Auguri - Technology

Product Lifecycle & Paradigm Shift

To understand the extent of our innovation and its potential impact, it is important to put it in the historical context of its procurement lifecycle and its three major transformations:

The first generation entailed the conversion of paper based systems to electronic systems resulting in increased efficiency.

The second generation was triggered by the advent of the Internet. Electronic markets opened up the flood gates between suppliers and vendors, resulting in a dramatic increase in responses to online solicitations and a related degradation in the ability to process them in a timely manner.

A third and nascent generation offers a paradigm shift from “specification-based” to “need-based” sourcing. Business needs are typically expressed as a set of business or purchasing decision criteria that incorporate expert knowledge, business rules or assessment logic. In order to deliver best value it is essential to tradeoff these criteria in a way that reflects the business needs. Now that the system understands the business needs, it is able to assess the proposals in real-time. As a result, you can now reduce by more than 50% the cost, time and resources required to process a solicitation while allowing your suppliers to compete on ALL the criteria you care about, not only on price. This yields the best value for every purchase. For example, a 1% more expensive proposal that offers 30% improvement in quality may be a winner in a ‘”need-based” solicitation while it would certainly be rejected in a traditional reverse auction.


			Product Lifecycle & Paradigm Shift To understand the extent of our innovation and its potential impact, it is important to put it in the historical context of its procurement lifecycle and its three major transformations: The first generation entailed the conversion of paper based systems to electronic systems resulting in increased efficiency. The second generation was triggered by the advent of the Internet. Electronic markets opened up the flood gates between suppliers and vendors, resulting in a dramatic increase in responses to online solicitations and a related degradation in the ability to process them in a timely manner.
		Reverse Auctions failed to deliver a usable solution due to their inherent limitation of being price-based, and therefore not covering the decision gamut. Reverse Auctions deliver the cheapest solution not necessarily the most suitable one. A third and nascent generation offers a paradigm shift from “specification-based” to “*need-based*” sourcing. Business needs are typically expressed as a set of business or purchasing decision criteria that incorporate expert knowledge, business rules or assessment logic. In order to deliver best value it is essential to tradeoff these criteria in a way that reflects the business needs. Now that the system understands the business needs, it is able to assess the proposals in real-time. As a result, you can now reduce by more than 50% the cost, time and resources required to process a solicitation while allowing your suppliers to compete on ALL the criteria you care about, not only on price. This yields the best value for every purchase. For example, a 1% more expensive proposal that offers 30% improvement in quality may be a winner in a ‘”need-based” solicitation while it would certainly be rejected in a traditional reverse auction. Procusoft is leading this 3rd generation of sourcing solutions. In our view, the choice today is between 2nd generation tools that have passed the maturity phase of their lifecycle and are now in decline, and 3rd generation tools that are being well received and are starting to show signs of accelerated adoption. Today most organizations who conduct solicitations find themselves facing a decision between sticking with a declining past or moving into the future.

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