Negotiation is a fundamentally human act between two or more people. When it comes to vendor negotiations, this is driven by the prior (and future) relationship between human counterparties. While digital processes can support this mission, if a key decision maker involved in a vendor negotiation goes on vacation, changes jobs or gets hit by a bus, the negotiation will stall or scramble to reach a conclusion. It’s a good reminder that no matter what role artificial intelligence (AI) plays in a negotiation, the negotiation process and award decision are driven by humans.
The true purpose of AI is to make human negotiators more effective by reducing their time spent on busywork (rather than removing humans from the negotiation process). This insight about how technology can augment and empower procurement teams (rather than displacing them), is of fundamental importance
For those participating in the vendor negotiations, it is likely that their companies book travel through a digital app that aggregates and discounts airline tickets. It is also likely that the hotel and ride to the meeting are also booked via digital apps. Thus, the technology stack that supports this “in-person meeting” is being mediated by a variety of digital apps (many of which already leverage AI), apps that support (rather than displace) the crucial in-person business negotiation by reducing the number of low-value transactional tasks and phone calls.
Now, this is the interesting question: Is the company that relies on those apps to get their people from point A to point B to enable the vendor negotiation really going to accept that the best tools they can give their procurement negotiator are a legal pad, an email account, a smartphone and an Excel spreadsheet? Negotiations are such high-leverage activities that companies will buy their procurement negotiators the best tools for the job.
Given that digital apps are changing the business process of every other enterprise department, it is unlikely that procurement negotiators will be the sole exception to this trend. The application of AI to market and vendor data analysis doesn’t mean that in-person negotiations will end, rather it means that negotiations will happen not just differently, but hopefully faster, better and with fewer email chains and ever-changing spreadsheets.
>>To learn more about this topic, visit futureofsourcing.com to read Edmund’s article on the three factors likely to impact the process of a negotiation.
Edmund Zagorin is founder and CEO of Bid Ops Inc., the first company to apply artificial intelligence to vendor negotiations. As a procurement practitioner, Edmund experienced the tedium of pivoting spreadsheets to evaluate vendor bids based on a set of ever-changing qualitative and quantitative criteria, leading him to form the team that created the Bid Ops platform. Edmund frequently meets with groups of F1000 executives to discuss the evolving role of artificial intelligence in spend analysis, vendor audit, bid scoring and across the enterprise procurement stack.