Note the Sourcing Innovation Editorial Disclaimers and note this is a very opinionated rant! Your mileage will vary! (And not about any firm in particular.)
Almost every single Big X and Mid-Sized Consulting firm is putting “Gen-AI” adoption in their top 10 (or top 5) strategic imperatives for Procurement, and its future, and that it’s essential for analytics (gasp) and automation (WTF?!?).
It’s absolutely insane. First of all there are almost no valid uses for Gen-AI in business (unless, of course, your corporation is owned by Dr. Evil), and even less valid uses for Gen-AI in Procurement.
Secondly, the “Gen” in “Gen” AI stands for “Generative” which literally means MAKE STUFF UP. It DOES NOT analyze anything. Furthermore, automation is about predictability and consistency, Gen-AI gives you neither! How the heck could you automate anything. You CAN NOT! Automation requires a completely different AI technology built on classical (and predictable) machine learning (where you can accurately calculate confidences and break/stop when the confidence falls below a threshold).
Which begs the question, have their marketers fallen for the Gen-AI marketing bullcr@p hook, line, and sinker? Or is this their new insidious plan to get you on a never-ending work order? After all, when it inevitably fails a few days after implementation, they have their excuses ready to go (which are the same excuses being given by these companies spending tens of millions on marketing) which are the same excuses that have been given to us since Neural Nets were invented: “it just needs more content for training“, “it just needs better prompting“, “it just needs more integration with your internal data sources“, rinse, lather, and repeat … ad infinitum. And, every year it will get a few percentage points better, but if it gets only 2% better per year, and the best Gen-AI instance now is scoring (slightly) less than 34% on the SOTA scale, it will be (at least) 9 (NINE) years before you reach 40% accuracy. In comparison, if you had an intern who only performed a task acceptably 40% of the time, how long would he last? Maybe 3 weeks. But these Big X know that once you sink seven (7) figures on a license, implementation, integration, and custom training, you’re hooked and you will keep pumping in six to seven figures a year even though you should have dropped the smelly rotten Gen-AI hot potato the minute you saw the demo (and asked them for a more traditional enterprise application they can deliver with guaranteed value).
So, maybe they aren’t misled when it comes to Gen-AI. Maybe they are just shrewd financial managers because it’s their biggest opportunity to hook you for life since they convinced you that you should outsource for “labour arbitrage” and “currency exchange” (and not materials / products you can’t get / make at home) and other bullsh!t arguments that no society in the history of the world EVER outsourced for. (EVER!) Because if you install this bullcr@p and get to the point of “sunk cost”, you will continue to sink money into it. And they know it. Or do they?
In our view, the sad reality is that while one or two financial managers may have gone deep enough down the Gen-AI rabbit hole to figure this out, most of them likely just don’t see the downside for them or their clients. Given all the hype the creators of these Gen-AI* models are pushing, with prolific examples only of success cases and upside, with very little education on the realities (because few of us are highlighting all of the risks of Gen-AI and failures when misapplied), maybe all they are seeing are promises that are just too good to ignore.
So, please, ignore the Gen-AI until you’ve validated a use case and instead remember When You Should Use Big X. Every solution and services provider has strengths and weaknesses. Please use them for their strengths, be successful, and increase the project success rate. (Post-Edit: As of 2024, technology project failure is at an all-time high. We don’t want to see any more of it!)
*Remember that AI, and Gen-AI in particular, is a fallacy.