Conventional thinking is that software‘tools’ equip professionals to do their work. Software as a Service (SaaS)applications have proliferated in recent years and include CRM tools,Accounting tools or eSourcing tools. Keelvar developed one such tool, a Sourcing Optimizer to manage bid events.
But this conventional thinking doesn’t apply to Intelligent Automation, whose sole purpose is to fully (or almost fully) automate entire processes so that the human user is taken out of the loop to focus on other activities that cannot be automated. If there’s no user, then how can it be a tool?
It’s not correct to refer to Intelligent Automation as a tool just as its not correct to refer to electricity, gas or data center hosting as tools. These are pieces of infrastructure so it’s a completely different category of offering that is sold differently, billed differently and used differently to SaaS tools.
The benefits and rationale for Intelligent Automation are obvious and time savings are the clearest driver for adoption. Many businesses approach buying Automation in the same way they've approached the procurement of software tools. Namely, engage the front-line user base and get their views on the new technology. This is where the first mis-step can occur.
Procurement Setting - how Technology Buying must Adapt
Procurement technology teams' roles have traditionally been focused on equipping the procurement team with a set of tools. Spend Analytics, eSourcing, eInvoicing, Supplier Management are all examples of SaaS applications that abound in modern enterprise procurement settings.
However, Intelligent Systems for Automation are Infrastructure as a Service (IaaS) rather than a SaaS solution so now the technology selection must focus on whether Intelligent Automation can fully capture the existing process and automate it.
The conversation regarding needs is focused on the process owner such as a Category Manager’s needs. The set of stakeholders is much smaller and should be focused on senior management. Sourcing managers tend to feel threatened by Automation so involving users of eSourcing systems in discussions on Intelligent Automation (which was standard practice for SaaS tools) is usually counterproductive in Automation programmes and where opposition can be expected.
Billable Bot Actions
So how does billing work when there are almost no users? The billing model switches to one more similar to common infrastructure billing methods. Consider your electricity, gas or data centre hosting as infrastructure and how consumption is metered and billed proportionately.A key consideration for technology budgets tends to be predictability.
Keelvar has come up with a new concept that hasn’t been seen in Procurement before. A founding principle for a fair and predictable billing model is to capture the notion of ‘work done’ and measure throughput by counting Bot Actions that replaced the work that a human would have conducted using a SaaS tool.
Examples of Billable Bot Actions are:
1. Looking up the requested good/service rate card
2. Seeking nearest alternatives the requested item if exact match isn’t present
3. Generate correct lane scope by looking up the liner country list
4. Generate a request summary for category managers
5. Message category managers
6. Determine invited suppliers
7. Message invited suppliers with invites / reminders
8. If all eligible suppliers have bid,message the category managers
9. Autopilot round opening/closing
10. Evaluate scenarios (including non-cost objectives) to generate award recommendation
11. Generate an award summary for category managers
12. On award, update the rate card
13. Message the awarded and losing suppliers
14. Message the original requester
Usage Tiers of Bot Actions
Enterprise procurement teams love economies of scale so are right to ask how their unit costs decrease as throughput increases. This is a fair and reasonable expectation so we came upwith the notion of Tiers of Bot Actions to capture the decreasing marginal cost of Bot Actions as throughput increases.
If a basic RfQ or Auction is conducted by a Sourcing Bot, the number of Bot Actions is between 8-20 depending upon the complexity of the process that is automated. If each Billable Bot Action costs less than $1, then the cost per auction or RfQ is approximately one or even two orders of magnitude (yes that is 10x to 100x times) cheaper to run than a conventional eSourcing project operated by manual labour.
This is a radical change and indicative of the type of truly transformative Digitalization that enterprises are seeking.
Digital Transformation requires Intelligent Automation
Intelligent Automation for Sourcing delivers Digital Transformation in a way that conventional SaaS systems cannot because speed at enterprise scale requires side-stepping education of thousands of users. Encoding a corporate sourcing strategy programmatically and centrally can deliver agility, speed savings and compliance.
Contact us today to talk about your requirements, and to discuss how Sourcing Optimizer, Sourcing Automation or Fulfillment Optimizer can transform your sourcing process.