I promise this is procurement-related and carries a moral that will resonate.
I’ve been playing racquetball for about 15 years—fully addicted. Today, for the first time, I went to see a professional coach.
He watched me warm up for five minutes through the glass wall, then came in and told me everything I was doing wrong.
I thought my footwork needed work. He said it was not only fine—it was exceptional.
The first moral: Never assume you can just self assess your skills. You need someone who sees the big picture.
Now the real problem according to him? My swing. My grip. My posture. My body torque. Even my head movement. He gave me about ten things I was doing wrong.
I had to practice all those new variables at once. It was tough. The backhand was even more challenging than the forehand. Reprogramming 15 years of habits was no small feat.
The result?
My backhand still needs more practice the “new” way, but my forehand…holy cow. Every single shot turned into a professional kill shot (racquetball term: rocket hard, centimeters off the ground, totally unreturnable). I can’t wait to unveil it in competition.
He said my backhand will be there in a couple of lessons.
Now here’s the funny part — and where procurement comes in.
I was getting really good at doing things the wrong way. I could beat most players.
Read this twice: Getting better and better at doing things incorrectly only creates the illusion of progress.
In 90 minutes today, I made more progress than I had in the last decade and thousands of hours of play. My mind is blown.
Now let’s pivot to procurement. I’ve worked with enough Fortune 100+ companies to tell you that we are doing procurement wrong.
And we’re getting better and better at it, too.
We automate bad processes with cutting edge systems
We write contracts for goods and services, then magically expect performance results post-contract.
We rely on policy to drive compliance, even though it never works.
We chase “savings” by hammering suppliers at the table, when most savings actually come from product and service design streamlining.
I could go on. But don’t be mistaken—our profession is full of bright, energetic, capable people. They’re not the issue.
The issue is they’re getting better at legacy practices. Just like continuous improvement of the combustion engine.
What’s missing is a catalyst—something to flip the script. With the right people and the right culture, the results can be dramatic. I lived that today.
When Lou Gerstner took over IBM and transformed it from a dying mainframe company into a profitable software and solutions powerhouse, he said the right people were already there. He simply needed to act as a catalyst for change.
That’s my bread and butter. My work with Fortune 500s is about being that catalyst—helping companies extract maximum results from the same people, just by doing different things.
Don’t get stuck in a rut. Don’t keep getting better at the wrong things—it only creates the illusion of results. And above all, don’t fall into arrogance—the belief that you can just grind harder and make it work. Leadership matters, but real transformation needs a catalyst.
Now go do something wonderful. Be your best! — Omid G. “THE Godfather of Negotiation Planning” ~ Intel Corp
Want to know why procurement rarely reports to the C-Suite?
Let this sink in: Eventually, procurement reports to someone who doesn’t understand procurement.
And do you think it’s that person’s fault? It’s not. There are a lot of reasons for it:
A) Most university business programs don’t cover procurement. I received a bachelor’s and master’s in business without hearing the word uttered.
B) When the C-Suite members started their careers, procurement was a paper pushing function. They still have that legacy idea in their head.
-and the biggest reason-
C) We’ve allowed procurement to be positioned in a way that secures our role as a back office service provider.
Yes, it’s our fault. Quit blaming the business units. Quit blaming executive staff. It’s our own fault.
There are a number of things that need to be done differently to solve this problem, and we’re really not doing any of them.
But for the purpose of this blog, I’m going to focus on just one: how we treat cost savings.
Cost savings are our bread and butter.
We add value based on cost savings. We live and die by cost savings. We get cost savings goals every year, then we get stretch goals to do even better.
Every year we sweat it out and somehow, by some miracle, we meet the goals. Then the clock resets the next year. Rinse and repeat.
But from the perspective of the C-Suite, none of this is really significant.
From the C-Suite perspective, it’s not a lot different than payroll getting and achieving efficiency targets. Nice job, but it’s not going to sell more product or increase market share.
And of course, this is a totally unfair comparison. The value of procurement cost savings trumps payroll efficiency by a factor of 10,000x — if not more.
But none of that matters when executives have their perceptions, and they have bigger fish to fry.
You see, to the C-Suite, cost savings aren’t even real. We save the business units millions, and the business units go spend it again.
Not a single penny makes its way back to the C-Suite, so why should they care?
True, the company got to buy more things as a consequence, but do you really think the C-Suite cares? Answer: They don’t.
And so now we get to what we need to do differently.
We need to influence the C-Suite, inclusive of the CFO, to have some portion of savings go to a central bucket. This money needs to become real. Tangible. Useful.
This money needs to be owned by the CFO. The CFO can then decide how this money will be used.
Some of it should go toward EBIT, and making the company more financially profitable.
Some of it should go towards new or improved employee benefits – daycare, better gyms, elderly care, etc.
And every single business unit GM that contributes to the CFO fund, by way of shared savings from their purchases, should have it reflected in their performance review.
Company employees will start viewing procurement as a function that makes their work experience and the company better. But that’s just a side bonus.
The big deal is that as a function of these actions, we will get the support of the business units and procurement will really, truly, stop being perceived as a cost center and firmly shift their status to being a Value Added Center of Profit.
And do you know how profit centers get treated? Just ask your company’s Sales organization. The ones with all the budget, headcount, and resources they could possibly want.
Rain Makers get rewarded and treated right. That’s the kind of place procurement deserves to be.
CPOs, I’m talking to you. Make it happen.
Now go off and do something wonderful. Be your best!
Omid G. “THE Godfather of Negotiation Planning” ~ Intel Corp
P.S. Companies that work with us on capability building (customized in-house procurement and negotiation training) report improved cost savings run rates of 5 – 12% across all purchases. Contact my office at Support@PurchasingAdvantage.com to find out more.
