Eduardo Gonzalez, research analyst at Frost & Sullivan, said Ariba's purchase of the collaborative manufacturing software firm Agile puts it in competition with supply chain software firm i2. However, the alliance between Ariba, IBM and i2 is already strained as IBM and i2 are signing many deals that do not involve Ariba.
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Larry Mueller, chief operating officer of Ariba, said the potential market for Agile's software would be huge. He cited Gartner Group predictions that companies, which fail to invest in collaborative systems, will be 20% less competitive than rival manufacturers in future. Gartner predicts that by 2003 the collaborative software market will be worth $18bn (£12bn) growing to $50bn (£34bn) by 2005.
Gonzalez said Agile was a good fit with Ariba as the companies had complementary customers, and integration between the two product lines would benefit these customers. Agile's collaborative software enables manufacturing firms to exchange information with suppliers and competitors.
Ariba, which paid $2.5bn (£1.7bn) for Agile this week, expects to complete the acquisition by the third quarter of this year.
Ariba formed an alliance with content management software company Vignette last week.