The Nine (Plus) Lives of Ariba and i2 Technologies | AMR Research

The Nine (Plus) Lives of Ariba and i2 Technologies | AMR Research

Ariba and i2 find new life

Two years ago Ariba and i2 Technologies had bleak outlooks. But the companies have renewed vigor now, having distinguished themselves as resilient software companies that are positioned to maintain or take share as competition increases. As companies continue to strive for more revenue, higher margins, and lower costs, Ariba and i2 move front and center on the competitive landscape.

For its part, Ariba should continue to be a major player in sourcing and procurement, gaining more traction in direct materials, with demand for its Low Cost Country Sourcing (LCCS) and Commodity Services products. Overall development of the sourcing and procurement market is providing a tailwind for Ariba, as the sourcing and procurement market continues to grow 9% to10% in the next couple of years, following at least 9% expansion in 2006. At the company-specific level, continued execution on the successful transition to an on-demand model could generate even higher-than-forecast growth. Current AMR Research sourcing and procurement revenue numbers have Ariba second to SAP. While SAP’s numbers showed an increase in 2006 with the acquisition, we expect Ariba to grow by at least 5% based on its successful transition to software-as-a-service (SaaS) technology and the resulting increased revenue opportunities.

Meanwhile, i2 is deriving more growth in sourcing and procurement with its direct materials support and product lifecycle management (PLM) partnership with Dassault Systemes. i2 is hitting on almost all cylinders since its reorganization, and continues to deliver innovative products into a increasingly receptive client base despite a more competitive landscape. i2 is also taking advantage of partnerships to extend its ecosystem, making inroads where it had lost mindshare to SAP. Also, many companies are less likely to be using end-to-end packaged suites and are instead making use of a set of well-integrated tools targeting distinct business problems, bolstered by a focus on strong business processes. i2 currently ranks third in supply chain management (SCM) revenue behind SAP and Oracle by 6% to 8%.

Details on Agile and i2’s recoveries and market factors involved in future success can be found in “The Nine (Plus) Lives of Ariba and i2 Technologies.”