Our profession spends so much time focusing on strategies in negotiations. Tactics, counter tactics, strategies, counter-strategies.
But the most powerful negotiation concept you can employ relates to a deep understanding, recognition, and leveraging of tipping points.
Essentially, you can think of a negotiation like marriage. There’s the day before marriage and the day after the marriage. And they are two very different days.
Once you’ve put the ring on their finger, suppliers know they have you.
In fact, even if your behavior indicates you’re about to put the ring on their finger—but haven’t yet—suppliers still know they have you.
This mistake happens in sports negotiations all the time. An NFL team, for instance, will publicly announce that they’ve selected their new head coach. And THEN they proceed to negotiate the compensation package.
What happens as a consequence? ALL the leverage shifts to the coach, because the NFL has publicly locked themselves into the new coach. They have to agree to whatever terms the coach’s agent proposes, because they can’t undo the press announcement.
The ring is on the finger.
It also happens frequently in procurement. A bid is sent out, and then the buyer starts negotiating hard with one of the recipients—on price and other commercial terms first.
Then, the buyer pulls out the contract template – the proverbial “Ts and Cs”.
And what do suppliers do with these? Well, they redline them to death.
Why do suppliers feel so comfortable redlining contracts to death?
Answer: Because they can.
The contract was introduced at the wrong point in the negotiation process—after the tipping point, instead of before it.
Suppliers have a keen sense for when the ring is going to be put on the finger. They then sense that they can ask for anything they want. And they do.
In job negotiations, almost any candidate demand will be accommodated after the job offer is given – because they’ve already committed to you.
But if you try to levy those same demands before the job offer is given, they might select another less demanding but still compelling candidate.
Similarly, supplier performance requirements can be issued to suppliers in a bid process, before the ring has been put on the finger. They’ll have no choice but to comply if they want the business.
However, try to issue those same requirements during negotiations, and suppliers will say, “Well, we’ll have to charge extra for that.” Try to issue it after negotiations and they will say “That’s not what we bid on.”
In fact, the entire negotiation deal design and setup needs to happen when there’s still a full field of suppliers.
Almost without exception, every client negotiation dilemma I see stems from mismanaged tipping points.
A negotiation problem develops because a sole source scenario was allowed to manifest, or a technology over-reliance was allowed to happen, or because contracts were negotiated too late in the renewal cycle, etc.
Read this twice: It’s not about what demands you make—it’s about when you make them.
Manage tipping points, and your same negotiation strategies will yield far better results.
Now go off and do something wonderful. Be your best!
— Omid G.
“THE Godfather of Negotiation Planning” ~ Intel Corp
P.S. What do Rolls Royce, Fujitsu, IBM, Sony, Samsung, Dresser-Rand, Walmart, Target, AT&T, Merck, Siemens, Kraft, Foxconn, Goodyear, Flipkart, Fiat, HPE, Allstate, Mercedes Benz, Anheuser Busch, Colgate-Palmolive, and many others all have in common? They’ve all invested in the Certified Purchasing and Supply Chain Manager™ (CPSCM™) certification program. Contact my office at Support@PurchasingAdvantage.com to find out how to elevate the capability of your procurement organization.
If you’re in procurement, the people sitting across the negotiation table from you are spending ***10X the amount of time in training that you are.***
Let that sink in. No, really. Let that stew for a while.
Yet that’s the reality. Salespeople have better systems, tools, data, market data, training, and more resources, personnel, and budget than you do. They have better everything than you.
What’s the reason?
It’s really simple. Salespeople are considered the “rain makers” inside of the company. They generate revenue.
Sales gets funding. Sales gets resources. Sales gets tools. Sales gets everything they need to succeed.
Procurement on the other hand is often viewed and funded as a cost center. Before you attempt to debate with me, tell me if you have all the headcount you want and need to run your department effectively.
And budget? Do you have enough to get all the systems and tools you want and need? For all the global face to face events you want and need to schedule?
The answer that I’ve seen with almost company is a resounding ‘no’.
And what is the implication? Well there are many, but let me just focus on one:
Training. Sales view training as a necessary way to get better results. Results at the negotiation table. Against you.
They’re spending an average of 20% of their time in training. That’s what I’ve read and that’s what I’ve seen.
Procurement on the other hand is spending up to 2% of their time in training. That’s what I’ve read and that’s what I’ve seen.
It’s amazing that we are able to get anything done at all in negotiations. If it weren’t for the fact that we are the ones with the money, I don’t think we could get anything done.
All of this needs to change. Procurement needs to break the legacy model for investment in training.
But procurement can’t just decide to do this. The C-suite needs to decide to fund this.
And the only way the C-suite will give a significant bump to procurement’s discretionary expenditures is if they stop seeing us as a cost center and start seeing us as a Value Added Center of Profit.
As a source of enterprise strategic advantage. Investing in procurement has to be seen as an investment in EBIT growth.
Negotiation has to become a corporate capability. Most companies I’ve worked with have reported 5-12% increased savings run rate after more intensive Capability Building engagements that we’ve run with them.
For as long as corporations view investment in procurement department training as being the same as investing in payroll department training, they will always lose.
And so will their stockholders.
CPOs, I’m talking to you. You own this. You own demonstrating the ROI on investment in procurement training. Raise the bar on your own deliverables. Focus on EBIT improvement. Focus on enterprise advantage. Let’s do this.
Now go off and do something wonderful. Be your best!
– Omid G.
