Back to basics
New product release returns i2 its supply chain optimization roots
By Sidney Hill, Jr., Executive Editor -- Manufacturing Business Technology, 12/1/2001 12:00:00 AM
Its sales have been slow lately, but the brain trust at Dallas-based i2 Technologies has been busy reorganizing the company in hopes of being in a position to prosper when manufacturing and distribution companies decide it's time to start buying new technology.
The most visible sign of this reorganization was last month's release of i2 Five.Two (pronounced five-dot-two), the latest packaging of i2's continually growing software suite. The new suite contains applications addressing three sets of business functions that i2 executives say are vital for the profitable operation of global extended enterprises.
i2 says such enterprises, which typically are comprised of multiple divisions interacting with numerous customers and suppliers around the globe, participate in what it calls value chains, and says its new software package will allow these companies to practice something called dynamic value chain management.
"Dynamic value chain management is a business philosophy that enables companies to take action, monitor the results of those actions, and then make quick decisions to initiate new actions based on those results," i2 CEO Greg Brady said during a Webcast in which the new software package was unveiled. To achieve dynamic value chain management, Brady added, an enterprise must be competent in the three areas that i2 Five.Two addresses: supplier relationship management (SRM), supply chain management (SCM), and customer relationship management (CRM).
Brady said the SRM components of the i2 suite, which include strategic sourcing and e-procurement applications, enable companies to configure their business networks—which includes selecting business partners and establishing processes for interacting with those suppliers. The SCM modules allow for understanding demand for various products and planning to deploy resources for matching that demand. Finally, the CRM components can be used to manage and fulfill orders.
To some extent, i2's release of this new package represents a return to its roots as a supplier of applications for optimizing business processes. When it was formed in the early 1990s, i2 was a pioneer in the supply chain planning space. Its first applications synchronized production lines so that goods could be manufactured in the least amount of time and at the lowest-possible cost while still meeting customers' expected delivery dates.
In recent years, however, i2 strayed from those roots. It started by developing Internet-based applications that allowed trading partners to share information about the plans being generated in its planning applications. Later, i2 developed i2 TradeMatrix, a platform for building Internet-based trading exchanges; formed a partnership with e-procurement vendor Ariba, Mountain View, Calif.; and began marketing itself as a supplier of business-to-business (B2B) e-commerce solutions. When its relationship with Ariba deteriorated, i2 started buying companies that had developed functionality that i2 thought it needed to build out its own B2B e-commerce suite.
Charges related to those acquisitions—including the purchase of strategic sourcing vendor Aspect Development, Mountain View, Calif., and RightWorks, an e-procurement vendor based in San Jose, Calif.—contributed heavily to the $13-per-share loss that i2 reported for third quarter of fiscal 2001. i2's profits also suffered from a dramatic drop in sales, with revenues for the third quarter of this year coming in $320 million lower than the same period last year.
But company officials also point out that the technology gained through its recent acquisitions make up critical pieces of the Five.Two software suite, which they expect to accelerate i2's return to profitability. Brady said Five.Two solutions should sell well because, in addition to providing valuable functionality, they can be purchased and installed as individual pieces. He also pointed out that i2 has developed templates for installing separate CRM, SCM, and SRM solutions in various vertical industries.
Both RightWorks and Aspect provided key applications in the Five.Two SRM package. RightWorks also provided the distributed architecture on which the entire Five.Two suite is built. Brady said that architecture is critical to the i2 CRM suite, because it allows companies that have multiple ERP systems to have all orders funneled to a central location and then dispersed to various parts of their value chains for fulfillment.
The RightWorks acquisition also netted i2 a platform called Open Commerce Network that i2 has linked with TradeMatrix as a way of bringing companies together to form private Internet-based trading exchanges. Completely absent from the i2 Five.Two announcement was any talk of public trading exchanges, which were a hot topic when i2 was in partnership with Ariba. But i2 Chairman Sanjiv Sidhu, who titled his opening remarks to the Webcast, A Return to Basics, did speak of companies using the Five.Two tools to manage around the natural constraints within their value chain. Constraint-based planning is what the first i2 SCM applications were based on—another indication that the company may be returning to its roots.
