Analyst Comments From i2's Planet Event

I2’s annual conference was held May 2^nd – 4^th in Orlando, Florida. There were over 800 attendees and a solid mix of operations and IT end users across industries. 

A day before the event started, CEO Michael McGrath announced he will retire at the end of his contract in 2007. Mr. McGrath was initially brought on as an interim CEO to help orchestrate the turnaround and he has been there almost two years now. Talking to i2’s end users at the event, it was clear Mr. McGrath has built up strong customer relationships in his tenure there and will be missed. That said, the i2 leadership team reiterated their commitment to continue forward with important strategic initiatives like the Agile Business Process Platform (ABPP) while keeping a close eye on cost controls. 

As an extension of the ABPP, the big news at the event was i2’s release of the Business Content Library (BCL). By i2’s definition, this is a ‘collection of business process and technology reference workflows’ or ‘business accelerators – a starting point from which you can build supply chain solutions to meet the unique challenges of a specific industry’.

In simpler terms, this is an assortment of configuration files, code snippets and documentation from existing customer implementations being packaged up and presented in the library. Customers can then download (for a fee) and customize the files in i2’s ABPP studio to meet their needs. 

It was positioned throughout the meetings as a way for i2 to quickly release new functionality without going through the lengthy QA cycle. 

Is that a good idea?

Well, when this concept was presented a handful of senior transportation executives at a conference round table, the reaction was mixed. While everyone acknowledged the potential, the big question mark was whether they could rely on i2 to put these workflows through the same quality testing process as generally available code. The concern being that it does not help accelerate the project if these reusable workflows from the library aren’t bullet proof. Since i2 plans to have customers ‘pay by the slice’ – i.e. pay for each library you use or pay a subscription fee that gives you access to all libraries – the expectation is that it will work and has been regression tested against the other workflows. 

That’s not to say that i2 has missed the mark – it just needs some refining and kudos to them for taking the first step (or leap) into the deep end. 

To be successful here however, vendors like i2 need to make a decision either way to 1) move closer to open source and FREE code sharing in this library or 2) make a commitment to testing and supporting these workflows at the same level as a GA product. Sitting somewhere in between is destined for failure – you simply can’t charge for something that may not work or has not gone through the same GA testing cycle. Also, if you are going to go down the path of an open source library, you have to extend it so these workflows can be customized in a tool other than a proprietary design studio. JBOSS and Eclipse should be supported. Lastly, i2 has been very focused on opening up their architecture internally but they can’t lose sight of the external ecosystem. More work needs to go into building services designed to interface with the large ERP solutions of the world – this is a natural next step for them. 

Forrester also had the opportunity to participate in a transportation executive roundtable discussing that group’s priorities and pain points for 2007. Representatives were there from companies like Ryder, Kimberly Clark, Frito Lay and GM. This was a very well run session by Razat Gaurav, i2’s VP of Global Transportation and Distribution Management and the audience was really engaged. 

In the discussion, it was clear that while most companies were experiencing relief from last years challenges around driver shortages, the root cause had not been addressed – simply put, the next generation workforce does not want to drive trucks for a living. There is not easy answer to this but everyone agreed that it boils down to improving the working conditions for the drivers. 

The other top challenges were also ones you would expect:

1. Capacity – the consensus was that this is less of a problem than it was last year but that the industry is cyclical and the capacity issues will return. One very interesting solution discussed is the concept of different carriers collaborating to share capacity and identify backhaul opportunities. The competitive challenges get in the way here but if companies can find a creative way to overcome this, it could be a win-win. i2 and other TMS solutions should explore the possibility of a carrier network collaboration model and see if it gains traction.  On a side note, one very large distributor commented that if they could achieve that level of coordination just across their own business units, it would be a huge efficiency gain. A software as a service solution giving peers access to a virtual capacity pool is the vision. Hopefully, i2 was listening and will explore possible solutions.
   
2. Fuel Prices – no surprise here. What are some of the companies doing to manage this volatility? The 2 biggest themes were maximizing continuous moves and reducing empty miles. One cool example of using technology to help was a carrier who using web services, pulls diesel fuel prices from gas stops and routes their trucks accordingly. 

Mike McGrath joined the session and asked the group their thoughts on whether an integrated WMS/TMS solution is a consideration when buying software. The response was not what I would have expected. There were actually a few companies who could care less and were willing to take on the integration themselves. Others talked about this being a key selection criteria as their focus is to not stand up data and application silos within their organization. 

My take is that i2 is continuously looking at whether they should add a WMS to their suite of offerings and gauging customer demand. They have made some smaller acquisitions in the last year to flex their new found profitability muscle but I doubt they have backing for a larger acquisition. If they do move here, it will be a smaller player which will be a difficult cross sell into i2’s existing tier one customer base. A strong partnership would be a better option. 

Overall, this was one of the better supply chain vendor conferences I’ve attended in a long time and the reason was the number of engaged customers presenting and participating with i2 taking a back seat. 

Patrick Connaughton | Senior Analyst - Supply Chain

Forrester Research