“THE Godfather of Negotiation Planning” ~ Intel Corp
P.S. The CPSCM™ certification program has been invested in my almost 40% of the Fortune 100. Contact my office at Support@PurchasingAdvantage.com to find out more. It’s a great way to put your procurement department on the path to both being and being perceived as a Value Added Center of Profit.
End users engage us late. Finance doesn’t recognize soft cost savings. Executives view us as a cost center instead of as a profit enabling entity. Business units view us as an impediment.
LinkedIn is flooded with memes, grandstanding, and complaints about these issues. For the first 10 years of my career, I felt the same way.
None of it is our fault. Except it is. All of it.
And we’re never going to get better if we don’t shed this habit.
The hard truth is:
Read this twice: End users don’t engage us early ***because they don’t see the value of doing so***. If they did, wild horses couldn’t stop them from engaging us early.
Executives view us as a cost center because our savings don’t exist in any budget they can access and use. To them, we report millions of dollars of phantom savings every year.
Finance doesn’t value soft cost savings because we haven’t influenced them to see value beyond budgetary reductions.
We’ve come to be like the payroll department – executives only hear about us when something isn’t working.
Now keep in mind, we deliver incredible value to the enterprise and to all its constituents. To the stockholders too. But we are talking about perception, not reality.
We have to own up to all this. We own this. This is our fault, not anyone else’s. We should be posting in LinkedIn about how we are going to solve these problems, not how we are victims of them.
The most important skill that procurement professionals aren’t good at is the ability to influence.
The reason is that we’ve only learned how to negotiate with money involved. Inside the corporation, we aren’t negotiating with money any longer. We are driving influence – getting people to follow us, not because we have money to offer, but because we have an irresistible value proposition to offer.
And we have no training or experience in doing those things. The rest of the company does, because they’ve been negotiating without money all along. We need to get better at it.
I’m calling on procurement leaders to help shift this movement. Don’t respond being defensive. That’s not going to help us get better. Respond with how you will double down on the right messages to drive accountability and help us be and be perceived better.
I’m going to do my part too. Now go off and do something wonderful. Be your best!
–Omid G.
~ “THE Godfather of Negotiation Planning” ~ Intel Corp
We’re operating by the old school rules a bit in procurement. Of all of our goals and objectives, the one that never changes and is the ultimate measure of our success is Cost Savings.
But cost savings is mostly an internal metric. The rest of the company doesn’t see the same value.
Here’s what happens when the C-Suite gets cost savings rolled up to them: “$280M in cost savings! This is outstanding!! Where is this money? We could use it right now!!”
And of course, this money doesn’t exist anywhere. It’s gone. What happened to it, the executives want to know.
“Well, you see, we gave it back to the business units, and uh, you see, well they kind of spent it.”
That’s where the cost savings went. Back to the spending machine. And of course, more was able to be purchased, and the business probably ran better as a result.
Don’t tell that to the C-Suite though.
And that’s why procurement rarely reports to the C-Suite. They’ll instead report into finance, operations, site services, or manufacturing.
I even had a client that had procurement reporting into HR!
Their logic? “HR buys people, so they should buy everything else too!”
And so, while we should aspire to smartly maximize cost savings, if that’s not going to get us a seat at the table, what will?
Procurement needs to become a source of Strategic Enterprise Advantage. They need to be and be perceived as a Value Added Center of Profit.
What needs to be done to get there?
Much stronger integration in business unit product and service design to drive improvements in cost, quality, and performance before things are baked. This way, the company will more directly see tangible results beyond just cost savings. My organization has found an average of 18% cost savings with our clients in doing this – and that’s BEFORE supplier negotiations.
Streamlining of all but the most strategic deals with AI & Robotics such that procurement is invisible. It just happens. Just like the payroll department – it just works, you just get paid, and you never have to think about it.
Eventually, negotiating for a CFO financial repository where a % of cost savings achieved goes there, instead of getting spent by the business unit again.
Shifting from reporting cost savings to reporting Contributions to EBIT. We’re terrible marketers, and we need to know how to position our value differently. The central repository above will make this easier.
These are just a few of things we need to be looking at. But just trying to get better and better at cost savings – which we should always do – AND hoping other people will care is a losing agenda.
If we want to get a seat at the table, first we need to get off the menu for lunch.
Now go off and do something wonderful.
– Omid G. “THE Godfather of Negotiation Planning” ~ Intel Corp
P.S. contact my office at Support@PurchasingAdvantage.com to find out more about our Capability Building Training Programs. Over 40% of the Fortune 100 has already invested in them.
1. Introduction: The AI Tipping Point in Procurement Negotiation
Let this sink in: By 2027, Fortune 500 CPOs will be able to close high-value deals without speaking to a single supplier rep. AI-powered negotiation is no longer a theoretical advancement of the future — it is a reality, here and now. In our previous analysis, we explored AI’s trajectory in procurement. Now, we look ahead. What does the next era of AI-driven negotiation mean for procurement leaders? How will it redefine their strategic role?
Poll results from industry professionals reveal a landscape of opportunity, efficiency, and reinvention. This article breaks down insights from real-world perspectives and lays out a strategic roadmap for Chief Procurement Officers (CPOs) who recognize that waiting on the sidelines is not an option.
2. The AI-Driven Future of Procurement Negotiation
AI is moving beyond process automation and into decision automation.
ANAs will autonomously handle mid-to-low-value negotiations with suppliers, executing deals within defined risk and performance thresholds.
Adaptive learning capabilities will allow AI negotiators to refine their strategies over time, mirroring and anticipating human decision-making patterns.
Real-time analytics will make ANAs responsive to market fluctuations, dynamically adjusting pricing and contractual terms in negotiations.
