value in an age of (temporarily) overhyped AI / Agentic plays (when, as we have pointed out many times, it’s not new, just better) to determine its real valuation (when you are being flooded with nonsense).

And of course,

  • beyond pure S2P,
  • easy agentic co-worker interfaces, and
  • plays well with “AI”,

as pointed out by The Prophet, will increase value, but that’s not the core of what you’re looking for.

Governance IS the Agent No One is Talking About

Joel is right — The Procurement AI Agent That No One is Talking About is Governance, it’s the agent that is needed the most, and, moreover, it’s one of the few agents, especially among the AI Agents (that include the felon roster), that can actually be implemented predictably and reliably, if you define their role properly.

In Joel’s post, he asks:


What happens AFTER you go live?

  • Users start tweaking workflows without documentation
  • Agents get duplicated as teams grow
  • Logic gets lost when staff turnover happens
  • Nobody remembers why decisions were made

And then tells you the answer:

It’s the same mess we created with ERP and S2P systems!

And then he goes on to say

????’? ???? ?? ????:

  • Automated workflow documentation
  • Change tracking with rationale capture
  • Duplicate detection and consolidation
  • Impact analysis before modifications
  • Knowledge retention across team changes

And he’s very close here, except what we really, really need (and really, really want) is

  • Impact assessment before initial implementation (as well as modifications),
  • Workflow documentation up-front and not just on changes, and
  • Documentation of every decision made, whether or not it changes the workflow, as well as who made it, and who approved.

In other words, knowledge capture and retention is ongoing, change tracking is also decision tracking, and analysis is continual.

However, when it comes to duplicate detection and consolidation, good luck with that!

While it would be nice to automatically detect (and quash) duplicate agents — if they are acting on API pulls through third party systems, how do you know they exist? When users in multiple departments go rogue, and do their own thing (especially if they are unaware there’s already an agent-based app for that), how do you know? You don’t!

So, instead, what you should really be focused on, especially from a GRC viewpoint, is

access tracking and access control
only authorized, validated requests get through to systems and agents because while you can’t track every agent on your system, approved or felonious, you can ensure access control to data if you replace the (open) APIs with no access control or access tracking with an agent that intercepts all requests and does that
risk assessment
continuously monitor data sources, internal and external, for KRIs and alert the right person when a potential risk situation is detected
compliance enforcement
ensure that any company, industry, or government protocols are followed in access control, data collection, decision making, and reporting

Considering that all of this can be accomplished via well-defined workflows, you could build very reliable agents and solve the un-cool problem that everyone needs a solution too. And I think that would be cool. Don’t you want to be someone who’s cool?

Forget Best in Class, Hype, or Futurism — If You Want To Improve, Mature!

As you know, and as we’ve written about repeatedly, the hype cycles for orchestration and Gen-AI are in full swing (even though both should be declining, they are both picking up steam, likely due to the ridiculous amount of money spent on marketing — which includes vendors buying analyst studies and reports that focus on areas where they look good).

Consultancies are not only trying to promote and sell you these technologies as a panacea for all your technology ills, but also trying to tell you that it’s what the best-in-class do and, by the way, that if you want to be best-in-class, you have to upgrade all of your processes (with their help) to those that the best-in-class use (whatever that means).

Furthermore, both are trying to tell you what the Future of Procurement is in 2030, 2035, 2040, etc.

And the reality is that NONE of this helps you. Not one bit.

As we have repeatedly pointed out, most of the currently hyped technology is still in experimental/beta stages. This is not technology that will help you mature. In fact, if you are not an industry leader, and mature in your processes, it may actually hold you back because you need to be a mature industry leader with your Procurement organization running smoothly to have the time and experience to properly evaluate these technologies and where they might fit in your organization.

Furthermore, every organization is different. As a result, what is a best practice for one organization may not be a best process for another. In fact, it might not even be relevant. While you will need to improve your processes, and streamline them for digitization, there is no set of fixed processes you can just plug and play and succeed.

And, don’t pardon my French, why the fuck would you care about what Procurement will be like in 5, 10, 15, 25 years. That does NOT solve your problem today. You care about what a better organization would like today and how to get there. That’s it. Just like the journey of a thousand miles begins with a single step (and possibly a single kick in the ass), the path to success is continual improvement, and, simply put, doing better tomorrow than you are doing today.

This means that the key to success is good old maturity levels, current state assessments, and simple step-by-step plans to get from one level to another. Nothing fancy. Nothing tech-centric. And definitely nothing hyped!

While the doctor admits he did get a little tired of the plethora of these maturity maps that appeared in rapid succession in the late 2000s and early 2010s, including the one he did, it was much preferable to today where the dearth of these, and simple advice, is deafening. The help that is desperately needed is not there — replaced by (Gen-AI generated) (Gen-)AI and orchestration hype, not how they can (and cannot) support the solutions you need.

[Plus, let’s not forget that analyst firms and consultancies tend to ignore government regulations and industry compliance (except in country-specific studies), day-to-day pain points (because they aren’t sexy and won’t sell the hype), and, unless they can make a quick-buck (or get a major uptick in eyeballs), changing global conditions that require (temporary) supply chain pivots.]

So, if you truly want to improve, find a maturity model that walks you through the process and knowledge improvements you need to

  1. get to where you should have been when you started Procurement
  2. get to where you should be today
  3. prepare for the next 3 to 5 years (since no one looks beyond that anymore)
  4. slowly build out a foundation that will take you beyond that (without another massive investment)

That’s it. That’s how you make progress. And how you do it without flushing Millions of Dollars down the (Big X) consulting toilet.

Need a starting point? You can still download the classic paper the doctor wrote back in 2012, that was sponsored by BravoSolution (acquired by Jaggaer), on Taking the First Step on Your Next Level Supply Management Journey which describes the levels of maturity from standardization and complexity reduction (which is typically the first step an organization takes on its journey), to operational excellence (which is typically the second step an organization takes on its journey), to strategic business enablement (which is when it typically becomes best in class).

If you do a web search, you will find others from the big consultancies, but this gives you an idea of what to look for in a model that you can build a progress plan on. Where do you start, where will go next, and where do you want to end up. Note that a good model is tech free. Tech should support your growth, not the other way around. (In other words, it’s never Tech-First or AI-First, it’s solution first, and then you identify the right tech.)

And if you need help with a current state assessment, or flushing out a roadmap from one level to the next, or where you are now to standardization and complexity reduction, hire a niche consultancy who will take a no-nonsense approach to get you there at a reasonable cost. (This shouldn’t cost millions of dollars in a transformation project. Depending on your organizational size and complexity, somewhere in the low six figures should typically be enough to get your started, or mid to high five figures if you want to just focus on a few core areas at a time. But definitely NOT seven figures. That comes during the transformation process once you have identified the tech you need, and NOT the tech everyone is trying to shove down the proverbial throat.)