DALLAS (03/21/2000) - Supply-chain software vendor i2 Technologies Inc. last week announced a merger with Aspect Development and the purchase of Supplybase, thereby locking up a pair of software specialists for negotiating with suppliers online. I2's goal is to challenge Oracle Corp., SAP AG and Manugistics in this area of e-commerce.
Under the $9.3 billion stock-swap with Aspect, which will become an i2 subsidiary, i2 gains exclusive control over technology that neatly complements its own supply-chain decision and management software. The deal is likely to be the largest in software history when officially concluded in several months.
The i2 purchase of Supplybase is valued at $380 million worth of i2 stock.
"Our own Product Lifecycle Management Suite does supply-chain logistics and planning," says Bruce Jacquemard, i2's senior vice president who pushed for the Aspect merger. "If you said you wanted to buy 6 tons of raw steel, for instance, we didn't have the supplier base to help tell you what you should use."
Aspect does, however -about 180 corporate customers from the high-tech and industrial world are using the Aspect collaborative decision-support tools and electronic catalogs customized to meet specific needs. Newport News Shipbuilding, for instance, worked with IBM and Aspect to set up an Aspect-based electronic catalog at the shipbuilder's data center so engineers could search for parts online from over a dozen suppliers and order them directly.
"It's an extremely efficient way to search, and we have a link to our SAP R/3 system so we can show the inventory availability of the part to find out if it's in our yard at the time," says Steve Hassell, chief information officer at the shipbuilder. If the part is not on hand, the Web-based Aspect catalog offers a way to contact the supplier via e-mail, electronic data interchange (EDI) or fax to order it or start the bidding or requisition process.
Aspect focuses on ordering standardized parts, but Supplybase, a start-up formed by three engineers from GE Plastics, specializes in online collaboration software for designing and purchasing custom-designed parts, such as injection-molded plastics or custom chips.
The software, called Supplybase.manager, runs on an NT or Solaris server behind a corporate firewall. "Anyone with a browser and e-mail can use it," says Dennis Stradford, Supplybase's president and CEO. Supplybase customers include Nortel Networks, Johnson & Johnson and Flextronics.
Supplybase.manager lets engineers view CAD/CAM files and mark up changes. In addition, if a corporation needs to locate a custom-work supplier, there's a database of 100,00 suppliers around the world in 47 industries to contact and start negotiations.
I2 Technologies, which entered into cooperative agreements with Aspect and Supplybase last autumn to ensure the three companies' products would work together, plans an integrated product line after the deals are complete.
Jacquemard acknowledges that the deals with Aspect and Supplybase bring to a boil the company's simmering rivalry with supply-chain market rival Oracle.
Ironically, i2 and Oracle are expected to cooperate on building an online trading exchange for General Motors, Ford and Daimler-Chrysler under a deal announced last month by the automobile makers. Originally, the auto giants had planned competing exchanges, but they eventually decided to cooperate after auto suppliers complained it would be counterproductive to force them onto different systems to sell parts. "Well, we're waiting to see how things come together on that," Jacquemard says about the possibility of cooperating with Oracle.
The merger with Aspect calls for i2 to acquire all the outstanding stock and stock options of that company. Each Aspect share will be swapped at a ratio of .55 share of i2 common stock for each share of Aspect, taking into account Aspect's two for one stock split that became effective last week. Aspect will become a subsidiary of i2 with Romesh Wadhwani, Aspect chairman and CEO, becoming vice chairman of i2.