Category Archives: SaaS

Analytics Must Drive Source-to-Pay, but not necessarily Gen-AI

Xavier recently penned another great piece on Analytics in P2P: From visibility to actionability where he highlighted the failures in analytics in traditional P2P:

  • static, backward looking, spend by category, invoice cycle time, approval rates, compliance rates
  • insights only after transactions are processed, payments are made, and cycles completed
  • late payments multiplying, exceptions accelerating, and supplier risk accumulating
  • lack of operational insight

According to Xavier, P2P can only be modernized if the embedded analytics shift from descriptive to diagnostic.

  • don’t report KPIs, explain the root causes (which approval paths contributed the most to approval time)
  • don’t report exception rates, identify suppliers that consistently cause them
  • don’t report spend anomalies, break it down and identify root causes

It’s a great start, but where it needs to get to is actionability. Xavier begins to address this point by stating the next step is “predictive awareness” where the system anticipates likely outcomes within active processes, such as predicting which invoices are likely to miss payment terms, which requisitions are likely to stall in approval or which suppliers are likely to generate disputes based on current patterns as that allows a Procurement professional to intervene before issues arise.

Finally, Xavier gets to the main point — the real inflection point comes when analytics begin to recommend actions and influence execution paths. Prescriptive analytics in P2P requires tight coupling between insight and control. If analytics identify a high-risk transaction, the system must be able to route it differently, apply additional validation or prompt a specific decision. If analytics detect a low-risk, repetitive transaction, the system must be able to reduce friction without manual intervention.

But it needs to go one step further. It must not only route differently, and apply more controls, but it must still do so automatically based on the diagnostic and predictive analytics. It can’t just apply a “one-size-fits-all” approach for automation and kick every exception out for human processing. You can’t always make the default path smarter because there should be different paths depending on the cost of the purchase, the risk associated with the purchase, the discrepancy between the invoice, goods receipt, PO, and/or contract terms and conditions. You need multiple streams that are auto-selected by predictive analytics that support the right actions given the assessment of the conditions.

The reality is this — except for truly exceptional situations, once you’ve made the decision on what to purchase, procurement should be 100% automated. It’s all e-document exchange, analysis, authorizations, and (payment) transactions. Unless something is really off, a buyer should never be involved once all the workflows, rules, and authorizations are setup.

But this automation should extend back into, and through, source-to-contract. Building on the Busch-Lamoureux Exact Purchasing pocket-cube framework, there are categories that are low risk, low value, and low complexity — you should NOT be buying these manually. “Agentic” automation should be taking care of these for you, considering that even a worst-case screw up will be of little impact. Then there are categories of moderate risk, value, and/or complexity which can be fully automated if all of the necessary data is available and there is a cost and supply history to build on, there are no special situations that need to be taken into account, and a worst-case analysis indicates that even a statistically unlikely “bad buy” will be of minimal impact. These should be 90%+ automated from the decision to buy to the recommended award, with extensive analytics and augmented intelligence for human review. And if the buyer likes the default recommendation, it should be just one click for the process to go from award to e-signed contract.

All of this requires very extensive descriptive, diagnostic, predictive, and actionable analytics and intelligence with extensive, adaptive, robotic process automation ([A]RPA) that can automate everything that should be. The reality is that while everything should be sourced (or exactly purchased), when you have all of the (market) intelligence, the standard processes, and the organizational goals encoded, then there’s no reason that the systems shouldn’t do the majority (or the entirety) of the work for you.

While buyers won’t be replaced by agentic systems (despite the over-hyped BS claims of AI Employees), they will be heavily augmented by them when most categories aren’t complex, risky, or strategic enough to require human review or intervention.

Now is NOT A Great Time to Buy (Part 3)

Standalone “Intake to Nowhere”, “Classic Onboarding and Supplier Management”, “Predictive” Analytics, “Contract” AI, “Agentic” AI or Classic Mega-Suites … until 2029

Yesterday we reminded you that while you need intake and orchestration, you need supplier intelligence, you need predictive analytics, you need AI-based contract analytics, and you need “Agentic” AI that executes (but does not make) decisions, you should not buy it standalone, at least not now, and you definitely shouldn’t buy a classic mega suite.

While all of the solutions we have tackled so far are currently over-priced, Agentic AI, which is the new hype, is the most over priced offering of them all, especially with the consistent over-promising by these new generation vendors that are promising BS “AI Employees” while delivering task automation that is reliable as a chocolate teapot where consistent, dependable, execution is concerned. Now, some of these vendors will figure out that you need constrained, double guard-railed, multi-agent systems with human monitoring and exception intervention and eventually deliver reliable augmented intelligence systems that make an average employee super human, and they will be worth it, most of these vendors will simply try to out-prompt each other through custom clod and chat, j’ai pété wrappers, cr@p out at about 80% to 95% reliability depending on the task, never be trust worthy, and never be worth it. Since these just started to hit the big time, with ridiculous over-funding, in the past year or two, it will be three more years before the dust truly settles and 2029 before you want to make any long term bets.

