Consultants will never tell you this about GenAI in Procurement
1/10. That's how I summarize the impact of GenAI in Procurement. Also, I am seeing that execution will become expensive and tools will become cheaper!
The real impact of GenAI in Procurement has been kept muted by consulting firms and Procurement Tech companies, on Purpose.
No wonder, they keep throwing general ideas (that aren't executable) and keep hopping from one buzzword to the other.
While experimenting at Supernegotiate labs, I am seeing two clear trends:
1.) Cost of Developing Procurement Tech: It is pretty wild how fast and cheap the cost of developing Procurement Tech has become! I am talking about operational aspects of esourcing, vendor onboarding, scope3, spend analysis, master data management, contract management, etc. 1/10.
Yap. 1/10 is the cost of developing a basic tool (That just works) at an extremely rapid development pace. And I am talking perpetual licenses (not annual subscription traps). So, you will have zero opex (apart from your hosting fees for your internal company servers).
The Magic will come from having Procurement expertise (granular operation level understanding and not the high-level consultant talk) with the ability to code! This skill set will prosper in 2025 and 2026.
"Procurement Agents or as I call it Procurement Microservices" will be developed by these individuals and probably the next best-performing Procurement suite will be built by individuals for each company at 1/10 of the cost.
Dont pay 200k for a tool in annual charges in 2025. It costs 1/10 to develop basic versions today.
Supernegotiate speaks from experience! Proof of work to follow in 2025!
2.) Consulting: Procurement consulting is not very helpful without ownership of execution and results, something the big consulting firms, will never agree to! With falling partner revenues, and high churn rates among their employees, the quality of the "procurement expertise" of these consulting firms is falling rapidly.
Use consultants only when you need external benchmarking! If you need resources to work on, find better methods (i.e. outsourcing).
Dont pay for concepts and ideas! Use GenAI to do so! Ideas and recommendations are cheap, execution is key in Procurement.
So, 1/10 is what I think you can reduce your Procurement consulting budget to without any material impact on your operations.
Side note: I have been a vocal advocate of rewarding people internally as they work with consultants to ensure the pretty presentations reflect "an accurate picture relevant to business context". Why not pay your people what you anyway would be paying to these consulting firms? If salespeople get commissions, reduction of consulting spend should be a metric linked to procurement people's compensation!
Back to point again, Generic Consulting's budget should collapse drastically!
For consulting firms, I think they need to build granular expertise in Spend Analysis, Procurement Microservices (Agents), and Procurement Operations fast!
Thoughts?