With platforms like Zycus’ Merlin Agentic Platform, AI-driven negotiations are extending into mid-level sourcing engagements, ensuring optimal outcomes based on supplier performance, cost modeling, and risk assessment.
On the horizon, AI will play a role in strategic-level negotiations, integrating predictive analytics and real-time negotiation intelligence to drive high-value dealmaking.
The Rise of AI-Augmented Strategic Procurement
Procurement teams will shift from execution to orchestration, overseeing AI-driven negotiations rather than managing them manually.
AI will supercharge sourcing data, surfacing supplier insights, risk assessments, and opportunity alerts in real time, allowing for proactive procurement strategies.
Human-led negotiations will focus on only the most high-complexity, high-impact deals while AI efficiently optimizes the broader supplier portfolio.
AI will introduce negotiation scenarios procurement professionals haven’t considered—leveraging data to reveal hidden opportunities for value creation.
AI as a Competitive Intelligence Engine
AI will mine external market data, supplier performance histories, and economic trends to predict the best negotiation strategies.
AI-driven simulations will allow procurement teams to model multiple negotiation strategies before engaging suppliers, testing different concession pathways and counteroffer approaches.
AI will detect potential risks in supplier negotiations, such as pricing volatility, geopolitical instability, or financial instability, offering preemptive mitigation strategies.
3. Poll Results: Industry Sentiment on AI-Powered Negotiation
Breaking down industry perspectives:
40% – AI will drive work/process/time efficiency: AI will take over manual, repetitive negotiation tasks, allowing procurement teams to focus on strategic value.
14% – AI will improve cost, quality, and risk management: AI will ensure optimized supplier selection based on real-time performance data.
15% – AI will allow procurement to focus on high-dollar deals: Automation will shift the procurement team’s focus from tactical to strategic initiatives.
32% – Skepticism about AI’s negotiation skills: Many still question AI’s ability to navigate nuanced negotiations requiring human intuition and relationship-building.
4. The Role of AI in Shaping the Future of Procurement
AI as an Enabler of Smarter Negotiations
AI-driven sourcing tools will analyze vast supplier datasets to identify optimal partners based on total cost of ownership, ESG compliance, and risk.
Contract negotiations will become more dynamic, with AI identifying clauses for renegotiation and flagging noncompliant terms automatically.
AI will enable continuous supplier engagement, using predictive analytics to recommend performance-improving interventions before issues arise.
AI as a Decision-Augmenting Partner, Not a Replacement
AI will not replace procurement professionals but will enhance their decision-making.
Procurement will shift from data gathering and analysis to scenario planning, strategic decision-making, and value engineering.
AI will facilitate better collaboration between procurement and finance, legal, and operations teams by aligning negotiation strategies with enterprise-wide objectives.
5. Addressing Skepticism: Can AI Truly Negotiate?
Where AI Excels in Negotiation
Data processing speed: AI can analyze supplier proposals in seconds, identifying the best-value opportunities.
Emotion-free decision-making: AI won’t be influenced by pressure tactics or cognitive biases.
Pattern recognition: AI identifies negotiation trends across industries and suppliers, applying best practices dynamically.
Parallel process multivariate negotiations: AI does not have the resource restrictions that humans have in running negotiations, and can run complex, multi-party negotiations in parallel with suppliers, all while pushing each supplier forward in concurrent fashion to what ultimately becomes the best deal for the company.
Zycus’ Merlin Agentic Platform, along with AI-powered iContract and iSource, leverages negotiation intelligence, ensuring AI is not just mirroring human decision-making but improving upon it by identifying the most effective negotiation levers in real time.
Where Human Expertise Remains Critical
Complex, relationship-driven deals: AI cannot replace human trust-building and strategic diplomacy.
Creative problem-solving: AI operates within programmed parameters, while humans can innovate solutions beyond data-driven insights. Gen AI capabilities are making tremendous progress in this space, however, and this will soon become an AI capability.
Enterprise-wide alignment: AI optimizes negotiations for data-driven efficiency, but procurement leaders must ensure alignment with broader business objectives.
6. The CPO’s Playbook for AI-Enabled Negotiation Leadership
AI is here. The only question is whether procurement leaders are ready. For forward-thinking CPOs, the roadmap is clear:
Define an AI-augmented procurement strategy: Identify where AI can deliver the most value and align its implementation with enterprise goals. Generate organizational excitement regarding this new approach, demonstrating the wins for procurement, end users, and internal business partners.
Shift talent priorities: Invest in training procurement professionals to become AI-fluent strategic negotiators. The procurement job profiles of the past need to be completely re-architected for this new model.
Treat AI as a competitive differentiator: Organizations that embrace AI-driven negotiation will outmaneuver those that hesitate. The slow and easy systems approach of the past will put companies woefully behind and will risk leaving millions of dollars on the table.
Adopt a hybrid negotiation model: Use the right AI platform to handle not only high-volume, lower-value negotiations, but also medium-volume, medium-value deals will liberate human expertise for mission-critical negotiations, leaving more time than ever before to truly prepare and strategize properly for such deals.
Build AI governance and trust frameworks: Establish clear accountability, ethical guidelines, and compliance measures for AI-driven procurement decisions. Drive buy in and support from legal, risk management, finance, and internal audit organizations.
Engage suppliers in the AI transformation: Ensure that suppliers understand how AI-driven negotiations will improve efficiency and value for both parties, and set expectations for how business will be done in the future.
Leverage world class AI-driven tools on a unified platform, such as Zycus’ Merlin Agentic Platform, iContract, and iSource, to streamline negotiation intelligence, automate contract management, and drive high-level strategic sourcing.
