It's time for vendors to find their niche in life
By Sidney Hill, Jr., executive editor -- Manufacturing Business Technology, 7/1/2006 12:00:00 AM
A recent road trip took me through what seemed like a time warp, and it wasn't just because I was in Las Vegas, where everyone from Elvis to Dino, Frank, and Sammy—or at least facsimiles of them—are known to be performing two shows nightly.
My sense of déjà vu was inspired by encounters with three stars from the last golden age of enterprise software—Ariba, i2 Technologies, and Manugistics.
Ariba and i2 were hosting their annual user conferences, while Manugistics, recently acquired by JDA Software, was being eulogized at that company's user event. JDA management vowed that the Manugistics solutions would live on to enhance the ability of JDA customers—historically concentrated in the retail sector—to manage their inventories.
Meanwhile, Ariba and i2 are looking toward what could be promising futures. It wasn't long ago that many industry experts left both these companies for dead.
From a purely financial standpoint, i2 has recovered, having recently closed its fourth consecutive profitable quarter. Ariba is operating in the red, but it has a cadre of very large customers who clearly see value in its solutions, and those relationships should spawn others that eventually bring Ariba to profitability.
The key to sustaining profitability for both Ariba and i2 will be maintaining what seems to be a new focus on solving real customer problems. In the past, both companies—though they were not alone in this regard—seemed more interested in building sophisticated technology platforms and then trying to convince customers they couldn't possibly run a business without them.
The Ariba Supplier Network, created during the height of trading exchange frenzy, still exists. But executives quickly point out it is only a small part of Ariba's business, which now centers on a set of "spend management" solutions that allow companies to do everything from analyze how their procurement dollars are being spent to manage supplier performance.
Christe Breves, chief procurement officer for Alcoa, says an ongoing restructuring of the procurement function at the world's leading aluminum producer includes the adoption of Ariba solutions. She says the restructuring has freed buyers from looking merely for the lowest-cost materials. Instead they are seeking the best values, and that includes scouting for materials that might give Alcoa a competitive edge.
Michael Aguilar, senior VP of supply chain with the consumer electronics division of Panasonic, says that company also gains an edge by working with i2, but he credits i2 personnel as much as the technology.
After initiating an agreement that calls for i2 to manage its supply chain application, Aguilar says Panasonic had the confidence to start forecasting demand for plasma televisions for the retailers it serves. Three months later, he said, the rate at which consumers were finding the televisions they wanted when entering a store went from 70 percent to 90 percent, while Panasonic's plasma screen sales jumped 500 percent.
While both Ariba and i2 still want to be known as thought leaders in their respective industries, it appears both are settling into what could prove to be comfortable niches. This is perhaps a bigger change for i2, which once declared its systems would replace ERP, but now boasts of partnerships with certain ERP vendors. I guess that's an indication that times truly have changed.
