JDA and i2 Technologies- déjà vu
Note: The following Supply Chain Matters guest posting is contributed by Guy Courtin
It must feel like déjà vu all over again for JDA and i2 Technologies. It’s like the Paul McCartney lyric “You say goodbye and I say hello.” (Hello Goodbye)
However, this time the deal should be consummated, unlike what happened 2 years ago. So what does this mean for the companies, their clients and the market? In 2008 the deal was one of the worst kept secrets. The financial markets collapse forced JDA to back down from the cash heavy deal in the 11th hour and saw i2 receive a $20million payment from JDA. This time around the new deal was announced early in November 2009 and will close before the end of January 2010 – a much more rapid turnaround with very little rumblings prior to the November announcement. With a different structure – which included debt as well as equity in addition to an alternative options for the deal – this protects JDA and i2 to ensure that the deal would not fall victim to externalities.
So why goodbye and hello?
What has not changed from 2008 is the acquisition of i2 means that the supply chain market will lose one of the vanguards of the industry. With Manugistics, i2 Technologies created and defined a revolutionary supply chain market in the 1990s. By leveraging advanced technology coupled with the speed and visibility of the web, both companies demonstrated how package applications could be leveraged to allow companies to plan, optimize and execute their supply chain to maximize their returns. The market is saying goodbye to a truly innovative and market shaping company. No need to rehash the details of the rise and subsequent fall from grace for the Dallas based firm, the fact remains i2 was able to bring a level of innovation to the market that will be sorely missed.
We will be saying hello to a new dawn for the supply chain space. A larger JDA – one that owns both supply chain stalwarts – Manugistics and i2 – will offer the market an interesting alternative to challenge Oracle and SAP for supply chain business. The questions remain: how rapidly can JDA integrate i2’s industry expertise, what will happen with the i2 client base and how quickly can the JDA prospects and install base take advantage of the i2 innovation?
Having personally lived through the first aborted attempt, I believe that this time around the transition will be smooth. The reality is the executives of both firms have been planning for this move since early 2008. After the first deal fell through, i2 made no secret of the desire to continue to pursue a suitor. During 2009 i2 continued to shore up its cash position, controlling its costs, not filling in vacant executive positions and withholding any major investments while i2 also went through a round of workforce reduction early in 2009 – most likely culling roles and positions that would be redundant in a larger organization. Unlike in 2008, JDA will be absorbing a firm that has been molded to fit in nicely with the JDA structure.
What about the i2 client base? After the first acquisition attempt, there was much unrest in the i2 client base. This concern is legitimate; however the fact of the matter is what alternatives do these firms have? Turn to their ERP provider? Go to point solution players? Maybe, but the reality is the i2 solution has been so customized for the majority of the large users and the desire to rip and replace these systems does not make business sense. If JDA retains the personnel that support these customers there should be little issue in the short term. The long term road map will determine how much JDA will invest in maintaining the i2 client base.
For JDA prospects and installed customer base, this move should be an exciting opportunity. It will now have access to a number of solutions and innovations that can greatly enhance its businesses. How JDA packages and prices these new solutions will determine how quickly its install base can start leveraging these new tools.
We are saying hello to a new era in the supply chain space, consolidation will continue. Will Red Prairie merge with Manhattan? Perhaps JDA will pick up the last two large supply chain vendors. Will innovation come from JDA or will the point solution vendors be the ones to carry the torch? This is left to be seen. My bet is that the last remaining pure play end to end supply chain solution vendors will seek to innovate and carry that torch, however, it will be the smaller vendors to bring innovation to the market. With delivery mechanisms such as SaaS, these small vendors will be able to rapidly bring value to both large and small users – this will make the ability to buy something other than Oracle or SAP easier for companies.
A sad day to see a once formidable i2 disappear as a standalone entity from the market place, JDA should have a better chance of making the larger organization work than the first time around. The question remains – which entity will emerge as the next Manugistics and i2 Technologies when it comes to innovation?
Guy Courtin
Disclosure Statement: Guy Courtin is a former employee of i2 Technologies, and does not hold a financial interest in either i2 Technologies of JDA Software.
Tags: i2 Technologies, JDA Software Group, Supply chain Matters blog, supply chain planning software, Supply Chain Technology, supply_chain_matters
