Higher rate of acquisitions in Supply Chain solution providers: Case of i2 Technologies

As the software market matures, larger companies look to gain customers through acquisition, and smaller companies have trouble getting critical mass, as the spate of deals in the last 18 months indicates. Among the big ones, i2's recent strategic moves can be mentioned as a good example: The once high-flying company stumbled badly at the end of the technology bubble, but under CEO Mike McGrath has now achieved three consecutive profitable quarters and dramatically improved its balance sheet. Once a frequent acquirer, RiverOne “is the first acquisition for i2 in several years,” noted McGrath.

The company announced this week it has acquired the assets of RiverOne, primarily an on-demand provider of software solutions that offer visibility, ecommerce and collaboration capabilities to the contract manufacturing market. What attracted i2 was both the multi-tier nature of the functionality, and RiverOne’s customer base, said Mike McGrath.“It’s the multi-tier nature that’s really different,” McGrath said.

“Our current products can do some of that, but RiverOne has a number of live, satisfied customers.”Multi-tier visibility or collaboration means the “channel master,” and perhaps other supply chain participants, can collaborate and have visibility beyond their direct trading partner relations. So, for example, an electronics OEM can see the purchase commitments and delivery status of the components purchased from suppliers by its contract manufacturer. Dell and other electronics companies have been building such capabilities for several years, though it is far from universal, and still relatively immature in its application even in most companies embracing a multi-tier solution.

“We believe collaboration is still very immature in the marketplace, but will be an essential element of next generation supply chain,” said McGrath.While the RiverOne solution has been targeted primarily to the electronics and contract manufacturing market, supply chain changes in other industries, such as offshoring and outsourcing, means these kinds of capabilities likely will also be of value there.Acquiring just the assets (software, intellectual property, etc.) means i2 will have to re-sign existing RiverOne customers and hire RiverOne employees. “We’ve had a lot of success on both counts in the last 2 days,” McGrath said.

(Source: SupplyChainer.com)