Users keep faith as i2 plans major revamp

Supply chain management company i2 Technologies is embarking on a major revamp of its software and corporate structure to improve...

Supply chain management company i2 Technologies is embarking on a major revamp of its software and corporate structure to improve revenue and stop a string of quarterly losses.

i2 announced plans to slash its annual operating costs by about 30% through moves such as closing facilities and laying off up to 1,400 of its 4,800 employees.

i2 also said it will move more of its development work to India, reduce the number of systems it supports and prune some of the less central components of its product line.

The cost-cutting initiative follows a net loss of $757m (£481m) on revenue of $119.6m (£76m) during the second quarter. Sanjiv Sidhu, i2's chairman and chief executive officer, said that the company is "intensely focused" on becoming profitable and hopes to get operating expenses in line with revenue by year's end.

Karen Peterson, an analyst at Gartner, said the layoffs may pose a risk to i2's customer satisfaction levels, especially with users who are installing its software now. "What could happen is that those customers in active implementations could be hit with consulting turnover," she said.

Meanwhile, the supply chain applications sold by enterprise resource planning software vendors such as SAP and Oracle are good enough for many companies, Peterson said. i2 needs to integrate its applications better so they can interoperate without coding by users. "This is a high-risk time for i2," Peterson added.

The company will offer tool kits to help users integrate its products. i2 is also doing in-house integration work, and chief marketing officer Janet Eden-Harris said that one of i2's goals is make a tighter connection between its planning and forecasting applications to its supply chain execution software.

Despite the rough times, users expressed continued faith in i2. Sandie Foster, a director of the i2 User Group and marketing manager at IT services firm SBI, said she has "every confidence in i2" in light of the restructuring and management changes.

Foster said the return of co-founder Sidhu as i2's chief executive officer and the promotion of Sam Nakane to chief operating officer in April as positive steps for the company. Sidhu had given up the chief executive officer job last year, though he remained i2's chairman.

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