By Siobhan Kennedy
IBM Corp has set out after the supply chain market and has struck a deal with i2 Technologies Inc, the biggest player in the field, under which the two will co-market IBM hardware and i2 applications to large and mid-size manufacturers. There is no resale agreement, except in Japan, where IBM has some experience selling proprietary local language solutions. Getting i2 on board is an important link in IBM’s plan to be able to offer customers the leading ERP, supply chain, CRM and business intelligence applications. And while the ERP market may be in free fall, supply chain and CRM are firing on all cylinders.
Under IBM’s first supply chain relationship the two companies are committing to form dedicated sales teams to cross-sell IBM/i2 supply chain solutions on all of IBM’s server and mainframe platforms, according to John Wilson, IBM’s director of business development for supply chain. The product package will also include integrated IBM middleware such as MQSeries, Websphere application server and Tivoli TME network management software and Lotus Domino.
As with all things IBM, Wilson said the drive behind the i2 partnership is e-business and manufacturers’ desires to web- enable their supply chain applications to better serve their partners, suppliers and customers. First it was the ERP implementation, but now companies have that house in order they’re looking to transform their supply chains from push to pull, upstream to suppliers and downstream to customers. He added: It’s about really fine tuning the supply chain so that you can deliver exactly what customers want when, how and where. He declined to say how much revenue IBM expects to make from the partnership, other than that the company views the market as a significant revenue opportunity.
The two will target large to mid-sized manufacturers (those with around $1bn in revenues a year) in four key sectors: automotive, consumer packaged goods, retail and hi-tech electronics. Even though IBM has publicly stated its intention to get more applications onto the AS400, Wilson denied that was the aim of the i2 tie-up. He said that IBM is absolutely interested in growing platform revenues, but added that alongside RS/6000 and AS/400 customers, the company also expects a lot of business from Intel Netfinity shops. Of the manufacturers being targeted, Wilson said the majority were likely to be IBM customers already, with a mixture of two, three or more platforms, but less likely to be existing i2 customers.
Wilson said that IBM and i2 have a long-standing history of working together claiming 200 joint customers but only on an ad hoc, as required basis. Having those joint customers was one of the reasons IBM decided to partner with i2 over other supply chain vendors, such as Manugistics Inc. In addition, Big Blue was already using i2’s software internally and was very excited about the success it had so far achieved, he said. It’s all been bottoms up and driven by customer specific opportunities, he said, now we want to make it tops down and actively seek out those customers.
Although the deal isn’t exclusive, Wilson added that the partnership with i2 was a significant step forward for us….a very natural extension to our existing relationship. Big Blue has one supply chain alliance, announced in June, with ERP vendor JD Edwards and Synquest Inc. But it is only aimed at discreet manufacturers, Wilson said, which he added represent a sliver of the market. This is a more pervasive offering, he said, aimed at multi industries all over the world.
The fact that it is non-exclusive means that IBM is certain to try to sign similar deals with other supply chain vendors over the coming weeks and months to coincide with this latest push into the sector. Areas such as warehouse management, shipment management and software to track and trace products are some of the potential gaps it will look to plug by partnering with best of breed vendors, Wilson said. Alliances could be announced within the next four, six or eight weeks, he added.
Although there are no joint development plans between the two companies, Wilson said that IBM and i2 development teams would work to push standards in the supply chain sector. At the moment, the way to make enterprise systems (i2, SAP, Oracle) talk to each other is largely down to proprietary software hooks written by systems integrators. That’s fine within the enterprise, but what happens between enterprises or when talking to customers? he said. Developing those standards and helping to facilitate vendor interoperability will be central to IBM’s supply chain strategy, Wilson said.