7. Conclusion: The Procurement Function of Tomorrow
CPOs who master AI won’t just manage supply chains—they’ll own the boardroom, because they will shift from a support function and cost center to a Strategic Source of Enterprise Value. This is THE way to secure procurement a seat at the table in the years to come. Procurement leaders who see AI as a tool for transformation will set the pace for the industry. AI-powered negotiation is not about replacing humans but rather enabling procurement professionals to operate at a higher strategic level.
CPOs that take a “wait and see” approach risk being left behind, as the train is leaving the station with game changing enterprise capabilities. Those CPOs who take a leadership position and embrace AI now will shape the future of procurement, driving unprecedented efficiency, cost savings, and strategic value creation. The best solution providers such as Zycus are at the forefront of this transformation, providing AI-driven solutions that empower procurement leaders to take charge of the future.
This inflection point will undoubtedly be THE defining moment in every CPO’s career — the decision presented to them now: Are they driving the change, reacting to it, or worse yet – watching it from the sidelines?
Having spent more than three decades in the procurement profession, working with countless Fortune 500 firms, I’ve witnessed a significant evolution in procurement negotiation strategies. This retrospective highlights key shifts over the past 25 years, focusing on the transition from purely transactional approaches to highly sophisticated, AI-driven, and autonomous procurement methods.
Early Years: Transactional and Cost-Driven (2000–2010)
In the early 2000s, procurement was largely cost-focused, with most organizations developing more sophisticated commodity teams to manage negotiations. Gone was the generalist negotiator, as procurement sought to negotiate with suppliers toe to toe, leveraging commodity expertise. Organizations prioritized centralization, bulk purchasing, competitive bidding, and game changing procurement systems and tools to achieve savings. Cost efficiency was the primary driver, and procurement teams relied on multi-supplier bidding, many times using online reverse auctions, to reduce costs. During this period, tail spends —low-value, high-volume purchases—were mostly unmanaged, leading to inefficiencies that still plague many procurement organizations today.
Total cost analysis became a major theme and source of common understanding, but organizations struggled to implement correctly, and bottom-line oriented finance organizations frequently failed to value the same as pure cost reductions. Negotiation strategies centered on positional bargaining, with volume discounts and long-term fixed pricing as key tactics. Negotiation training focused on cost analysis and at-the-table tactics and counter-tactics. Procurement negotiators grew their scope internally, though certain longtime independently operating business units – such as marketing and HR – frequently fell outside of procurement jurisdiction. Though win-win negotiations were a regular basis for dialogue with suppliers, aggressive cost-cutting measures often left suppliers feeling like they were not put into practice.
Key Tools Developed:
E-sourcing platforms to facilitate online auctions and competitive bidding.
Spend analysis tools to identify cost-saving opportunities.
E-procurement systems to streamline purchasing processes.
By 2010, procurement evolved beyond commodity driven cost savings strategies to more advanced strategic sourcing, with the goal of long-term value creation with strategic supplier partnerships. This entailed greater Total Cost of Ownership (TCO) focus, supplier relationship management (SRM) strategies, market analysis & risk management, multi-category optimization, increased focus on sustainability & compliance measures and overall contract governance. However, despite progress on the largest expenditure areas through these measures, tail spends remained largely uncontrolled throughout this period, allowing for maverick spending and compliance risks – areas left largely unnegotiated.
During this period, negotiation strategies became more sophisticated, incorporating TCO and should cost analysis, sustainability measures, supply line management strategies, and development of new sources for competition and risk reduction. Away-from-the-table negotiation strategies became more prevalent, augmenting at-the-table strategies, with frequent measures to assess and shift bargaining power in the buyer’s favor. Aggressive strategies to achieve cost targets remained in place and the pressure for procurement to achieve more costs savings each year from the same suppliers carried on.
Key Tools Developed:
Supplier Relationship Management (SRM) Platforms that enabled systematic supplier performance tracking, risk assessments, and collaboration.
Total Cost of Ownership (TCO) & Should-Cost Modeling Tools that helped procurement professionals evaluate lifecycle costs beyond purchase price, including maintenance, logistics, and operational costs.
Category Management & Multi-Category Optimization Software that allowed for holistic spend analysis across multiple categories to optimize sourcing strategies.
Market Intelligence & Risk Management Platforms that provided real-time insights on supplier markets, geopolitical risks, and industry trends to strengthen negotiation leverage.
Contract Lifecycle Management (CLM) Systems that enhanced compliance, governance, and automation of contract approvals.
Early AI-Driven Spend Analytics Tools that helped identify spend leakage, maverick spending, and compliance risks in tail spend management.
Interest-Based Negotiation, Advanced Analytics, & The Dawn of AI (2015–2025)
By 2015, procurement negotiations shifted toward value-based and interest-based approaches. Those organizations that employed purely cost-driven negotiations found they led to supply chain risks, poor service levels, and weakened supplier relationships. As a result, procurement teams started focusing on collaborative supplier engagement, integrating supplier risk assessments, and balancing cost with quality and innovation. Increasingly, strategic sourcing now entailed negotiating for performance results instead of just price and supply. The pandemic introduced the importance of supply chain flexibility and resiliency, and new measures prevailed to ensure both were sourced and negotiated for moving forward.
Early in this period, predictive analytics and machine learning emerged, enabling automation of procurement tasks, supplier performance forecasting, and demand trend analysis. Rudimentary tail spends management tools emerged, offering greater visibility into indirect and tactical purchases. Electronic bidding applications also appeared, automating a tactical process. Meanwhile, blockchain began transforming supply chain management by improving transparency, efficiency, and compliance. All of these innovations drove improvement in efficiency and results of negotiations processes, though in a highly modular and piecemeal fashion – with lots of “human glue” holding them together.
