Could Gen-AI lead to procurement savings?

The Hackett Group is projecting generative AI will reduce Selling, Generative and Administrative costs by up to 40% within 5-7 years

With more technology providers implementing AI functionality into their solutions, there are increased opportunities to deduce repetitive and manual work from back office functions. 

40% over the next five to seven years

The research from the Hackett Group, a leading benchmarking, research advisory and strategic consultancy firm, suggests generative artificial intelligence technologies will have a profound potential impact on selling, general and administrative (SG&A) costs and staffing, enabling reductions of up to 40% over the next five to seven years.

The detailed analysis of current costs engaged proprietary performance benchmarks from The Hackett Group  to quantify for the first time the potential impact Generative AI will have on SG&A, including finance, procurement, human resources, information technology, marketing, sales and other functions.


Gen AI plays a 'critical role'

According to The Hackett Group Principal Vin Kumar, “There’s a tremendous amount of hype in the market around Generative AI, and a lot of confusion over its potential impact on cost and staffing. But for the first time, we’ve taken a fact-based approach to validating the eye-popping headlines and quantified the potential benefit based on an analysis of data from our extensive benchmarking of Global 1000 companies across the various SG&A functions. We’ve concluded that Generative AI plays a critical role in the intelligent automation framework, which includes robotic process automation, intelligent data capture, cognitive tools and more. It has a multiplier effect in terms of enabling dramatic efficiency and effectiveness improvements in structured, unstructured and interactive work. Without Generative AI, companies will see only incremental reductions in cost and staffing from these other intelligent automation technologies.”

The Hackett Group Principal Vin Kumar

Chief of Research John Van Decker said, “Now is the time to educate management on the capabilities, limitations of the technology, relevant policies and potential impact on staffing; assess how generative AI can be adopted in your organisation; and partner with technology and/or digital automation teams to take full advantage of generative AI’s capabilities. In the SG&A area, domain-specialised Generative AI is particularly relevant. By providing Generative AI with the necessary process knowledge and integrating it with other intelligent automation solutions, companies can begin utilising it quickly for transactional SG&A tasks and mature over time to autonomous operations.”

 

Chief of Research John Van Decker

 

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