i2 Technologies Inc has revealed some sparkling results for its third quarter, with no evidence so far that SAP AG’s supposedly imminent entry into the supply chain market is causing i2 any problems at all. Third quarter net profits rose 121% to $7.2m on revenues up 62% at $94.1m and according to chief executive Sanjiv Sidhu, the fourth quarter is now shaping up to show even stronger growth. In early September, SAP announced it was moving into the supply chain market with its Advanced Planning and Optimization (APO) module, due to ship in December. Straight away, software analysts began to voice their concerns about the future of specialists like i2 and Manugistics Inc. And it isn’t just SAP that i2 has to watch out for. With year 2000 spending putting the squeeze on customers’ software budgets, all of the large enterprise resource planning vendors are fighting over a diminishing pot of funds, forcing them to look towards new markets. But at the moment, all i2 is seeing is an increase in the volume of hot air. From the ERP companies, we faced increased rhetoric but this did not impact on our deals significantly, said Sanjiv Sidhu. The ERP vendors are struggling to copy i2’s supply chain offerings, Sidhu said, and i2 would continue to stay ahead by investing in development. Conscious of the fierce competition, Sidhu said his management team hadn’t been waylaid by the world’s economic doldrums and had continued to pour funds into research and development. Additionally, i2’s annualizes revenues are now approaching $400m, making it significantly bigger than any of its traditional supply chain rivals. i2 has now sold licenses to 10 of the world’s top PC manufacturers including Compaq Computer Corp, Dell Computer Corp, IBM Corp and in the most recent quarter, an $11m deal to license Hewlett-Packard Co. Sidhu said SAP had been conspicuous at tenders involving simple manufacturing processes like consumer packaged goods. But for the complex manufacturing tasks, such as those found at the HP tender where new products are rapidly introduced and stock obsolescence is a massive worry, i2 said there was still no sign of the ERP crowd. How much longer this can continue remains to be seen.
