Introducing the World to Autonomous Negotiations: Learn How Pactum has Created an Industry
We founded Pactum in 2019 after identifying a need that had not been addressed in the market. On average, enterprises have millions of dollars locked in inefficient agreements, and unlocking such value is difficult. Global enterprises have thousands of suppliers, and they can only actively manage 20% of them (their strategic suppliers). The other 80% are left unmanaged because it would require too much manpower and be too complex to negotiate these thousands of contracts.
Our technology employs a chatbot to reach out to suppliers via email to start a negotiation conversation. It leads the interaction, asking the supplier questions and offering options aimed at better understanding the supplier and what matters to them. It then negotiates contract terms that are important to both the company and the supplier, reaching a mutually beneficial agreement.
In negotiations, the amount of complex data or the pace of changing information is too fast for humans to comprehend — machines can do a better job. Pactum can reach better deals for both sides compared to humans and provides several advantages:
- The chatbot goes through an equivalent of 100 human hours of preparation time, sifting through all historic and forecasted information in internal and external databases for every negotiation.
- It tracks all negotiations in parallel, learning from all interactions and keeping terms dynamic — meaning the value of terms changes based on how other parties accept or decline them.
- The system has unlimited time to spend with the supplier, making sure an optimal outcome can be found.
At first, we started negotiating for small, non-strategic vendors in the procurement industry. As we grew, we moved into more specific categories — negotiating merchandising agreements in retail, negotiating freight for logistics companies, and negotiating maintenance, repair and operations (MRO) deals for production plants.
After achieving initial success in non-strategic supplier negotiations, we approached venture capitalists who posed an interesting question: Which category did our technology fall under? Procurement Tech, FinTech, and LegalTech didn’t fit because they were too restrictive. To put it simply, we conduct negotiations using AI, period.
It dawned on us that we had created a completely new category of enterprise technology — autonomous negotiations. This is a unique industry that enables Fortune 500 businesses and their suppliers to reach optimal, mutually beneficial deals at scale by leveraging AI and negotiation science. While historically humans have been the primary negotiators, they often create inefficient outcomes when they negotiate. Instead, this is a new phase of evolution in enterprise software.
Mainframes provided the computing power. On-premise business software was revolutionized by SaaS offerings. Then robotic process automation provided new growth opportunities, automating mundane tasks that machines couldn’t do previously.
Autonomous negotiations reveal a new stage of development where business processes are not only facilitated but also conducted by a machine. Take smart cars for example. The term most often used is “autonomous vehicle” not “automated vehicle.” While every car is automated, an autonomous car can make the necessary decisions that get it to its destination. Autonomous negotiations powered by AI enable global enterprises to understand the needs of their suppliers, allowing them to make offers, receive counteroffers and ultimately reach mutually beneficial agreements — all without human interaction.
AI automation does not replace people in the negotiation equation but rather augments F500’s capabilities. The technology empowers business leaders to focus on critical, strategic initiatives that drive their business forward instead of spending unnecessary time on repetitive, low-value tasks and processes.
And let’s face it — inflation is soaring, supply disruptions are everywhere and capacity is strained. The next disruption or recession is right around the corner — if it’s not here already. We need to be nimble and leverage new technologies to create value.
The market is ripe for a new approach. Autonomous negotiation is the answer — and Pactum is leading the charge. We have created a category of Autonomous Negotiations.
In 2019, CEO Martin Rand, Kaspar Korjus and Kristjan Korjus founded Pactum, an AI start-up that conducts autonomous negotiations for global enterprises and the creator of the autonomous negotiations market. He previously served as Product Manager at Skype and commercial lead for Europe for The Climate Corporation (owned by Monsanto), where he gained firsthand experience in successfully conducting complex negotiations with culturally and geographically diverse teams.