Plus, if you know the real history of AI, which is probably older than your grandfather FYI (with the first algorithm to be awarded the title developed 70 years ago), you know that it’s usually close to two decades before a new algorithm is mature enough, and understood enough, with real, solid, mathematical measures of reliability, for mass, unmonitored, industrial use. And typically at least a decade before it’s ready for leaders to apply it in industry for monitored, target, use. The first LLM hit the scene in 2018. That means 2029 is also the year it will finally start to be reliable for a certain (but small) set of tasks in certain (but a small set of) domains. It will still hallucinate more than an LSD loving dead-head, but by then we’ll have much better detection methodologies and confidence measurements and will actually be able to trust it when the results get through the multi-layered security gates that we’ll finally be able to build with more understanding.

And yes, as we’ve said twice already, you need this tech. But buying “best of breed” will only “bleed your cash in the best way possible” with little measurable return.

But don’t return to a “classic mega-suite”. These are now more over-priced than ever. First of all, as we’ve discussed many times on this site, unless you are a Fortune 1000/Global 3000 multi-national with extensive, and complex, source-to-pay needs, you don’t need to pay Millions of Dollars a year for a suite when an 80% mid-market solution for 250K a year will do the trick. (See our piece on how much should you outlay for ADVANCED Source to Pay.)

Not only do most organizations only have a few categories where advanced technologies are needed, and usually only in one or two of the modules the mega-suite sells, but most of their categories are so straightforward that even BoB mid-market solutions present not just an 80%+, but a 90%+, solution. Plus, modern ARPA and appropriately focussed Agentic solutions are allowing mid-sized organizations to cobble together “good enough” solutions from low-cost 80% point solutions for 10% of the cost of a mega suite that gets them started on their journey, allowing them to upgrade to better solutions as they need, and only as they need.

This is putting severe cost pressure on the mega-suites, which are going to have to admit that most of their solutions, workflow, and UIs are over a decade old and not worth the premium they once charged. For organizations that truly need these solutions, from vendors which aren’t aggressively updating their solutions (due to these vendors being purchased by PE firms at too high a valuation and, thus, being forced to cost cut to meet ridiculous sales targets), if they wait a year or two, these will soon be priced at what they’re worth, and you’ll get an annual license for less than half of what they are charging today and get all the functionality you need to boot!

So, at the end of the day, while you need a solid Procurement solution that comes with a modern intake front-end, has orchestration at the core, provides you supplier intelligence, integrates the analytics you need, helps you with your contracts and their processes (to the extent you actually need that help), and allows for adaptive robotic process automation for all your well defined tasks (and provides the data foundation for “Agentic” AI if you have valid applications where such technology will actually bring value), you don’t need to overpay for it. And you definitely don’t need to pay the double to quadruple price tags that current mega-suites are charging.

But if you can find what you need, at a fair price tag, and you buy that, you buy real value that will appreciate with time because it will do what you need it to do, at a fair price, and that’s the only way you save time and money with ProcureTech. Getting what you need, when you need it, at a fair price point. You know, classic Procurement!

Remember that.

Now is NOT A Great Time to Buy (Part 2)

Standalone “Intake to Nowhere”, “Classic Onboarding and Supplier Management”, “Predictive” Analytics, “Contract” AI, “Agentic” AI or Classic Mega-Suites … until 2029

Yesterday we told you that while you need intake and orchestration, you need supplier intelligence, you need predictive analytics, you need AI-based contract analytics, and you need “Agentic” AI that executes (but does not make) decisions, you should not buy it standalone, at least not now, and you definitely shouldn’t buy a classic mega-suite.

While analytics platforms have been traditionally scarce, they’ve been popping up faster than bluebonnets in spring, faster than the weeds in unplanted fields, and faster than Starbucks on an empty corner in Y2K. This is creating severe downward price pressure as well as diluting the average actual functionality as many of these are built on third party white-labelled platforms and, even worse, wrappers on third-party LLMs that are great at conversation, not so great at analytics, and entirely dependent on these third party platforms where accuracy can change overnight on the same prompt, models can change with zero notice, and token pricing can skyrocket with no notice.

Even worse, some of these don’t work reliably because they depend on experimental LLM/AGI models, which are horrendously unreliable at math, and they will inevitably fail. That’s why you should be careful with what you buy from the “new standalone analytics startup” category — many have no real functionality (and won’t last very long because of it) and those with only average run-of-the-mill functionality will soon be available for dimes relative to the dollars they are trying to bill you for today. If you need a solution, get one that was available on the market by 2022 at the latest, as the current generation of LLM/AGI/wrapper solutions started to spring up about 3 years ago.

