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Forbes
Forbes
Technology
Lauren deLisa Coleman, Contributor

Inside The Hot, New Area Of The $39B Corporate Spend In AI

A shopper departs an Amazon Go store Monday, Jan. 22, 2018, in Seattle. More than a year after it introduced the concept, Amazon opened its artificial intelligence-powered Amazon Go store in downtown Seattle on Monday. The store on the bottom floor of the company’s Seattle headquarters allows shoppers to scan their smartphone with the Amazon Go app at a turnstile, pick out the items they want and leave. (AP Photo/Elaine Thompson)

 

Major consulting companies have been tracking and analyzing adoption rate of artificial intelligence for various business applications over the last few years. The numbers have a bit slow to in terms of growth. In fact, in a recent survey from consultancy firm McKinsey & Company of AI-aware C-level executives, only 20% indicated that they use any AI-related technology in their part of the business. However, it seems those who are aware of the power of this emerging technology are definitely creating expenditures around it.  This is evident in the fact that McKinsey also reported that last year companies spent $39 billion in AI which is three times more than in previous years. When talking to industry experts in the space, the budget seems to be going to a particular area of interest for businesses today: business spend management(BSM).

Rob Bernshteyn, CEO of Coupa software  gave me three main reasons why he believes this trend is growing: 

 

  • Identifying and improving sourcing opportunities: AI can help find patterns in a company’s buying behavior and can anticipate your purchasing needs. Not only can AI be used to find trends and suggest routine purchases, AI engines can examine all of the company transactions to see if the team is overlapping in expenditures, for example. If it finds a pattern, it can recommend such actions as an RFP or run an auction to buy a particular service or item in larger quantity from fewer vendors at better prices. It can also help a company map out purchase patterns from the similar suppliers in order to negotiate more effectively when renewals or expansion of contracts are due.

 

  • Better data visibility: Understanding how money is spent is critical for the effective operation of any business. AI tools can help structure and organize spend data in a format that shared services leaders can actually use. By taking a company’s data files, improving the readability and quality of the data, a business can prevent poor or disorganized data from disrupting your processes. Using humans to scrape data from all parts of the organization and put it in an organized system is possible, but it’s often too costly to be practical. AI-powered tools are able to extract, organize and present data, in a fraction of the time and at a fraction of the cost.

 

  • Better understanding of the supplier base. The analysis generated by AI tools can be leveraged to help a company better see its risk concentration, including which parts of the business would be most impacted if a critical supplier defaulted on their obligations. It can also help a company identify opportunities to improve working capital by identifying which suppliers a business should negotiate different payment terms with based on global transactions.

“Quite simply, AI is helping companies save money and make better decisions about how to manage their supply chain,” explains Bernshteyn. “With the large sets of data available for AI-powered tools, BSM is one area where we may see the biggest ‘wins’ from AI because it helps companies better understand their supplier base, enabling them to make better purchasing decisions, exercise better risk control, and capture more discounts.  While uptake at the moment may be limited to early-adopters, in the next two years there is a very good chance that your company will be using AI in this way. If not, rest assured that your competitors will especially if Millennials are on the team. “

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