We live in an AI world. It’s still early in the transformation but this is clearly a persistent trend. For all the change AI promises, though, success has been elusive.
Here’s MIT Nanda talking about the current state of affairs:
“Despite $30–40 billion in enterprise investment into GenAI, this report uncovers a surprising result in that 95% of organizations are getting zero return. The outcomes are so starkly divided across both buyers (enterprises, mid-market, SMBs) and builders (startups, vendors, consultancies) that we call it the GenAI Divide. Just 5% of integrated AI pilots are extracting millions in value, while the vast majority remain stuck with no measurable P&L impact. This divide does not seem to be driven by model quality or regulation, but seems to be determined by approach”
The study also states that the key features of the successful 5% are a focus on a few specific business functions viz. BPO/ Back-office operations and customization of the tools to focus on business outcomes. Vendors who succeeded in these areas are reportedly securing multi-million-dollar engagements rapidly.
The unsuccessful majority leverage tools like ChatGPT but fail to handle integration complexity, fail to align with daily operations and existing workflows, and are slow at contextual learning.
We have seen this movie before with earlier avatars of digital transformations. However, we firmly believe that the Procurement Technology space is ideal for getting the sought-after success with Enterprise GenAI.
Jon Hansen, the procurement guru – a prolific commentator on the state of procurement technology – summarized what was promised with ERP. It seems eternally relevant:
“Enterprise-wide integration
Automated workflows
Significant cost savings
Process standardization”
Here is what he identifies as the fatal conceit of procurement technology:
“At the heart of this change is a growing realization of a fundamental truth that process and not technology is the driving force behind a successful e-procurement initiative.”
Most procurement technology is built for the large enterprise. It is neither suitable nor economic for small and medium-sized enterprises (including semi-autonomous divisions within larger organizations, such as IT). People, including Hansen, have made the analogy that many of the leading systems are like a Ferrari. One wouldn’t buy a Ferrari SF90 Spider to haul rocks or take the kids to school. A more suitable vehicle might be a Ford F150 or a Hyundai Santa Cruz which is not only cheaper but may more appropriately serve the need of a family or small business.
Sometimes, it pays to start small and simple. This, in turn, provides a flexibility that is necessary to function as a business. Yet, the existing suite of procurement technology takes a one-size-fits-all approach. They are built for the large enterprise with plenty of large enterprise features and a large enterprise price tag. Many of them are older. They lack a contemporary user experience. They bolt on AI as an afterthought, not as a central part of the functionality.
There are so many players in the procurement technology space because there are so many different types of buyers.
In procurement technology, there need to be tools targeted for small to medium-businesses that seek to transition from running RFPs with emails and spreadsheets to running a lean operation leveraging the most appropriate AI-enabled capabilities.
EdgeworthBox is a flexible platform of tools, structured data, and community focused on executing RFPs. Our AI suite integrates and adapts to existing customer workflows, improving rapidly with usage by propagating best practices, replicating successful approaches, and significantly enhancing collaboration across business functions
We’d love to hear from you. Please reach out. And watch this space.
