i2 Springs Back Against ERP Giants

By Jacqueline Emigh  |  Posted 2004-11-16

i2 Springs Back Against ERP Giants

Snapping back from a string of financial and legal woes, supply chain player i2 Technologies is now working on product enhancements with longtime users such as Daimler-Chrysler, while adding new customer wins such as Bed Bath & Beyond, often through integrator partners.

i2 plans to add 100 to 200 new features in the next edition of its manufacturers and retailers software suite, i2 CEO Sanjiv Sidhu said in an interview with eWEEK.com.

"The health of the company is improving rapidly, and were feeling confident," Sidhu said. "We have $280 million in cash right now, and our business is growing in terms of customer bookings."

Specifically, the next release of i2s Six Two supply chain software suite will include new allocation planning and assortment planning features for retailers, as well as new tools for manufacturers around event management and "the outsourced supply chain," according to Sidhu.

Once the undisputed leader in supply chain software, i2 fell on harder times with the crash of the dot-com boom. The Dallas-based vendor has faced rising competition from ERP (enterprise resource planning) vendors SAP, Oracle and PeopleSoft.

But analysts such as those at AMR Research agree that i2 is on the rebound now. "2001 to 2004 was a rough period for the market. It was even rougher for i2, as the company underwent multiple layoffs that resulted in a 50 percent slash of the 2001 market work force, finished an SEC investigation resulting in restated earnings and the adoption of new revenue recognition policies, and was de-listed from the Nasdaq stock market," according to a recent report from AMR Research.

"i2 is battered but not out. Financials have stabilized, the management has dealt with many of the customer issues, and the products are uniquely positioned to tackle some of todays business problems," said Lora Cecere, an AMR analyst.

Sidhu said he perceives a greater competitive threat from best-of-breed vertical market players, particularly in the retail space, than from ERP giants such as SAP.

Drawing on results of a recent, company-conducted market survey, Sidhu criticized ERP for being too broadly focused and overly vendor-specific, as well as for asking users to "rip and replace."

"ERP really isnt good enough. Customers need to be able to deal with the problems theyre trying to solve," he said.

"ERP vendors are saying, You have to buy everything from us. But what were hearing [from users] is that supply chain solutions need to integrate with the rest of the world. Theres no guarantee that your customer or supplier will be using the same ERP system you are."

IBM is working to untangle supply-chain communications. Click here to read more.

Where ERP is too broad an approach, point solutions can be too narrow and sometimes too difficult to integrate with enterprise systems, Sidhu said.

Not surprisingly, ERP companies take a different perspective on the supply chain market. "Vendors such as i2, Manugistics and Siebel are diminishing into the background—and not just because of big, bad SAP, Oracle or PeopleSoft," said Bill Wohl, a spokesperson for SAP.

"By now, chain solutions have matured to the point where they should be part of the entire infrastructure. People want to go with companies like SAP all the way. Theyre saying, I dont want integration headaches," Wohl said.

Next Page: Tailoring vertical solutions.

Vertical Solutions

For his part, Sidhu touted i2s Web services-based Supply Chain Operating Services framework, first rolled out two years ago, as supporting composite applications that are highly targeted, but that can also integrate well with legacy software and newer ERP and point solutions.

"We have a very modular architecture that lets you tailor a user-specific architecture very fast. Whether its retail, high tech, metals or automotive, i2 gives you a much more vertical solution than ERP," he said.

Representing the companys vision of a "closed-loop supply chain," the framework is a "next-generation" solution, Sidhu said. "The first generation of supply chain products only did planning. The next generation also allows you to track and execute the plan. It can provide you with performance gains, too."

Key capabilities of i2s framework include data synchronization, as well as MDM (master data management). "With MDM, you dont have to physically store all of your information in our data management system. Instead, we can just keep links to all the data," Sidhu said.

The new allocation management and assortment management capabilities in the next version of Six Two will make major use of MDM, he told eWEEK.com. i2 is working with both Payless and Bath Bed & Beyond on developing the new retail tools.

Click here to learn about a gap between supply-chain technologies and business strategies.

The event management capability, also slated for the next edition, will "track events beyond the value chain," he said. Daimler-Chrysler is implementing the new feature in a solution for streamlining car design by reusing auto parts content.

On the whole, though, i2s recent customer growth has been stronger with retailers and consumer goods makers than with manufacturers, according to Sidhu. Bed Bath & Beyond just signed on a few months ago. Other current customers in this space include PepsiCo, "particularly Frito-Lay;" and Woolworth Australia.

"Weve always been big in manufacturing," Sidhu said. High-tech customers account for about half of i2s manufacturing business. "Dell, Nokia, Texas Instruments. The list goes on. We also have automotive customers like Daimler-Chrysler, Ford Motor Co. and Cooper Tire, big industrial companies like John Deere and Caterpillar, and most of the worlds top metals manufacturers."

Other recent customer wins for i2 include Leading Edge Logistics, Kia Motors America, Spanish logistics provider Tradisa, NEC in Japan, and Italian-based Galileo Avionica.

I2 could do better against ERP vendors such as SAP by adding more feet on the street, Sidhu acknowledged. The company is working on expanding its own sales force.

But in the partnership arena, i2 is sticking mainly with an existing set of about 10 alliances, including with IBM and Accenture, he said. "Wed rather focus on continuing successes with our existing partners than on starting a lot of new partnerships."

Meanwhile, however, i2 has been adding a few partnerships with regional players, such as Tata Consultancy, the largest software and services company in India.

Check out eWEEK.coms for the latest news and analysis of enterprise supply chains.

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