San Francisco, CA August 20, 2001 Texas Instruments spends more than $200 million a year on contract labor and consulting services, but, until recently, the company had no easy way of controlling or leveraging that spend.
Although the company meets between 15 percent and 20 percent of its labor needs through contract labor or consulting services, Luther Harris, procurement director for administrative and energy services at Texas Instruments, said, "We, in procurement, realized there was not a lot of information on our contract workforce."
Now the Dallas, Texas-based high-tech company is implementing a services e-procurement solution from provider CascadeWorks to gain better visibility into its spend in this area and to better manage its suppliers of contract labor and consulting services. "CascadeWorks' solution will be a more efficient and cost-effective way for TI to manage its e-procurement process," predicted Harris.
TI currently uses custom contracts and pricing for each consulting engagement, an arrangement that Harris called "resource-consuming and expensive." Texas Instruments is looking to use the CascadeWorks solution, dubbed Clarity, to standardize, streamline and track its processes for engaging with supplemental labor and consultant communities.
The initial TI rollout will begin at the beginning of October with a pilot in the company's facilities group on a nationwide basis through the United States. The company will then roll out the system to the remainder of the company's U.S. operations within the following month.
CascadeWorks provides its solution as a hosted solution. Customers can prepay an annual license and services fee up front, or they can "self-fund" the application from savings they realize from using the solution. TI is taking the latter route, according to Harris, who added that he believes the company will shave 8 percent of its total contract labor and consulting services spend, which he pegs at greater than $200 million per year. The savings will come both from hard dollar savings realized through discounts shared with suppliers and through savings from being able to negotiate better contracts by consolidating the company's spend.
In addition, TI expects that the solution will help eliminate billing process issues that resulted from manual data entry. Diana Jovin, CEO of CascadeWorks, said that this is typical with the solution provider's customers. "Because we have invested a lot of effort in close-loop financial reconciliation, we are able to drive a very high ROI for customers," she said.
Harris says that TI will be considering ways to implement services e-procurement in other service procurement areas.
Texas Instruments is CascadeWorks's fourth major announced customer after ABN AMRO North America, Autodesk and Charles Schwab.
