Procurement tech will be evolving rapidly over the next few years, according to a recent report.
A Gartner report predicts that all spend analysis software based on “narrow” AI (artificial intelligence) will be obsolete and ready for replacement five years from now.
Gartner analyst Patrick Connaughton further declared that advances in “general” AI will have replaced about half of existing legacy spend analysis software by 2022. This is impactful news considering that the spend analytics software market is seen topping US$3 billion that same year on a growth rate of 17.7% a year.
The Coming Change: Narrow vs. General AI
So what’s the difference between narrow AI and general AI? Narrow AI is like getting a computer to play chess. The game is defined, the rules and procedure are defined, and a specific problem is resolved. Software run by high-powered computers are great at this. The greatest of human chess players no longer have a chance. General AI happens when some guy off the street in brought into the room and talks to the computer about life and stuff. Computer eventually discovers the guy is bored and asks him to play a game of chess as an alternative way to pass the time.
Narrow AI is limited because it is optimized for a certain task. It is not going to provide new insights or suggest new approaches because that is not what it is built for. General AI is near-human-level intelligence using natural language processing. Present is the ability to learn dynamically and to redefine the contours of any problem. General AI-powered systems can handle a wide range of possibilities with undefined variables.
The impact of general AI on business intelligence software over the coming decade cannot be overstated. Gartner predicts that over 90% of all Business Intelligence (BI) platforms will be suffused with general AI in that time frame.
The problem with narrow AI spend analysis software is that it demands the proper organization and categorization of data that has to be cleaned up and validated. It is thus time-consuming to operate and subject to a lot of errors. General AI-driven spend analysis software can handle imperfections in the classification and organization of data. Then it adds more value by extracting patterns and trends emergent in the data.
Traditional providers of spend analysis software are at a dangerous juncture as they can be leapfrogged by nimble software providers who can deliver cloud-based general AI spend analysis software that can make actual recommendations.
Chief procurement officers will have a lot on their plate as the tsunami of change will wipe away a lot of the legacy systems they currently employ. Only by keeping up with the latest trends in AI and software, will they be able to cope.