Generative AI
AI systems that create text, code, images, or other content from prompts — typically priced via APIs, seats, or bundled SaaS features.
Updated 2026-05-153 min read
Definition
Generative AI refers to artificial intelligence models that produce new content — most commonly text and code — in response to user prompts, using large language models and related architectures deployed via APIs or embedded in SaaS products.
Why it matters
Adoption outpaced procurement governance. Teams experiment with multiple tools; spend fragments across APIs, copilots, and AI-enabled SaaS uplifts — often invisible until usage scales past the pilot.
Related Terms
Large language model
AI models trained on large text corpora that power chat, coding, and search assistants — usually billed per token or via enterprise seat licenses.
Token-based pricing
Billing for LLM API usage by tokens processed — input and output text converted to billable units that scale with every request.
AI inference cost
The cost to run trained models in production — API calls, GPU compute, and hosted endpoints — distinct from one-off training spend.