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New i2 chief starts the clock ticking

Giving himself 120 days to turn things around, Greg Brady explains how he plans to transform the business-to-business software maker.

 

  
   
New i2 chief starts the clock ticking
By Melanie Austria Farmer
Staff Writer, CNET News.com
May 15, 2001, 1:30 p.m. PT

This is no time for "Brady Bunch" jokes.

Two weeks into his new job as CEO of i2 Technologies, Greg Brady is on a mission to transform the business-to-business software maker so that everyone--from sales to marketing to customers--can get on the same page.

It couldn't have happened sooner. Many of the companies competing in the business-to-business arena, including i2, Ariba and Commerce One, have taken hits. Most have churned out disappointing financial results amid a broader economic downturn that has made customers cautious about technology spending and caused many technology providers to stumble.

For i2, which makes software that helps companies better manage their suppliers and inventory, delayed customer purchases attributed to an earnings miss in the first quarter. Sales for the second quarter also are expected to come in lower.

While some analysts believe i2 is in better shape than most of its competitors, others say the company is in need of changes and, in some ways, is still feeling the heat from the problems made public with its high-profile Nike implementation. That incident--in which the shoe and apparel company put partial blame on i2 for an earnings shortfall--sent the software maker's shares on a downward spiral and started investor lawsuits flying.

"The specter of what happened with Nike is still haunting i2," said Joshua Greenbaum, an analyst who heads Enterprise Applications Consulting. "It came at a time when the threat of recession was hanging over IT budgets. The idea of i2's (software) costing millions of dollars, taking months and months to install, and then to have it put your company at risk is a very scary prospect for companies.

"Right off the bat, (Brady) really needs to reassure customers and prospects that if you implement i2, you're going to get where you need to go within reasonable cost and a rational time frame," he added.

I think (the Nike episode) has kind of been beaten to death in the marketplace...There were some delays in the project that were based on some advance things Nike wanted to do. Supply-chain software, which is at the core of i2's business, has often been described as complex, sophisticated and costly, but a necessity for all types of companies that want an easier way to automate the process of buying goods and tracking, scheduling and planning inventory. Though supply-chain automation software has been around for years, it made a huge splash in the last year with the boom of consortium-type marketplaces, or industry exchanges.

In recent months, demand has shifted from big-bang industry exchanges to the creation of private marketplaces needed by companies that hope to automate transactions with their own suppliers. i2 and its rivals are actively tapping the more lucrative private marketplace arena, helping companies conduct business with their own set of partners, customers and suppliers over the Web.

Brady served as president of i2 from 1994 until his appointment as CEO earlier this month. Under his leadership, i2's revenue grew from approximately $11 million in 1994 to $1.1 billion last year. Last week, the 40-year-old CEO detailed what he's calling a 120-day program to get the company's new game plan on course, which includes reorganizing its sales force and the creation of new product marketing efforts.

The Indianapolis native is under pressure to show the industry that a new leader is going to make a difference at Dallas-based i2 and that the promise of supply-chain software is anything but dead.

Despite the lull in the once bustling business-to-business sector, the new chief has his eyes set on more boom than bust. Brady, who was once vice president of worldwide applications for Oracle, recently talked with CNET News.com about the future of the business-to-business sector, the real deal behind Nike, and his take on i2's competition, or what he calls a lack thereof.

Q: Everyone agrees that i2 is going to need to make some changes. Most companies looking to really reinvigorate a company will frequently look outside

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 New i2 CEO claims benefit from slowdown
Greg Brady, CEO, i2
the company for new ideas. Yet i2 chose you, a longtime veteran, to lead it. How are you going to use the CEO office to do things differently than you did as president?
A. We grew the company with really no outside venture capital funds at all. Because of that, we had to grow the company without a lot of management structure. Everybody basically ran their own thing, and I coordinated it. Now we're a much bigger company. Based on the heritage, there's been a lot of kings in their kingdom, and the company has somewhat been out of line, and we had three senior managers--myself, a vice chairman and a CEO--who looked to the company as getting different guidance.

We worked really well as a company. Most software companies are run really well, but at the end of the day you have to have one leader that's making the decisions and moving forward on those decisions. In this role, that gives me the opportunity to really do that--to get clarity and vision from all employees and, therefore, execution around that vision.

What is the most pressing thing for you right now? What are you going to tackle first?
Our single biggest challenge has nothing to do with the hard stuff, really. We have the broadest product footprint in the world. We're in the five hottest marketplaces in the world. We're either No. 1 or No. 2 in each one of those marketplaces.

Where we have the problem is really alignment of conveying the message most effectively to our sales force and conveying our message most effectively to the marketplace. Because we are in so many different products, we appear disjointed. The biggest challenge I have right now is to change that--to get the customer and the sales force to pull a requirement out of product marketing, which pulls it out of development, and therefore we deliver on what everybody wants. That's not necessarily how it runs today, but that's how it will run here shortly.

How do you plan to set the company on this new course?
I have a very formal process that we're going through. It's really a transformation process that I've defined. In a nutshell, what it is, is a session in which I first gained concurrence on the common vision with my executive team; that's actually happening on the 18th and 19th of this month. From that, we define an organizational structure that allows us to create alignment around that agreed-upon vision to the market. That level of structure is what's going to make i2 significantly different than what we are today.