The biggest change however was in the latter part of this period, with game changing AI driven capabilities that streamline the entire S2P process, from end user demand intake to negotiations, demand fulfillment, and supplier payment. The most relevant innovation for this article is that the advent of fully autonomous AI capabilities that can drive end to end negotiations – for the first time automating *decisions* instead of processes. In 2025, those companies that are adopting these technologies have created a scenario whereby AI can negotiate the vast majority of transactions, and procurement is overseeing and uniquely now able to focus their energies on the truly most high dollar and strategic deals, without the constant onslaught of distractions from mid and low level transactions.
Key Tools Developed:
AI-driven analytics for internal intake and demand management and external supply chain management.
Blockchain-based supply chain ledgers for improved transparency and traceability.
Modular Tail spend automation tools to help control low-value purchases.
Unified AI driven S2P capabilities that streamline the end to end procurement process with autonomous intelligent decision automation.
The Future: Agentic AI & Autonomous Procurement (2025 & Beyond)
It’s 2025 and the future is now. With Agentic AI and Autonomous Negotiation Agents (ANA), procurement is entering an entirely new era. These AI-powered negotiation tools simulate human negotiation behaviors – with greater capabilities in fact – and are able to seamlessly automate the decision making process with intelligence, from end user intake to bidding, simultaneous multi-party negotiations, contracting, and demand fulfillment.
Leading providers in this space are embedding these capabilities within comprehensive procurement ecosystems, ensuring seamless integration from spend analytics to contract management. As organizations look to future-proof their procurement strategies, embracing platforms that deliver true autonomous negotiation capabilities will be essential. With a long-standing reputation for AI-driven innovation, solutions from companies like Zycus are at the forefront of this transformation, equipping procurement teams with the tools to not just automate, but truly optimize and elevate their negotiation strategies in an increasingly digital landscape.
The opportunity? Done right, procurement can take 50 – 70% workload off their plate – that surplus is like getting up to 70% more headcount approved. It’s a game changer, and it promises to liberate procurement departments, enable improved cost and quality results, drive faster processing time, improve business unit trust, and allow for procurement to use their freed up time in far more leveraged and strategic capacities – delivering even greater outcomes for the truly biggest deals before them.
Procurement finally has the opportunity to get out of the back office, shed their role as a value-added cost center, and sit firmly at the C-Suite table as a source of enterprise advantage. CPOs need to be on notice and take their next steps wisely.
Key Takeaways: Actionable Steps for Today’s Procurement Leaders
Drawing from 25 years of procurement evolution, here’s how you can tackle today’s challenges with practical strategies and cutting-edge tools like Zycus:
Redefine Procurement’s Role with AI-Driven Insights – If your team is stuck handling routine transactions instead of focusing on strategic deals, AI can help. An AI-powered Source-to-Pay platform with Negotiation Agents can automate 50-70% of mid- and low-value negotiations—from request to contract—so your team can focus on what matters.
Take Control of Tail Spend with a Holistic Strategy – Instead of treating tail spend as an afterthought, procurement should establish governance structures, strategic supplier agreements where business consolidation is possible, and leverage AI-driven oversight to turn unmanaged spend into an opportunity for efficiency and risk reduction.
Elevate Strategic Sourcing Capabilities – Procurement is no longer just a cost center; it has the potential to drive enterprise-wide transformation. Move to interest-based negotiations, streamline costs in the SOW/Spec before negotiating externally, use supplier performance and market data to predict risks, and secure performance-based contracts that are easy to track and deliver results. AI-powered spend analytics can also highlight savings opportunities and improve supplier negotiation outcomes.
Over the last two decades, we’ve witnessed a number of players in the Source-to-Pay (S2P) sector, among them Zycus, Coupa, Ivalua, SAP Ariba, Donkey, Zip, Tonkean, and others. Zycus has brought forward their new Merlin Agentic AI Suite, which they envision as a leading-edge solution that streamlines, simplifies and transforms the procurement request intake to pay management process. Their stated goal is to leverage the promise of Agentic AI and drive breakthroughs in user experience, process efficiency, procurement results, and privacy/data security.
Given the magnitude of this new product launch, I wanted to explore Zycus’ Intake capabilities in depth – covering my perspectives based on specifications, use cases, and seeing it in action – to show how it drives improvements in traditional pain points in procurement, efficiency, end user experience, and enablement of strategic procurement tasks. Let’s dive in.
Procurement Intake: An Underserved Process
In nearly all cases, the procurement request or intake process is the first step toward purchasing goods or services. Despite its foundational role, intake has traditionally been a pain point for both end-users and procurement teams due to:
1. Complex Processes: Manual request forms, multiple approval workflows, and unclear processes and ambiguity in procurement policy create confusion.
2. Lack of Standardization: Procurement requests are often inconsistent, leading to incomplete or inaccurate data.
3. Poor User Experience: Procurement tools are frequently unintuitive, discouraging users from engaging early or correctly.
4. Time Delays: Approval bottlenecks and repetitive data entry slow down the entire procurement cycle.
For procurement teams, managing this chaotic intake process consumes a significant amount of time, preventing them from focusing on higher-value activities like strategic sourcing, supplier management, and spend analysis. Just as importantly, end users and their organizations get frustrated by these processes and may use them begrudgingly, or try to circumvent them altogether, neither of which builds goodwill with the procurement organization. They can in fact add to the “roadblock” perception that procurement tries so hard to shed.
