i2 Technologies says it's on the mend

Having completed an extensive reaudit of its finances dating back to 1998, supply chain management software maker i2 Technologies Inc. says it is moving ahead with its turnaround plans. That was the message in Orlando at the Directions 2003 i2 User Group conference, where company executives outlined their strategy for the next year.

"The difference is night and day," said I2's Chief Executive Officer Sanjiv Sidhu, who discussed the reaudit yesterday during an interview. "Life is totally brighter after the reaudit. We had strong support from the existing customer base. That is what has brought us here and left us standing quite strong."

He also said a number of potential customers who were awaiting the reaudit to be completed are now likely to close deals.

There are other bright spots, Sidhu said. The company has achieved its goal for 2003 of becoming more efficient, reducing its cost structure by 30 percent, while improving customer satisfaction and product quality. The next step in 2004 will be to "return to growth," he said.

As part of the plan, the company is pointing to the next iteration of its product, i2 Six.One, which will come with a series of prebuilt workflows that connect operations across a company's various departments and enterprise resource planning systems. The product should enable what Sidhu called "closed loop" supply chain management.

One of the major enhancements to i2 Six.One is an ability to monitor the execution of a supply chain management plan and make adjustments dynamically as conditions change. "It enables real-time corrections of a plan," said Sidhu. "If my plan is to sell 10 units a day and I just sold five, I find out why did I sell five and decide what action to take to sell 10."

A number of users expressed relief that the corporate audit was over and were upbeat about i2's long-term prospects. The board of i2's user group "saw it as a distraction, but ... a necessary thing that had to happen," said Gene Hunt, chairman of the Atlanta-based i2 User Group's board of directors. "We were supportive, because we knew on a user-group level, we can't exist without i2."

He noted that, despite its troubles, the company still put money into research and development for strategic updates to future releases of the product. The board is no longer worried about i2's long-term viability and the loss of their companies' supply chain management investments. While noting that i2 is getting the "engine fired back up in 2004 for going out and selling," Hunt said it may take a while to close deals with some customers, as supply chain management purchases often take several quarters to complete.

"Users are cautiously optimistic," said Larry Lapide, an analyst at Boston-based consultancy AMR Research Inc. He noted that i2 got through the audit and has implemented structural changes to make sure any mistakes won't be repeated. It's important now that i2 starts making a profit, he said.

"The next piece is that customers want to see financial viability," Lapide said.

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