Like I said, the tough stuff to do in the software business is to get a product, second is to build a distribution channel, third is to build a sales and implementation methodology that delivers value on your products to your customers. Those three things we're best known for. If I can take the power of what we already have and align the organization around the proper amount of marketing and conveyance of that concept and get 100 percent of our efforts focused on our competition and delivering value for our customers, it can really turn the company on its ear as far as driving value.

Personally, I think the Aribas of the world are based on a flawed business model. They're going after things that don't matter to companies. The last part of the strategy, though, is that as a company now, we've got so much to offer and we've had so much success that it's time where we engage very large companies to take a solution out to the market, the next level and the next generation of opportunities.

Part of our vision as a company is to engage our customers directly into our product, marketing and development process to really think outside the box, forget about how things have always been done--let's talk about how things could be done and i2 will provide the technology and the services necessary to support making it happen.

You've been credited with being a driving force behind i2's aggressive acquisition strategy. Do you plan to continue on that acquisition strategy, and if so, how do you do that in a down market?
Our strategy as a company is to slow down in the acquisition effort. Anything we would buy would be most likely...built to work with ERP (enterprise resource planning) systems, not built to work with these new (dynamic) systems. So the only acquisitions you'll probably see us do are point solutions that help drive that new backbone solution.

(Editor's note: ERP systems enable companies to automate complex back-office business needs, such as accounting, order entry and human resources.)

When the Nike news came out, that hit i2 pretty hard. Investor lawsuits followed. What really went wrong with that project?
I think that's kind of been beaten to death in the marketplace over and over again. There were some delays in the project that were based on some advance things Nike wanted to do. We agreed to do those, and consequently, since then (the company) has had success at Nike. We work closely with Nike. We're still working with Nike, we're still a good partner with Nike. We hope to drive a lot of additional value at Nike. I think they would say they hope the same thing. Honestly, all that's behind us. Nike and i2 are doing really well together.

What's your take on what really happened with the glory days of B2B, especially the boom days of public exchanges?
I think people figured out there wasn't a lot of value in a public marketplace as the technology was designed today. People were focused on auctions. Auctions are a short-term advantage. You're going to auction around buying products from customers and from suppliers once or twice over the next five years, and you're going to select business partners out of that that you're going to do business with for an extended period of time. That was interesting, but it really didn't add a whole lot of value.

And then (companies) focused in on indirect procurement. Well, pens and pencils bought cheaper across the Web doesn't do a lot to drive business to your company. I think there will be a resurgence, and some of the marketplaces will be successful--those that have business models that are focused on offering services that drive significant value to all of their participants. I don't want to name who the ones that we think they are now, but I would contend in my crystal ball there's a few of them over the next six months that will make pretty good headway.

But, more importantly, what really came out of that market trend was that people quickly figured out they didn't want to offer up what they were doing internally to all their competitors in a public market. So i2 has had huge success with a lot of private marketplaces--Dell, Northern Telecom are good examples, where they've got themselves, their suppliers, their customers all running on a marketplace together. Most of them are figuring out, Why do I want to teach others how to do what it took me awhile to learn how to do effectively internally?

What is the future of B2B?
There will be public and private services in a marketplace. Differentiating it on "is it public or is it private" is crazy. There will be ways in which you can do things private in a marketplace or you can get public services that a marketplace offers. The example is, if I'm moving freight from point A to point B and freight is not core to my business, and I want to do it at a better price and a better delivery service, I'd like to go to a freight service over the Web that already has all the carriers there and bid out who I need to move that product for me at that point and time. So I'm going to see services such as freight, financial services and content processes that will be loaded out as public service offerings that people can use because it's just cheaper to get it somewhere else than to try to do it yourself.

What is your timetable for getting things turned around at i2?
I'm announcing a 120-day plan tomorrow (last Thursday). I'd like to point out, it's not really a turnaround. i2, in a down economy, has achieved a lot more success than just about anybody else in our space, or in the B2B space as a whole. We beat revenue estimates in the first quarter. I'm walking into a role where the company is doing pretty well and the things that need to be fixed are easy to fix. We're in a good situation.

i2 has often been lumped together with competitors such as Ariba, Commerce One, Oracle and SAP. Five years down the road, which companies will i2 be competing closely with?
Somebody that's not on that list. Personally, I think the Aribas of the world are based on a flawed business model. They're going after things that don't matter to companies. I think the Oracles are anchored down by their installed base of old ERP implementations and will have to carry that installed base forward, and therefore they will have trouble managing both current customer expectations and being able to compete effectively in the marketplace. The competitor five years from now is not named on your list.

(Our competition will be) somebody who figures out that the concept and the processes defined in the '60s that today are considered ERP are no longer valid concepts. It'll be interesting to see whether the ERP vendors are smart enough to understand their own problems. I don't have much fear in the people like Ariba; they've got a very slim product footprint and not much to compete with.

It's a great question. If the ERP guys get smart, it's them; if not, it's going to have to be somebody that catches up to i2, which is going to be difficult to do with the head start that we have.  

    
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