Business & Technology Nexus

Dave Stephens on technology and business trends

Garbage In + AI Still Equals Garbage Out

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What if you wake up and realize you desperately need a Procurement system. Where do you start? You probably just have invoice and payment data from multiple AP systems – and about all you know is the suppliers you paid, how much you paid them, and when. “I’m so screwed,” right?

Never fear, some vendors proclaim, with our magic decoder ring we can reconstruct your spend history. We can build super-slick reports to help you start off with confidence and pinpoint your savings opportunities. Check out Zycus AutoClass, probably the best example:

Wow, that’s quite a decoder ring. Or is it? You will definitely get a nice report. And it will look like your spend history. But don’t mistake it for accurate. Do it, but keep your expectations low and your wallet close at hand.

What’s the secret sauce? Companies like Zycus take feeds of “correctly” categorized content from large companies and use it to seed an AI solution based on Bayesian statistics – the same stuff used for Spam Filtering. Your AP data is then classified using their predictive algorithm. We experimented with this while I was at Oracle. I mean, after all, it’s an embedded technology available in Oracle’s database. But while Zycus claimed an astonishing 85% accuracy, we could never get over 60%, even with the best “training content”. I still don’t believe the 85% number. So watch out. And consider having someone spend a day or two doing some excel-based scrubbing to see if that gets you enough information to proceed. Your home-grown estimates may be all you need.

So, I hate Zycus, right? Wrong! I think they have pulled together some nifty technology. And as the body of “correctly” classified content grows, their algorithms get better. But I am a much bigger fan of getting data correctly classified on the way in rather than playing guessing games on the way out.

GE customized Oracle iProcurement, for example, to plug in Zycus’ AutoClass for any special request resulting in a Requisition. There, a human could decide whether the predictive algorithm was close to right (Yep, Smith vs. GE is indeed Legal Services). I’d trust the spend reports coming out of a system like that. And Zycus’ technology makes self-service classification possible (the alternative is having users guess which of 8,000 categories to place their request in).

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Written by Dave Stephens

02/18/06 8:59 PM at 8:59 pm

Posted in Opinion

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