IBM Allies with Ariba, i2

SAN MATEO (03/10/2000) - Trio to focus best of their businesses on Net exchangesCALLING IT A watershed moment in the burgeoning e-commerce market, officials at IBM Corp., Ariba Networks Inc., and i2 Technologies Inc. this week announced a broad alliance they claim will significantly change the way businesses deal with other businesses over the Web.

As part of the deal, the companies will combine what they believe are the best of their complementary technologies to put together a completely integrated business-to-business marketplace solution that allows corporate users to craft and deploy full-service marketplaces. Underscoring its commitment, IBM has taken minority equity stakes in both Ariba and i2, although they declined to say what the financial worth of that stake is.

Officials at the three companies said they will help users put together an integrated supply chain that allows them to carry out all the processes, from placing orders to the fulfillment of those orders, as well as more tightly integrating a variety of processes involving users, suppliers, and marketplaces.

"Today, businesses work with other businesses very inefficiently," said Sanjive Sadhu, CEO of i2, in Dallas. "For instance, over the last four years companies have reduced their inventories by 50 percent. But where did that inventory go?

To their suppliers. Their entire ecosystems haven't really benefited. We can change that."

Of the three players Ariba stands to gain the most credibility from this very significant association, said Carl Lenz, an analyst at Gartner Group, in Stamford, Conn. Ariba is now able to integrate its offerings with IBM's e-business and supply-chain systems to provide a completely automated supply chain. Ariba also has the chance to "latch on to IBM's Global Services," Lenz said.

The agreement is also an acknowledgement that Internet exchange platform vendors are grappling with the nitty-gritty issues of supply chains; in particular, the fulfillment challenges, Lenz said.

"I think Ariba and the rest of them are realizing that they had to reach out and do this," Lenz said.

Officials from all three firms have pledged to work cooperatively to piece together a common suite of open and network-based commerce services including payment, logistics, auction, and collaboration that will fuel both enterprises and marketplaces. This integrated offering will be available both as a hosted Internet-based solution and as a software solution, officials said.

"IBM does about $45 billion annually in procurement through various marketplaces," said Bill Etherington, senior vice president and group executive at IBM's sales and distribution organization in Somers, N.Y. "So we are moving our systems onto Ariba and i2's technologies, which we think will move us to another level in terms of achieving savings and efficiencies within our own procurement operations."

The three companies will also form dedicated sales teams to sell, market, and implement a range of different e-market solutions.

IBM's Global Services will also chip in to provide not just support but a number of systems integration and hosting services to Ariba and i2, and it will become the preferred provider to alliance customers.

Ariba and i2 have signed a patent cross-licensing deal with IBM giving the companies access to Big Blue's complete software and Internet technologies.

That deal will serve as the basis for the creation of a competency center for business-to-business solutions, although Etherington declined to say when that center would be operational.

IBM Corp., in Armonk, N.Y., is at www.ibm.com. Ariba Networks Inc., in Mountain View, Calif., is at www.ariba.com. i2 Technologies Inc., in Irving, Texas, is at www.i2.com.

InfoWorld Senior Editor Eugene Grygo contributed to this article.

Bundling arrangements

As part of the deal, Ariba and i2 agree to use IBM's key middleware products in their solutions.

* Websphere (including Commerce Suite)

* DB2

* MQSeries

IBM will use i2 and Ariba products.

* i2's TradeMatrix marketplace

* Ariba's B2B marketplace

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