Spend Analysis for Cadence

Reports $6 million in savings with new technology

Reports $6 million in savings with new technology

Walnut Creek, CA— August 11, 2003— Softface Inc., today announced that Cadence Design Systems Inc. is publicly reporting $6 million in savings through using the Softface Procurement Intelligence Suite, an automated spend analysis solution.

The Softface product creates corporate spending analyses using an automated technology that combines business intelligence, data mining and data cleansing capabilities. With the automated spend analysis solution generating configuration-level spending visibility, Cadence said it began saving money immediately and reported $6 million in savings after using the product for 18 months.

Cadence Design Systems, a global supplier of electronic design products and services, is a Fortune 900 company with approximately 5,700 employees and 2001 revenues of $1.43 billion. The organization has sales offices, design centers and research facilities around the world and spends $360 million in indirect spend annually. Cadence said it has always had a procurement savings initiative, but additional procurement cost savings became a higher priority to the CEO with the slowing economy.

For Cadence, as it is in most companies, procurement savings opportunities are found by better understanding what the company buys, from whom, at a detailed level. Before the implementation, Cadence said its spending analysis procedures were manually intensive, expensive and lengthy. Historical spending data had to be manually rebuilt and categorized for analysis purposes, and the outsourcing alternative was also lengthy and expensive. Outside consultants would manually rewrite the data to create the analysis and then would take the knowledge when the project was completed, not enabling Cadence to leverage that data for future savings. With the new technology, Cadence said its data knowledge is stored in the software.

In April of 2002, Cadence implemented the Procurement Intelligence Suite to automate the spend analysis process. According to the internal Cadence assessment, as a result of implementing the Softface solution the company reduced its off-contract purchasing expenditures by 30 percent, achieving an additional savings of 5 to 7 percent on specific commodities through containment of rogue purchasing.

In addition, Cadence was able to find savings utilizing the Softface technology that had not been found for a year. Cadence has also reduced its number of suppliers by 35 percent because the technology highlights supplier spending at the commodity level and below, enabling Cadence to reduce spending by 4 to 6 percent on specific commodities through supplier consolidation efforts. Also, because the spend analysis solution increases the pace of the strategic sourcing process, Cadence accelerated its savings by an additional 2 percent of its total indirect spending in one year.

Kendall Mills, group director, Worldwide Procurement, at Cadence Design Systems, said, "We're searching for quick-hit purchases that result in an almost immediate return. That's what Softface gave us. Overall, in the first 18 months of operation, Cadence saved $6 million."