What you are really talking about are the differences between agent-based and equation-based modeling.The latter has been the traditional model used by software developers because it attempts to quantify and therefore confine multiple strands (re attributes) of diverse stakeholders into a single, definable stream or process.While applicable in the more static environment of say financial software (yes GAAP does provide certain elasticity, however generally speaking the core elements of finance are relatively narrow in terms of overall scope), equation-based modeling does not translate to other more dynamic areas of an enterprise such as an enterprise’s procurement or supply chain practice.

Agent-based modeling, which has been around for approximately 15 years, first seeks to understand the unique operating attributes of diverse stakeholders. Once understood, it then attempts to link these seemingly disparate attributes through the utilization of advanced algorithms to produce a reliable, real-world “collaborative” outcome that results in a tangible benefit (in the case of procurement – bottom line savings).

To a degree, Web 2.0 represents the natural evolution of the agent-based model.

Referencing the supply chain example once again, here is how an agent-based application would be presented:

“It is my position that a true centralization of procurement objectives requires a decentralized architecture that is based on the real-world operating attributes of all transactional stakeholders starting at the local or regional level. In other words, your organization gains control of it’s spend environment by relinquishing centralized functional control in favor of operational efficiencies originating on the front lines. This is the cornerstone of agent-based modeling.”

From Acres of Diamonds: The Value of Effectively Managing Low-Dollar, High Transactional Volume Spend (2004)

I have included links to two of my more recent articles on the subject of agent-based modeling below.

Post Resource Links:

• https://procureinsights.wordpress.com/2007/06/28/dangerous-supply-chain-myth…
• https://procureinsights.wordpress.com/2007/12/03/is-cisco-really-driving-21s…
• https://procureinsights.wordpress.com/2007/07/04/dangerous-supply-chain-myths-part-7/

News Releases

CATAAlliance Partners with Procurement Insights to Launch Supply Chain “Social Network Hub” — Thousands of Supply Chain and Procurement professionals are invited to join new business networking model

http://www.cata.ca/Media_and_Events/Press_Releases/cata_pr02110801.html