I2 Adds Sourcing Info to Supply-Chain Apps

SAN MATEO (03/17/2000) - The acquisition of Aspect Development Inc. by i2 Technologies Inc. for $9 billion this week will allow i2 to step out of its niche as an e-marketplace portal and execution software provider in to the role of lead contractor for business-to-business projects.

The i2 buying spree also included Supplybase Inc., maker of Web-based product design and sourcing of custom parts and assemblies. The agreement will combine content and analysis with i2's transaction capabilities.

"What i2 and others like it are trying to do is be the lead contractor on end-to-end business-to-business solutions," said David Burdick, an analyst at the Gartner Group, a market research company in Stamford, Conn. The recent agreements that i2 signed with IBM and Ariba will also go a long way to help i2 take on this new role. The lead contractor role will require i2 and others to provide partners who will deliver on development, sourcing, fulfillment, production, and support, Burdick said.

The Aspect and Supplybase acquisitions then became crucial for i2's one-stop shopping efforts, because i2 currently does not provide the content and aggregating services needed to help businesses rationalize their supply chains, analysts said.

For instance, i2 will be able to offer its clients better business-to-business system development capabilities through its Aspect acquisition and a transaction engine via its recent agreement with Ariba, as well as provide its own supply-chain planning and optimization services, Burdick said. "The net of this is that they're trying to put together one-stop shopping from development on up," he said.

By acquiring and then integrating content-oriented offerings, i2 is providing end-users with much-needed content, said Pierre Mitchell, an analyst at AMR Research in Boston. "i2's acquisition of Aspect has filled in the content hole of how you're going to do strategic sourcing," Mitchell said. The content support will allow i2 to put forth a strong strategic sourcing solution.

Mitchell said the question now becomes whether or not i2 can integrate the product lines, and the prospect of that is good, because the two have worked together before. "It's going to take some time," he said. "But I think the integration should be relatively straightforward."

Gartner's Burdick isn't as certain that the integration path will be so smooth, even though a proverbial 95 percent of the work may be easy. "It's that last 5 percent that's difficult," he said.

Competitors of i2 should look at this "as a disconcerting move," Mitchell said, because of the combination of content and transaction support. End-users are expecting more "advanced content solutions" that include supplier analysis, commodity rationalization, part rationalization, supplier management, and design optimization.

SAP and Oracle are striving to become one-stop business-to-business e-commerce shops and move away from the perception of being monolithic ERP (enterprise resource planning) vendors, Burdick said.

The software provider, i2, is expected to meet competition from ERP vendors, such as SAP and Oracle, which are entering the supply-chain market, as well as procurement and trading exchange vendors such as CommerceOne and Ariba.

Aspect is slated to become a subsidiary of i2 with Romesh Wadhwani, Aspect chairman and CEO, taking the helm as vice chairman of i2 and a member of i2's board of directors.

The agreement specifies that i2 will acquire all of the outstanding stock and stock options of Aspect, officials said. Calculated from i2's closing price March 10, the total value of the transaction is approximately $9.3 billion, i2 officials said.i2 Technologies Inc., in Dallas, is at www.i2.com. Aspect Development Inc., in Mountain View, Calif., is at www.aspectdv.com. Supplybase Inc., in San Francisco, is at www.supplybase.com.

Who's taking the lead?

To fulfill its hopes of becoming lead contractor, i2's dance card may be filling up with partners who could also play the role of competitors.

* Agile Software

* Ariba

* Baan

* CommerceOne

* IBM

* J.D. Edwards

* Oracle

* PTC

* SAP.

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More about Agile SoftwareAMR ResearchAribaAspect DevelopmentBaanCommerceOneGartnerGartneri2i2 TechnologiesIBM AustraliaOraclePTCSAP AustraliaSupplybase

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