Vendor consolidation: Acquisition of i2 Technologies points to supply chain market shift

The pending acquisition of i2 Technologies by JDA Software is a signal that supply chain management—while still an extremely important strategic function—is no longer the highly specialized activity it was perceived to be just a few years ago.
By Sidney Hill, Jr., executive editor August 12, 2008

The pending acquisition of i2 Technologies by JDA Software is a signal that supply chain management—while still an extremely important strategic function—is no longer the highly specialized activity it was perceived to be just a few years ago.
On Monday, JDA Software announced an agreement to purchase i2 Technologies for $346 million.
Supply chain plans are still generated by “planning engines” that use complex mathematical algorithms to determine the most efficient ways of deploying an enterprise’s resources over a given time. But it appears that the people who use supply chain systems are more interested having tight links to the applications that hold the information that goes in a plan—typically an ERP suite—than they are in having the most sophisticated supply chain system.
Bob Parker, VP of research with Manufacturing Insights , says this shift in user focus is why Oracle and SAP —the two largest ERP suppliers—now also dominate the supply chain space, while supply chain specialists like i2 and ILOG (recently acquired by IBM) are disappearing.
“When you look at Oracle and SAP, you see supply chain systems that are functionally equivalent [to i2’s offering,” Parker says, “and they have the ERP backbone. That makes it easier to migrate the core data” that’s needed to generate supply chain plans.
Manufacturers have long valued tight integration between various business systems, but until the advent of integration and business process management platforms like SAP’s NetWeaver and Oracle’s Fusion Middleware, ERP vendors could not provide that type of integration. Thus it was easier for vendors like i2 to argue that buying best-of-breed functionality was worth the extra cost and effort of building custom integrations between a specialty supply chain solution and an ERP system.
Once the ERP players started building their own integration platforms, however, they also started purchasing supply chain vendors and building the tight links that user prefer. Oracle acquired its first supply chain application when it bought PeopleSoft—another large ERP vendor—several years ago. Oracle has since acquired supply chain specialists Demantra and G-Log to build what Parker describes as a solid supply chain offering.
Ironically, ILOG may have contributed to the demise of severalrentiation in the market, and that made it easier for the Oracle’s and SAP’s of the world to move into the supply chain space.
So what do those customers who have stayed with i2 throughout the industry transition do now? Parker suggests they have system-replacement plans in place. His advice is based on observing what JDA has done since acquiring Manugistics—another former high-flyer in the supply chain space. “They have not done much to improve the product,” Parker says, of JDA’s handling of Manugistics. “I wish I could be more optimistic about the