Ariba And I2 Struggle To Find A Winning Strategy

Like a long-married couple, one-time partners Ariba Inc. and i2 Technologies Inc. are starting to look a lot alike. Both vendors see revenue declining as the economy forces companies to shun E-marketplaces and large software deployments. The business-to-business software vendors are adapting by redirecting their product strategies.

Ariba reported last week that sales plummeted 54% in its fourth quarter compared with a year ago. Newly appointed CEO Bob Calderoni pledged that the vendor would bolster business with new products to help customers analyze the business processes associated with the supply chain. Last month, Ariba shipped the first such product, Ariba Sourcing, part of its "spend-management" suite that helps customers pinpoint areas in the supply chain where they can cut costs. Within the next five months, Ariba plans to ship a supply-chain analytics product as part of that suite, Calderoni says.

This is Ariba's second new product strategy in a year, raising credibility concerns. The company also abandoned the B-to-B exchange market, its original strategy, which it once said would revolutionize business. To be successful, the vendor must deliver good technology. "Their early buyers felt that this was a panacea that would address every E-commerce issue they would have," Meta Group analyst Joanne Friedman says. "That didn't turn out to be the case."

I2's revenue fell 40% this past quarter compared with the same quarter a year ago. Last week, i2 rolled out an upgrade of its product suite, called i2 5.2, that includes an order-management system aimed at financial services and retail markets. Previously, i2 has focused on manufacturing with advanced planning and scheduling software for factories.

Carl Lehman, a Meta Group market analyst, is skeptical of i2's commitment to financial services, noting that it hasn't hired experts in that market: "I don't know how strong they're really trying to play in that space."