Since its founding in 1988, i2 has survived the dot-com burst, financial shortfalls, and much-publicized conflicts with customers such as Nike and Siemens. This month, i2 reported a decrease in revenue in the fourth quarter and for the full year of 2004. Fourth-quarter 2004 revenue was $84 million, compared with $98 million the same quarter a year ago. For the year, revenue was $389 million, down from $495 million in 2003.
But McGrath has a new vision for i2 to help the company get back on track. Under his leadership, i2 will re-focus its software on supply chain management, which is the area where there's the most opportunity for growth, McGrath says. "We also want to make sure we regain the confidence of our investors by demonstrating to them that i2 is a profitable company," he says.
Bringing on a board member rather than an outsider was a smart choice, says Ken Ruggles, research director at AMR Research. As a board member for eight months, McGrath is familiar with i2, which should help reduce ramp-up time and allow the company to move more quickly, says Ruggles.
I2's goal will be to become profitable at current revenue, or with only modest growth, Ruggles says. "They realize they will not be able to grow their way back to profitability. This may mean changes to the way they approach sales," he says. Traditionally, i2 has been driven by large license deals. There's a likelihood the company will focus more on services and smaller deals, which can lead to long-term growth within individual accounts, Ruggles says.
McGrath also is the co-founder of Pittiglio Rabin Todd & McGrath, a management-consulting firm to technology-based companies, and the founder of IDe, a provider of integrated software for development-chain management. "McGrath is recognized as a thought leader in the area of product development and through his work with the [supply-chain operations reference model]," Ruggles says.
Changes within the company are expected begin in the near term and i2's direction regarding focus will be formally announced at its conference in May.