Generative AI (GenAI) for procurement has hit the Peak of Inflated Expectations, says Gartner, adding that it will rapidly reach a Plateau of Productivity within two years as mainstream adoption starts to take off.
According to the technological research and consulting firm’s 2024 Hype Cycle for Procurement and Sourcing Solutions, rapid adoption and a multitude of credible use cases will quickly move GenAI through the Cycle.
Gartner explains the ‘Peak of Inflated Expectations’ phase means early publicity produces a number of success stories, which are often accompanied by scores of failures. Some companies will take action during this time, but many will not.
The ‘Plateau of Productivity’ phase is defined by mainstream adoption starting to take off, with criteria for assessing provider viability more clearly defined.
At this stage, the technology’s broad market applicability and relevance are “clearly paying off” says Gartner.
At the start of this year, 73 percent of procurement leaders said that they expected to adopt the technology by the end of 2024, said Kaitlynn Sommers, Senior Director Analyst with Gartner’s Supply Chain Practice.
“This level of adoption, along with promising use cases, such as contract management, means GenAI will rapidly move through the Hype Cycle and reach the Plateau of Productivity at a faster rate than is typical for most emerging technologies in procurement,” she added.
The Hype Cycle evaluated more than 20 technologies that are impacting the procurement landscape this year.
Results show many core procurement technologies are continuing to mature and increase in adoption across organisations, with GenAI use case availability expanding greatly as more capabilities are added by vendors across the sourcing and procurement landscape every month.
Early prominent use cases include contract management, sourcing and supplier management, while additional expected use cases include supporting supplier performance management, P2P and analytics.
Along with GenAI, a set of emerging, AI-driven technologies are nearing the Peak of Inflated Expectations, including autonomous sourcing, predictive analytics and conversational AI.
To provide more affordable access to GenAI capabilities, in line with digital process support, Gartner says procurement technology vendors are integrating third-party large language models (LLMs) which can adapt to provide recommendations and support based on the organisation’s data and an individual’s procurement role.
“The window for building competitive advantage through early adoption of GenAI in procurement is narrowing,” said Sommers.
“Despite this, procurement technology leaders should remain aware of the obstacles to successful implementations, notably in the areas of data quality and integration of GenAI with their current systems.”
Sommers’ recommendations for solving these challenges include:
- Launching targeted use-case pilots that will help clarify what capabilities can be scaled
- Monitoring developments from current vendors for opportunities to utilise GenAI without the need to build proprietary infrastructure from scratch
