Marketplace Splitsville

By eweek  |  Posted 2001-03-12

Ariba and i2 technologies seem set upon ending their marketplace software alliance with a pair of acquisitions that are aimed at attacking one anothers markets.

The deals would not only seal the fate of their rocky partnership, but ratchet up the pressure to fill out their range of products. That ultimately could help businesses that want more options for setting up e-commerce programs, but such integration is a tricky business that could trip up either of the rivals, experts said.

Ariba, a Mountain View, Calif., procurement software company, is closing in on a deal to acquire Atlanta-based SynQuest, perhaps within the week, said industry officials familiar with the situation. SynQuest is one of the few remaining independent supply chain software makers. The deal would give Ariba its first direct access to the raw materials and finished parts market, which it has been planning to enter.

Meanwhile, Dallas-based supply chain software giant i2 is expected to buy RightWorks, a small procurement software vendor in San Jose, from cash-hungry Internet Capital Group.

Ariba and i2 teamed up with IBM last year to build public online exchanges, but have been going their separate ways to seek the growing and potentially more profitable private exchange business.

None of the companies involved would confirm that the long-rumored deals are in the works.

According to Marcus Ryu, Ariba?s vice president of corporate strategy, SynQuest "is one among a number that weve talked to. If youve heard acquisition, its surely overblown."

Still, analysts believe Ariba needs another acquisition. Software buyers increasingly want comprehensive product suites. Ariba has the bigger challenge, since it lacks the sophisticated software needed to handle the complex transactions it aims to do, analysts said.

But Ryu disagreed. Ariba doesnt want to add highly advanced supply chain planning. Its enough to have software that lets companies track supply chains by communicating with each other, he said.

"On the other hand, doing a lot of mergers is a tricky business," said Joshua Greenbaum, principal at Enterprise Applications Consulting in Daly City, Calif.

Ariba, which last month agreed to buy Agile Software for $2 billion in stock, faces more financial pressure for any future deal.

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