I2 appoints head, inspires user hopes for a rebound

New CEO will fill role in interim until permanent head found

Users of i2 Technologies' applications this week said they are hopeful that the installation of a new chief executive portends a brighter future for the troubled maker of supply chain software.

The Dallas-based company this week appointed one of its directors, Michael McGrath, as CEO and president, replacing co-founder Sanjiv Sidhu.

An i2 spokeswoman says McGrath, co-founder and former CEO of consulting firm Pittiglio Rabin Todd & McGrath, was chosen from several candidates. The company says that McGrath's position is temporary. Eventually he will replace Sidhu as chairman, and a new CEO will take McGrath's slot.

McGrath's background as a third-party integrator should help in i2's effort to broadly expand its consulting operation, says Ravi Vancheeswaran, director of planning for the integrated products group at ON Semiconductor. The company runs i2 Demand Planner, Supply Chain Planner and Factory Planner, among other applications.

McGrath's plan to expand i2's consulting services is also good news for ON, Vancheeswaran says, noting that "i2 has good supply chain management tools and supplier management tools, and this will bring a focus on how to extract their value for customers."

While i2 has provided ON with adequate technical consulting services to help in its effort to create a supply chain management infrastructure, it needs more business-process-focused consulting to help users further exploit the software, Vancheeswaran says.

"The next question we need to ask is, 'Where should I be holding inventory, and how can I best leverage the tools to give us the biggest bang for the buck while keeping inventory levels down and on-time delivery up?' " he says.

Another i2 user, Richard Scheerer, CIO at shoemaker The Clarks Companies, also says he is encouraged by McGrath's appointment and plans. "I2 continues to be an important component in Clark Companies' application portfolio," he said in an email.

"It appears that i2 has weathered the troubled times, and any effort to grow the company and make it a bigger player in the supply chain space is good for the current user base," Scheerer says.

The Clarks Companies uses i2's Demand Planner, Supply Chain Planner and Demand Fulfillment applications to support manufacturing and customer service processes.

While it's unlikely that anyone can rapidly restore i2 to full financial health, McGrath has a special advantage in that he is both an outsider to i2 and has some intimacy with its situation from his role on the board of directors, said Kevin O'Marah, an analyst at AMR Research.

"His interim role is not purely (to be) a temporary shepherd, but (it's) more of rescue mission to right a ship he will remain with," O'Marah noted.

Last year, i2 lost $US1.4 million as revenue slumped by more than $100 million to $389 million. If i2 can stop hemorrhaging cash and change its focus to generate business results, its technological excellence could give it the ability to drum up meaningful new business, O'Marah says. "People tend to underestimate how strong the product set is and how satisfied early customers were," he says.

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