Zycus recognized these challenges and built Merlin AI Intake to tackle them head-on with intelligent automation, AI-powered insights, and an intuitive user interface which integrated into Microsoft Teams (MS Teams). The days of the end user spending endless time trying to self navigate through catalogues with low tech chat bots and hopefully finding the right items from the right supplier are over. Zycus has introduced a much better way, and I’m impressed.
Merlin AI Intake: Key Features and Capabilities
# 1. Intelligent Guided Buying
Merlin AI Intake simplifies procurement by leveraging Conversational AI to guide end-users through the request process. Rather than requiring users to navigate complex procurement systems or workflows, the solution offers a user-friendly, conversational interface that resembles consumer shopping experiences. Spelling errors in your request, or don’t word it just right? No problem. Merlin AI Intake accepts descriptive inputs, rather than just requiring prescriptive inputs. I can’t emphasize what a leap forward this is. “The HVAC system only blows hot air” is something Merlin AI Intake understand and helps you solve. This is 21st century procurement at its best.
– AI-Powered Recommendations: Based on historical purchasing data, organizational policies, and user behavior, Merlin AI suggests the right products or services. For example, if a user needs office supplies, the system can recommend preferred suppliers, approved catalogs, or even suggest quantities based on past usage. Further, if you go off contract, rather than letting the end user make their own random choices from the supplier wilderness, it makes strong suggestions based on pre-qualifications, and assigns scores to each supplier, helping the decision process to be a smart one.
– Policy Compliance Enforcement: Merlin AI ensures all requests comply with procurement policies and organizational guidelines, reducing maverick spending. If a user attempts to request a product from a non-preferred vendor, the system nudges them toward compliant options. I think Merlin AI Intake will help make tail spends – something that has plagued procurement for all my decades in the business – a legacy problem.
Interestingly, unlike legacy requestioning systems or even competitor intake offerings, Merlin Intake does not rely on rule-based system to codify the procurement policy. Rule based systems as we know have significant limitations:
– Can get complicated to configure extensive rules
– Often procurement policies different by region or Business unit within the same company
– Every time there is a change or refresh in procurement policy, a reconfiguration is required in the intake system.
Zycus’ Merlin Intake has used Generative AI for policy enforcement which ensures that the procurement policy is dynamically updated in real time in Merlin Intake for any changes to the underlying policy.
By delivering these recommendations in real time, Merlin AI minimizes errors, ensures compliance, and accelerates the buying process. For once, end users will feel like a system was implemented that was to their benefit instead of just for procurement’s benefit. This is going to drive a much higher organic compliance rate.
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# 2. Conversational AI for Seamless Intake Requests
One of the standout features of Merlin AI Intake is its conversational AI capabilities. Unlike traditional systems that rely on rigid forms, Merlin AI uses natural language processing (NLP) to interact with users intuitively.
– Human-Like Conversations: Users can simply describe their needs in plain language. For example, instead of filling out multiple fields, a user can say, “I need 20 laptops for the IT team,” and Merlin AI will automatically:
– Populate the necessary fields.
– Identify preferred suppliers.
– Suggest relevant product catalogs.
– Kickstart the approval workflow.
– Error Reduction: AI ensures data accuracy by prompting users for missing information or clarifying ambiguous requests. If a user’s input is unclear, Merlin AI might respond with, “Do you mean Dell Latitude laptops or HP ProBooks?”
This conversational approach dramatically reduces friction, making it easier for end-users to submit requests while improving the quality of procurement data. It might as well be a procurement person on the other end of the conversation, because that is exactly what end users will experience and perceive – which means huge time savings and improved results for procurement.
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# 3. Auto-Classification and Categorization
One of the traditional pain points in intake management is classifying procurement requests accurately. Merlin AI Intake automates this process through its auto-classification engine.
– AI-Based Categorization: Using machine learning, Merlin AI automatically categorizes requests based on descriptions, historical data, and product/service taxonomies. For example, if a user requests a “software subscription,” the system tags it under IT services, ensuring the request is routed to the appropriate workflow.
– Data Standardization: By automating categorization, Merlin AI standardizes procurement data, improving spend visibility and analytics.
– Routing Optimization: Proper categorization ensures requests are routed to the right category managers or approvers, reducing delays caused by manual intervention.
This capability not only accelerates intake but also enables downstream processes—like sourcing, purchasing, and reporting—to function seamlessly.
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# 4. Workflow Automation and Approval Management
Merlin AI Intake eliminates manual bottlenecks by automating workflows and approvals.
– Dynamic Approval Workflows: The system automatically determines approval hierarchies based on factors like request value, category, and user role. For instance, a high-value purchase might require manager and finance approval, while a low-value item could proceed with auto-approval.
– Real-Time Status Updates: Users receive instant notifications on their request status—whether it’s approved, rejected, or pending further input.
– Escalation Management: If a request stalls at a specific approval stage, Merlin AI can trigger escalations or reminders to avoid delays.
By automating approvals, Merlin AI significantly reduces cycle times while ensuring proper governance and oversight.
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# 5. Integration with S2P Ecosystem
Merlin AI Intake is built in and not bolted on the S2P unlike the standalone intake tools. This means it seamlessly integrates with Zycus’s broader S2P suite and other enterprise systems, creating a unified procurement experience.
– ERP and P2P Integration: Once a request is approved, it flows directly into downstream procurement processes like purchase order creation, supplier communication, and invoice management.
– Data Synchronization: Integration with ERP systems ensures that procurement data—such as budgets, GL codes, and supplier master records—remains up to date.
– Contract Management: If a request involves a contractual agreement, Merlin AI connects with contract lifecycle management tools to identify existing contracts or trigger new ones.
