AI. It’s everywhere, all at once.
Procurement is one of the leading industries when it comes to embracing new solutions and ways of working. The space is waking up to the massive value that can be created through autonomous negotiations. And making a name for itself in the procuretech ecosystem is Pactum.
Pactum is an AI-based system that helps global companies to automatically offer personalised, commercial negotiations on a significant scale. The system adds value and saves time for both the Pactum client and their negotiation partner by aligning values to determine win-win agreements via easy-to-use chat interface that implements best-practice negotiation strategies.
Scott Mars has been the Global Vice President of Sales at Pactum AI since December 2022. He explains that his organisation is always striving to grow and expand its service offering. “At Pactum AI, we’re defining the space,” explains Mars. “We’re a creator for autonomous negotiations, we work with some of the world’s largest organisations and we’re really looking to expand the pie. The name Pactum originates from the Latin definition of an informal agreement between two parties. We can do up to 10,000 negotiations at once and unlock hundreds of millions of dollars of savings for our clients. We’re typically looking at tail-end suppliers and tail-end spending that no one’s touching. In many cases, that represents 80% of the negotiations.”
Mars highlights a recent example of incredible savings achieved through Pactum AI’s solutions in a short space of time. Recently, Pactum worked with a travel and leisure firm in the UK to introduce its autonomous procurement solution. “We conducted a very brief implementation over two weeks, which led to a much larger enterprise rollout,” he discusses. “The CPO was actually on holiday while we implemented the autonomous procurement solution with his team. This involved optimizing payment terms with some of his long-tail suppliers.
“When he got back from holiday, there were 50 DocuSigns sitting in his emails, all related to extending payment terms. Many of them were remarkable successes, resulting in an average extension of negotiated payment days by more than 30 days and a 3% average gain from negotiated discounts and discount periods. This means we secured an average discount of 3% on each invoice when paid within the agreed-upon discount term. Our unwavering commitment to enhancing overall value not only positively impacts our clients but also extends to their suppliers, creating a win-win scenario for all involved.”
With AI having such a transformative effect on procurement, achieving efficiency and cost-effectiveness is more streamlined than ever through digital tools. But being alert to new threats, particularly in a space that is so open to innovation, does bring data security concerns. Mars recognises the challenge of cybersecurity and affirms Pactum ensures the safety and confidentiality of sensitive procurement data remains secure in chatbot interactions.
“Everything is hosted in a private cloud, so each customer has a private instance. It means all of our data is secure from a generative AI perspective,” he tells us. “Large language models (LLMs) are great, they’re creative but they have their problems which means we’re only using safe LLMs. All of our negotiation design is kept in-house, and we use rule-based explainable AI which means all the data is secure per each customer. We have the largest repository of behavioural science, so those learnings are shared across our customer base, but all the customer data and all their negotiations are private to each customer.”
Looking ahead, Mars is excited about procurement’s digital future and explains Pactum AI’s vision is to transform global commerce. “At the moment, we’re only doing buying, but we are looking to move into the sales side as well,” he discusses. “Large companies have a huge footprint. For example, the Fortune 500 is 66% of the US economy. The plan is for us to move into selling which will give us the scale to transform global commerce. It’s definitely a grand vision, but we do feel that we’ll move from buying into selling and transform global commerce.”
For procurement generally, Mars is adamant that the space is in its “golden age” with the magnitude of vendors within the procuretech ecosystem hitting unprecedented numbers. “I was speaking with a CPO recently and he said 10 years ago you could name the procure to pay and ERP vendors on one hand, now there’s hundreds of them and all these periphery vendors for AI and spend,” he reveals. “The most visionary procurement leaders aren’t just looking at these all-encompassing solutions, they’re bolting on niche solutions into their ecosystems to make their teams more efficient. I think we’ll start to see a consolidation in the coming years of all these little companies into a few larger players to do really an end-to-end type solution. I expect someone to come up with a solution to close the loop in procurement.”