Tech briefing: rise of the chatbots - Supply Management
By 2020, half of all web browsing will be voice searches ©Amazon
By 2020, half of all web browsing will be voice searches ©Amazon

Tech briefing: rise of the chatbots

It’s time to get to know these guys. They could very soon be your best source of conversation – and  your top team assistant.

Chatbots are web- or app-based interfaces, or conversational agents, which have begun to pop up online, often in a customer service setting. Voice-operated virtual assistants, such as Siri and Alexa, are also chatbots.

They can answer simple questions, automate processes, promote services or even diagnose medical conditions, and are already being used by hotels, banks, healthcare providers and retailers. A 2016 Oracle survey found that by 2020 80% of businesses will be making use of chatbots.

It is also predicted that in just two years, 85% of all customer service interactions will be powered by chatbots, at which point the average person will have more conversations with bots than with their partner or spouse, according to Gartner. And a report from Grand View Research estimates that by 2025 the global chatbot market will be worth $1.25bn.  

Text-based bots are either online or embedded in messaging apps, such as WhatsApp or Facebook Messenger, and are used as an alternative to making a call to find information. Written conversations with bots mirror human interactions, saving time and money for both parties.

But it is the voice-activated virtual assistants that have really taken off. By 2020, half of all web browsing will be voice searches, according to iProspect, and the voice market will have grown to $15.8bn. And judging by sales of Amazon’s Echo devices (aka Alexa) that seems likely. The company sold so many in December that it couldn’t count them – or prefers not to tell us – but the figure was “tens of millions,” according to the company’s press release. And Google is currently pushing its Google Assistant (with which you can now also communicate via text) as it aims to catch up.

Despite the hype, chatbots are not new. The first, ELIZA, was developed in 1966 using code to imitate human language, and, functionally, not a lot has changed.

How it works

Bots today rely on similar techniques of interpreting language (and trying to beat the Turing test by being indistinguishable from a human). The difference is the internet, and the way it has altered the commercial landscape. Simply put, connectivity has enabled many more practical applications for the technology.

There are two types of modern bots: those that rely on a simple set of data and follow rules in order to respond to specific demands; and those that use machine learning, or AI. The second are the most advanced and the most versatile – as natural language processing enables them to mimic human conversational patterns. Bots can only develop as fast as the AI that powers them, so as this technology advances so will they.

Business benefits

In procurement terms, one of the biggest advantages of chatbots is their money-saving potential. By 2022, chatbots will account for cost savings of $8bn a year, according to Juniper Research.

Chatbots are being used in increasingly innovative ways, from enabling Alzheimer’s patients to log their symptoms to helping UNICEF talk to at-risk communities.

Supply chains too are starting to see the potential. AI is often quoted as one of the most promising tools in procurement’s future, and bots could be one way forward. The race is definitely on to find the most innovative applications for the technology.

So you can expect to see a bot that alerts you to disruptions in your supply chain caused by weather, and a purchase-to-pay system that automates the whole process. And there are plenty of companies out there providing simple software solutions to increasingly complex conundrums.

The key is to work out what your organisation needs, then the world is your (automated) oyster.

Bots in procurement

Speaking at the CIPS Middle East Conference 2018 in Dubai this June, Christopher Harvey, head of procurement at Saudi Arabia’s private research university, KAUST said: “Today, our buyers receive about 5,000 emails a day. How do we reduce that down? We are looking at chatbots, to free up people’s time so they can focus on major agreements. But selling chatbots to senior management will be a challenge.”

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