This end-to-end integration eliminates silos and ensures procurement operates as a cohesive, data-driven function. It also gives a huge edge over the competition, as the solution is not modular. It’s an enterprise-like solution – no data handoffs, no modular applications glued together, no more endless privacy and data leakage points of failure. It’s designed from the ground up as a singular capability, and it shows in every aspect of how it operates.
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The Benefits of Merlin AI Intake
Merlin AI Intake delivers measurable benefits across the organization, transforming procurement into a frictionless and strategic function:
1. Enhanced User Experience: The conversational AI interface makes procurement intuitive, encouraging higher adoption rates among end-users. Furthermore, end users can access Merlin Intake through the familiar MS Teams (Microsoft Teams) eliminating the need to login to the S2P solution.
2. Faster Procurement Cycles: Automated workflows, approvals, and data classification reduce cycle times significantly.
3. Improved Data Quality: AI-powered auto-classification ensures accurate and standardized procurement data.
4. Cost Savings: By enforcing policy compliance and guiding users toward preferred suppliers, Merlin AI minimizes maverick spending and reduces procurement costs.
5. Greater Efficiency: Procurement teams spend less time managing requests and more time on strategic tasks like supplier negotiations and category management.
6. Increased Visibility: Standardized and centralized data enhances spend visibility, enabling better decision-making and reporting.
7. Scalability: Merlin AI can handle a high volume of requests, making it suitable for large enterprises with complex procurement needs.
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Key Differentiators for Zycus Merlin AI Intake
In looking at the key competitors such as SAP Ariba, Jaggaer, GEP SMART, Coupa, Donkey, Zip, and Tonkean, they all have strengths, but there are a few areas where I see Zycus Merlin AI Intake as having a competitive advantage. I’ve outlined those areas below.
AI-Powered Automation: Zycus Merlin AI Intake outpaces traditional competitors like SAP Ariba and Coupa by streamlining procurement intake requests using AI, ensuring accuracy and efficiency. Compared to stand-alone tools like Donkey and Zip, which are ‘bolt-on’ and rely on rules-based automation rather than true AI, Zycus delivers smarter workflows that evolve with organizational patterns and is built-in to the S2P solution.
User-Friendly Workflow: Zycus’ intuitive interface within the familiar MS Teams, minimizes manual work and friction. While competitors like Ivalua and Coupa often face criticism for steep learning curves, tools like Tonkean provide workflow customization but require significant user input to optimize. Zycus simplifies onboarding and daily use with its straightforward and adaptive design powered through the familiar MS Teams application.
Scalable and Flexible: Compared to Ivalua or Jaggaer, which require extensive customization, Zycus offers out-of-the-box solutions that adapt quickly to growing organizational needs. Zip and Tonkean provide flexibility for niche applications but often fall short in enterprise-level scalability without significant custom development.
Seamless Integration: Zycus seamlessly integrates with ERP systems and third-party platforms while focusing on AI-driven value creation. Coupa and SAP Ariba achieve similar integration but with more rigidity. Donkey and Tonkean support integrations but lack depth in procurement-specific functionalities, making Zycus a more specialized choice.
AI-Driven Insights: Unlike competitors like Zip and Donkey, which emphasize process automation but lack robust AI analytics, Zycus Merlin AI delivers actionable insights into procurement trends, user behavior, and cost-saving opportunities, enabling proactive decision-making.
Configurable Workflows with AI Enhancement: Zycus offers configurable workflows enhanced with AI suggestions, providing balance between automation and control. While Tonkean focuses on customizable no-code workflows, it doesn’t leverage AI to optimize procurement intake as effectively as Zycus.
Global Reach and Compliance: With a strong focus on compliance and global scalability, Zycus ensures alignment with regulatory standards across regions. In contrast, Donkey and Zip cater primarily to smaller-scale, localized operations and don’t offer the same level of enterprise-grade compliance features.
The Future of Procurement with Merlin AI Intake
As organizations continue to embrace digital transformation, procurement will play an increasingly strategic role in driving cost savings, innovation, and sustainability. Zycus Merlin AI Intake represents a key milestone in this journey, transforming procurement intake from a cumbersome task into a streamlined, intelligent process.
By combining AI, automation, and user-centric design, Merlin AI Intake empowers procurement teams to operate with greater efficiency, accuracy, and impact. As the solution evolves, capabilities like predictive analytics, deeper supplier insights, and voice-based AI interactions are likely to redefine how organizations manage procurement requests.
For procurement leaders seeking to optimize their Source-to-Pay processes, Zycus Merlin AI Intake offers a future-ready solution that simplifies intake, enhances compliance, and unlocks the full potential of procurement.
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Conclusion
Looking ahead to 2025, my advice to CPOs remains the same: don’t get caught on the sidelines with this. Agentic AI capabilities in procurement are a game changer. The train is leaving the station, and CPOs need to mobilize their organizations in the right direction or be left behind. There is an opportunity here to not only elevate end user experiences, but perhaps more importantly, for highly intelligent automation that will extract procurement from so many non-value added transactions and processes in ways never before possible – and allow them to focus on the more leveraged strategic sourcing activities that they were hired to do. This then furthers procurement’s position not as a cost center, but as a source of enterprise advantage.
Zycus has been at the forefront of procurement innovation for over two decades, and Merlin AI Intake demonstrates its commitment to solving real-world challenges with cutting-edge technology. By transforming the procurement intake process with AI, Zycus not only improves efficiency but also enables procurement teams to drive greater business value. In a world where procurement is no longer just about savings but about agility, compliance, and innovation, Merlin AI Intake sets the standard for what’s possible. From my perspective, the bar has just been set higher. Much higher.
