Transport Intelligence Reports: Manugistics Parent Acquires i2

A former class leader in the supply chain software sector, i2 Technologies, has been bought by JDA Software Group, the US company which owns Manugistics, for $346m.

The acquisition is not so surprising. i2 has been troubled by falling profits and revenue for many years. At its peak around 2000, the company had a stock market valuation almost 100 times that paid by Arizona-based JDA. A decade ago, manufacturers and logistics companies rushed to buy its inventory management and supply chain packages.

However, i2 was crushed over the past decade by the big beasts of the global software world. SAP and Oracle, recently joined by Microsoft, could not offer software that was as flexible or indeed as effective as i2, but their logistics packages came as part of their ERP or SCM software that dominates the IT architecture of large companies. The result was that i2 was cut out of the picture through the software integration process.

To compound that trend, i2 was attacked from below by small software houses with cheap, almost bespoke [customized], packages that ate away at the edges of its market.

i2 tried to strike back by offering more sophisticated solutions to more demanding customers. But that move came too late. i2 had management succession problems, with its CEO retiring last year after failing to turn round the company and then taking almost a year to confirm his replacement.

The new owner, JDA, plans to bundle-up i2's capability with its existing Manugistics products. The latter are more focused on retail and consumer products as opposed to i2's exposure to engineering-type supply chains. i2 will also expand JDA's offering through its process design services as well as giving exposure to transport management systems (TMS).

Overall, JDA plans to succeed where i2 failed by creating a larger company, with annual sales of over $600 million, that can more easily take on the big software providers with more integrated offerings. In the words of JDA's CEO, Hamish Brewer: "By acquiring i2 we double our addressable market in manufacturing to include discrete manufacturing, complementing our current market leadership in process manufacturing and strengthening our retail and transportation management presence". The question is, can JDA achieve the necessary size of business without losing the flexibility that was the essence of i2?

This report was furnished by Transport Intelligence.

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