Timing Is Right: Works Sold to i2

Supply chain segment shakeout continues

In an announcement that helps to drive home the ever-fluid nature of business partnerships in the Internet age, i2 Technologies today announced that it has signed a definitive agreement to acquire RightWorks Corp., a partner company in the Internet Capital Group network. This is a major development not only because it is a further sign of segment consolidation, but it also brings i2 even more sharply into conflict with the i2/Ariba/IBM alliance. The addition of RightWorks' e-procurement and commerce solutions to i2's supply chain capabilities is indicative of the rise of co-opetition, in which, instead of long relationships, companies enter into partnerships of convenience, and leave those partnerships when it's to their advantage. (See the Web article N Syncra for more on this concept.)

When he addressed the Ariba/i2/IBM partnership during a teleconference that announced the acquisition, Dr. Romesh Wadhwani, i2's vice chairman, hinted at the possibility of leaving the partners out of future opportunities. Wadhwani said, With i2's acquisition of RightWorks we will have effectively, vertically integrated our procurement capabilities, which will reduce our need for additional external partnerships in this area. We currently have more than a dozen joint customers with Ariba, and each of these customers remains an extremely high priority for i2. We will absolutely continue to support them and to enhance our joint solution with Ariba for our mutual customers today and in the future. i2 will honor its commitments, in other words. But don't expect it to remain a passive participant forever. At the same time, if customers want this type of collaborative e-procurement capability that is only available from i2 today, we will of course be happy to provide that.

Wadhwani also said he expects the acquisition to affect IBM less than it does Ariba.  IBM and i2 continue to be very closely aligned, and we don't expect this acquisition to affect our relationship with IBM in any way. IBM continues to be one of i2's most important partners, and, in keeping with our commitment to open integration, we will continue to create our entire product line with the ability to easily integrate with existing legacy systems and partner products, and we will continue to support IBM as a strong partner in this and other respects.

Mary Coleman, current RightWorks CEO, said she expected the acquisition would help RightWorks draw customers  or at least to close deals with those customers who had been holding off making commitments because of the rumors surrounding the i2 acquisition. Obviously in the current markets, private company liability tends to be an issue with large corporate accounts. And certainly, given the strength of i2 and our pending acquisition with them, that will bode very, very well for our sales force with our prospects and customers. In other words, i2 will give RightWorks some credibility with the major companies who might otherwise fear that RightWorks might disappear in mid-implementation.

One company that will almost definitely be affected by the acquisition is supply chain software provider Manugistics. RightWorks had a reselling with Manugistics dating from late last year. Dr. Wadhwani said, It is highly unlikely that Manugistics would want to continue the agreement with RightWorks at this point, so we would obviously have to find ways of bringing closure to that.

Interestingly, Agile Software, acquired by Ariba in late January, has struck a deal with Manugistics, giving Ariba indirect access to the same type of supply chain software that i2 provides.