If you manage an indirect procurement category, you have probably heard leadership ask you where the artificial intelligence (AI) savings are. Business and procurement leaders have read the headlines about AI-enabled savings, and they expect suppliers' efficiency gains to show up favourably in the prices you negotiate. Yet when you ask your suppliers, most will probably tell you their costs have gone up.

The gap between leadership's expectation and the supplier's position is something we discuss time and again in CASME's peer-to-peer events. At our latest members-only webinar with our strategic alliance partner, The Hackett Group, these questions about AI in Procurement took centre stage.

AI savings are mostly not in procurement contracts yet

You may wonder who is getting them, and how.

Suppliers and consultancies publish ambitious ranges for what generative AI (GenAI) in Procurement could save by category. They are still aspirational, so I would not promise them to your stakeholders. You can certainly put them in front of your suppliers as a negotiation lever.

In our RoundTables and Panel Discussions this year, the most common view is that it is still too early to tell, and interestingly the gap between the headline claims and what members see is significant. So why may that be? In my view, just as Procurement is expecting savings, suppliers have already prepared robust counter-arguments.

"Our costs went up" is the answer you will hear most

What will my supplier say when I ask for a share of the AI gain?

During the webinar we ran a live poll, here are the results:

When you negotiate AI-related savings, what do suppliers counter with? 

• Our costs are higher, so our prices are higher: 43%
• We need to recover our investment: 38%
• We have a competitive advantage, or you have no alternative: 33%
• Risk or security considerations: 33%
• Pricing power, the price is the price: 24%
• The supplier is not using AI: 24%

There is an element of truth in these arguments. Hardware and compute costs have risen sharply, and a supplier that has invested in AI can reasonably expect a return. The question is how much of your price the higher cost touches. A component that has doubled in price does not double the price of the product it sits in, and one investment does not belong on every line of your invoice.

KEY INSIGHT: When a supplier cites higher costs, ask what share of your price those costs represent. The answer usually supports a much smaller increase than the headline.

There is a logical route to sustainable value, and it starts with getting the risk and contract fundamentals right.

The category managers who are obtaining value settle contract terms before they ask for savings

Should I go in hard on price?

At a recent CASME Panel Discussion, procurement leaders from leading organisations told us they put risk and legal terms ahead of savings on purpose. Procurement resource is finite, so they start with legal and IT and with where their suppliers use AI. Only then do they open the commercial conversation. If savings come first, a supplier could offer a discount in exchange for weaker terms on intellectual property (IP) ownership or on AI-generated content, elements your organisation may not want to compromise on.

Of note is also what happens outside the request for proposal (RFP). The smarter category managers ask suppliers, in day-to-day contact, to show them how their delivery has changed with AI. Suppliers find that less threatening, and you come away with a baseline to negotiate from.

Rate cards and cost breakdowns are your first negotiation tool

How do I see where AI is changing what I pay?

Outcome-based pricing gets plenty of attention, yet the members I speak to are going back to rate cards, grades and hours. For services delivered mainly by people, the rate card is the closest that indirect procurement comes to a cost breakdown. It lets you ask which activities are now AI-assisted, and where the saving shows.

Members also describe what happens without one. A "technical cost" line appears on an invoice where the RFP was not itemised. A supplier offers credits against future work, then recovers them through higher fees or a more complex statement of work (SOW).

Knowing what your AI spend is made of is your second negotiation tool

Is the cost of AI mostly the cost of tokens?

One delegate asked how to control token rates that keep rising and changing, and how to counter software-as-a-service (SaaS) providers raising fees for "AI investment". The token price is only one part of what an AI service costs to run. As Nick Walden of The Hackett Group showed, the total depends heavily on how often a person has to review the output, how complex the workflow is and how many users share the licence. In his worked example of an employee chat assistant, tokens were 17% of the monthly bill, while human review was the largest share at 34%.

If your IT procurement strategy treats AI as a token price, you may negotiate the wrong line. This is where it pays to get closer to your own IT team, especially if they are building AI tools in-house.

Several members now price the in-house option as one of the bids. Even when they do not build it, they go into the negotiation knowing what it costs to build, transition and run.

KEY INSIGHT: Treat your in-house option as one of the bidders. Pricing it teaches you more about a supplier's real costs than a benchmark will.

Members are building the next layer of practical tools together

Where can I get the detail?

CASME is working with members to go deeper and turn what peers are doing into practical checklists and guides, covering:

• Controlling token costs
• AI contract clauses (for marketing agencies, members already have a guide drawn from our Marketing RoundTables)
• Itemising rate cards for AI-assisted work

• Directional savings ranges by category, with a reality check against what members achieve.

   

The value is there for category managers who ask better questions first

What should I weigh before my next supplier conversation?

Three things to consider:

1. When a supplier says its costs have gone up, how much of what you pay does that cost touch?
2. Do your contract terms and conditions (T&Cs) protect you before you ask for an AI-enabled saving?
3. Where would you accept value other than a lower price, such as faster delivery, broader scope or better quality, and would your leadership recognise it?

BOTTOM LINE: AI savings in indirect categories are arriving more slowly than the headlines suggest, and suppliers have well-rehearsed reasons for holding on to them. The category managers making progress do the groundwork first, with contract T&Cs, rate cards and a clear view of what AI costs to run.

My thanks to Nick Walden of The Hackett Group for such practical insight, and for eight years of partnership between our two organisations.

Continue the conversation in CASME's supplier-free forums, where practitioners compare what suppliers say with what they see. If you are working out how to prepare for a negotiation where the supplier has its AI arguments ready, join us as a guest at our Improving the Outcomes of Negotiations Panel Discussion on 19 November (EMEA-Americas). For token costs and SaaS increases, join our IT SpotLight on 18 November (EMEA-Americas). See all CASME Procurement Events.

Written by Victoria Folbigg. Victoria is CEO of CASME. A procurement leader, she has worked across consulting, consumer goods, pharmaceuticals, logistics, banking and software.

SOURCE NOTE: This opinion piece draws on "How Can Procurement Teams Negotiate the Spend Category Impact of AI, GenAI and Agentic AI?", a CASME members-only webinar with The Hackett Group held on 5 November 2026 for EMEA-Americas. Comments from CASME Panel Discussions and RoundTables are reported under strict no-attribution guidelines. The cost example is from The Hackett Group and is used with permission.