With regards to contract AI, this has been emerging for quite some time, but the current generation of LLM-powered plays that have been multiplying faster than cane toads in Australia started spiralling out of control about 2 years ago when the proclamations started to be made that your corporate future would be human lawyer free.

After all, clod and chat, j’ai pété can review a contract, spit out a summary, and (purportedly) tell you if any clauses are missing in a matter of seconds. Also, if you give it enough (historical) contracts and a few instructions, it can also draft a contract for you in seconds, even if you need a hundred page monstrosity. Who needs a lawyer?

Well, you. These are not infallible, and they make mistakes all the time. Often, they are minor, and easily fixed by a contract or legal expert with a quick review, but sometimes they aren’t so minor. Sometimes the omissions or clause errors are so major that it takes a lawyer longer to rewrite than if they just had their paralegal assemble the draft by hand and they dotted the i’s and crossed the t’s.

In other words, since you get results that are just as good using your own low-cost LLM subscription, it’s not worth a large price tag for a “Contract AI” that just wraps someone else’s tech. Especially when it’s going to get a lot cheaper and have no value unless embedded in the sourcing and supplier management applications you use everyday where all of the embedded supplier and agreement data need to complete the contract is embedded in the application. Wait a year or two and you’ll get it for a dime on today’s dollar.

To be continued …

Now is NOT A Great Time to Buy (Part 1)

Standalone “Intake to Nowhere”, “Classic Onboarding and Supplier Management”, “Predictive” Analytics, “Contract” AI, “Agentic” AI or Classic Mega-Suites … until 2029

Yes you need intake and orchestration.

Yes you need supplier management.

Yes you need predictive analytics.

Yes you need AI-based contract analytics.

And, yes, you definitely need “Agentic” AI that executes (but does not make) decisions.

And if you’re a (mid) mid-market or larger, you need a suite.

But you should not buy any of these products, at least not now.

Why?

The majority of intake and orchestration platforms, and especially the ones that have raised nine figure VC (i.e. 100M or more), are overpriced and under featured. Modern intake and orchestration that modernizes interfaces, simplifies workflows, optimizes clicks, and makes process adherence easier than doing it any other way is valuable, but not that valuable. It’s essentially better middleware 3.0 for the web, and very easy to replicate. There might only be a few players now, relatively speaking, but you’re about to see a slew of these players who literally do nothing but put very nice lipstick on a big fat prize-winning pig (who’s not happy about it), which is a lot easier to do than raising the prize-winning pig from a piglet to a prize winner. At the end of the day, you need actual functionality, and that’s where the real value lies. (And today, that means shilling out for a classic mega-suite to layer the fancy new intake platform on top of, which costs you more, not less.)

As competition heats up, and technology advances, this will be the easiest, cheapest, play and you’ll soon find out that what the big players claim is worth 1M is only worth 100K to 250K, and you still need to go spend that 1M+ on traditional platforms that have deep functionality. So either buy a platform with real functionality with orchestration built in, or wait another year or two. It’s gonna get cheaper and better for standalone I2O. The market has not yet been zipped up.

Supplier Management is very important, but the vast majority of the one hundred plus (yes, that’s 100+) solutions on the market — be they best-of-breed, suite-modules, or hybrid data/contract/content management solutions with a supplier focus — are no longer up to the task. As per our recent post on supplier management must be continuous and proactive throughout the supply chain, these classic point-in-time solutions are no longer up to the challenge of modern supplier management as they can’t even detect changes in supplier behaviour in real-time that are indicative of emerging risks, yet alone supply chain events that are going to seriously impact supplier behaviour in short order.

As a result, they aren’t worth very much. Moreover, if you look at what classic onboarding applications do, they collect data that they force the supplier to enter during the onboarding process — data that, for the most part, is publicly available on the supplier’s web site, third party registries, and other (internal) enterprise systems — data that could easily be consolidated and pre-filled by modern RPA / Agentic applications that would not only allow a supplier to “onboard” in a fraction of the time by pre-gathering all of the fields. In other words, modern (A)RPA and Agentic data gathering applications do the work of classic onboarding, and with their prolific propagation, do it cheaper and put serious downward cost pressure on these classic applications. Moreover, these next generation solutions, which are dropping in price as well as they are becoming a dime a dozen, can continuously monitor these data sources, detect data changes, and (queue) update(s) in real time. Plus, they can accept feeds from supply chain systems and correlate events that might be meaningful.

So, if you’re still in the situation that can survive off of a last generation solution, wait a year or so, and get it for pennies on today’s dollar. But if you can’t wait, make sure you get a modern solution that can monitor supplier and related supply chain changes — it won’t cost more, and if you don’t lock into a long-term subscription, you’ll be able to keep costs way down on renewal (or easily switch to another platform with the same functionality for a lower cost in a year or two).

To be continued …