i2 Fights Giants with Apps, Services

 
 
By Jacqueline Emigh  |  Posted 2005-11-29
 
 
 

i2 Fights Giants with Apps, Services


Supply chain specialist i2 Technologies Inc. plans to rebound from a recent dip in customer-driven revenues by pushing its products and services in some new directions, according to one top official.

i2 is also considering the possibility of new platforms for its supply chain applications, ranging from Microsoft .Net to open-source Linux, John Cummings, senior vice president and chief marketing officer, said during an interview.

In quarterly results announced earlier this month, i2 reported a decline in revenue from $111.1 million to $62.2 million during the comparable quarter last year.

Software development and licensing revenues both suffered.

Click here to read more about i2s next-generation SCM offerings.

As part of efforts by recently appointed CEO Michael McGrath to improve the companys financial situation, the vendor has since sold off its content and data businesses to IHS Inc. for $30 million.

According to Cummings, i2 is now working on customer recruitment and retention by leveraging its expertise into new product and service offerings.

i2 keeps facing rising competition in some major accounts from ERP vendors SAP AG and Oracle Corp., according to Mark Hillman, a former i2 marketing executive who is now an analyst with AMR Research Inc.

"i2s executive sponsors [at customer organizations] are feeling some pressure to defend why they chose i2," the analyst said in another interview. "But it helps that [supply chain solutions] are becoming more of a business buy. IT managers tend to be concerned about using the smallest number of systems possible. Business buyers are more interested in the core functionality."

As the vendors revenues have continued to slide over the past few months, other i2 officials have talked up partnership activities around i2s MDM (master data management) software engine.

Read details here about i2s vertical "partner ecosphere" middleware plans.

One major motivation behind these pacts is to migrate MDM beyond the supply chain into new industries such as financial services management, i2 officials said in earlier interviews.

But for his part, Cummings focused mostly on i2s current in-house development of specialized BPM (business process management), SOA (service-oriented architecture) and applications for SCM (supply chain management), the companys long-time key market.

As Cummings sees it, i2 is saving time and money for customers by innovating with these emerging technologies for MDM-based applications in the supply chain arena.

"Weve launched [several] next-generation solutions since last fall that use this approach, and well be launching more. These are giving us quite a bit of pull-through [with customers]," Cummings said.

"Weve used our expertise to build in a lot of processes and IP [intellectual property] that [are useful] for the supply chain. This really sets [these] applications apart from what you might find in the rest of the industry."

Next Page: i2 aims for innovation with caution.

i2 Aims for Innovation


with Caution">

i2s new applications are aimed at supply chain visibility, material management, consolidated procurement, demand management and collaboration/lean replenishment, among others.

"i2 is still where a lot of customers want to be," said AMRs Hillman. Recently, the company has been gaining more traction with customers in a number of areas, especially inventory management and strategic network design, according to the analyst.

The vendor is trying to apply innovation to its consulting practice, too, according to Cummings.

"We have some of the most brilliant supply chain [consultants] in the business, and theyre solving problems now, rather than selling software. Its a subtle change of mind-set, [but] it differentiates us to a certain extent," he said.

Beyond software sales, i2s consulting arm performs application delivery and some design, helping customers with everything from exception management to data cleanliness, according to Cummings.

"It also helps that were taking a more vertical approach," he said, adding that i2 now runs separate consulting practices for verticals such as retail, consumer products, transportation, high technology and industrial/aerospace.

The vendor is playing things more cautiously, though, when it comes to operating platforms.

Despite i2s recent partnership deal with Microsoft Corp., only one product in the recent crop of applications runs on the .Net platform. i2 hasnt yet decided whether to port the rest, according to Cummings. "We want to take a phased approach. First we need to understand how .Net works with demand management," he said.

"i2 is now Microsofts chosen supply chain partner. The relationship is not trivial," according to Hillman.

"Naturally, Microsoft would like its partners to move to .Net. Microsoft really wants .Net to take hold."

Meanwhile, though, i2 is also keeping a watchful eye on Linux.

"Weve had a lot of internal conversations about open source. It does seem to make sense, [in light] of the industry movement in this direction. But its something we need to keep evaluating," Cummings said.

Its still too early to tell how i2 will fare with McGrath at the reins, according to Hillman.

i2s future relationship with Microsoft contains a few question marks, too, he said. Microsoft also produces several ERP- and supply chain-oriented products of its own.

The AMR analyst also suggested that i2 should take better advantage of the industry move toward hosted software models.

The supply chain specialist already does offer a few hosted software services, including a service called Freight Matrix for transportation management, Hillman said.

Hosted services impose fewer IT requirements, while at the same time letting customers gain financial efficiencies through an "on demand" model, according to the analyst.

Editors Note: This article has been updated to include additional comments from Mark Hillman, an analyst at AMR Research.

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