October 16, 2000

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Siemens Chooses I2 For Ambitious E-Business Initiative

By Steve Konicki

etailers aren't the only ones souping up their E-business strategies. German electronic components and engineering company Siemens AG threw nearly $1 billion on the table last week to finance its rebirth as a top-to-bottom E-business. I2 Technologies Inc. will provide the software to manage planning, design, sales, supply chain, procurement, fulfillment, and service for Siemens' manufacturing and sales operations in more than 190 countries.

Software from i2 will be integrated with Siemens' SAP enterprise resource planning software, its private exchange through Commerce One Inc., and future E-business apps. No division, employee, or business process will be untouched by the initiative, says Siemens president and CEO Heinrich von Pierer, who unveiled the effort last week. Siemens' existing E-business operations--including i2-driven supply chains, trading exchanges, and Web sales sites run separately by various divisions--will be consolidated, and the company will add online customer-relationship management and knowledge-management systems. In three years, Siemens expects to do half its procurement over the Internet and increase total sales over the Net to more than half of its business.

The project may reveal the real cost for a large company to reengineer its business processes to this degree, says Gartner Group research director Carl Lenz. "Costs for a company to take full advantage of what E-business can offer are going to be 10 times what people originally thought."

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