**London**: The procurement landscape is witnessing a shift from generative AI to Agentic AI, raising questions about the future of AI applications in business. Ardent Partners predicts significant changes for 2025, highlighting enhancing decision-making and the emergence of autonomous negotiation agents.
In the procurement landscape, the narrative surrounding artificial intelligence (AI) has shifted notably in the latter half of 2024, moving from generative AI (GenAI) to a focus on Agentic AI. This change has raised questions among observers about the future role of GenAI, which had been a focal point in procurement marketing strategies. Ardent Partners, a research and advisory firm, includes the rise of Agentic AI among its predictions for 2025 in their report titled “Procurement 2025: BIG Trends and Predictions.”
AI has a long history of evolution, transitioning from rudimentary rule-based systems to sophisticated models capable of reasoning and creative thinking. In the current context, AI is typically categorised into three main types: Narrow AI (ANI), General AI (AGI), and Superintelligent AI (ASI). The predominant systems in use today are examples of Narrow AI, which excel in specific tasks like facial recognition or autonomous vehicle operation.
GenAI represents a significant milestone within this evolution, focusing on the generation of new content, as evidenced by its introduction with tools like ChatGPT in late 2022. These systems can create human-like text, code, and images by analysing vast datasets and predicting outputs based on input prompts. While GenAI has the potential to enhance productivity in various procurement activities—including contract summaries and generation of supplier intelligence— it has notable limitations. Its reliance on human prompts and its inability to autonomously pursue goals can restrict its operational capabilities. Additionally, a concern associated with GenAI is the occurrence of “hallucinations,” where the AI generates plausible yet inaccurate information due to insufficient training data or biases.
In contrast, Agentic AI emerges as a more advanced iteration, marked by its autonomy and ability to achieve objectives independently. Unlike GenAI, Agentic AI can autonomously plan tasks and execute workflows that adapt to changing circumstances. This advancement allows for enhanced decision-making capabilities that extend beyond mere content generation, opening up avenues such as automating procurement approvals and negotiating with suppliers dynamically.
The development of Agentic AI builds upon various underlying technologies, including generative AI, reinforcement learning, and evolutionary algorithms. It represents a shift towards what are referred to as AI agents, which operate without the need for direct human control. While the potential applications of Agentic AI in procurement are extensive, the technology remains in its early stages, primarily functioning within the confines of human-defined objectives. The most notable current applications are seen in autonomous negotiation agents, with emerging solutions from companies like Pactum, nnamu (now integrated into Beroe), and Fairmarkit.
The advent of Agentic AI has prompted discussions about the future of Software as a Service (SaaS) applications within procurement. Some claim that the implications will lead to the obsolescence of traditional SaaS. However, experts suggest this is an exaggeration, at least in the short term. Many SaaS solutions involve complex integrations with legacy systems and business processes that cannot be entirely replaced by AI. The need for human judgement and ethical considerations in decision-making ensures that human oversight remains a pivotal element in enterprise operations.
Despite this, the integration of Agentic AI into SaaS applications is anticipated to significantly enhance their functionality, making these systems more adaptive and intelligent.
Looking ahead, a discussion on the evolution of AI in procurement, particularly the move towards what is being termed the Agentic Age, is scheduled for March 27th, in collaboration with Fairmarkit. This event promises to delve deeper into the implications of this transition.
Source: Noah Wire Services
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