Software players i2, Aspect to combine

By Staff -- Logistics Management, 4/1/2000

In the largest software merger to date, i2 of Irving, Texas, and Aspect Development of Mountain View, Calif., announced that they would join forces to offer solutions for building online supply chain communities. Under the deal's terms, i2 will plunk down $9.3 billion in stock for Aspect. In a related development, i2 agreed to purchase Supplybase Inc. of San Francisco in a $380 million stock swap. Supplybase provides databases for electronic catalogs.

i2's acquisition of Aspect and Supplybase will allow the company to offer more business-to-business electronic commerce applications. Demand for so-called "B-to-B" software has increased as companies rush to form online exchanges with their trading partners. The creation of these supply chain communities composed of partners collaborating to reduce inventories may well transform logistics operations.

In recent months, trading partners in several industries have begun to construct online communities for purchasing and other collaborative activities. Ford Motor Co., General Motors Corp., and Daimler-Chrysler, for example, announced plans to build a huge Web-based procurement site that would encompass all automotive suppliers.

Other industry groups also are building online communities. Last month, more than 50 major consumer-products companies, including Procter & Gamble Co. and NestléS.A., announced that they would team up to create an Internet marketplace. That's no surprise to industry analysts, who project that businesses will construct up to 1,000 such exchanges by year's end.

i2 already provides a framework for exchanges, dubbed "TradeMatrix." The company says that the addition of Aspect's and Supplybase's products to that platform will allow it to provide increased functionality, from design collaboration to the strategic sourcing of materials.

Although i2's acquisition of Aspect will allow it to offer product development software, the company still lacks Internet procurement capabilities, says analyst Steve Banker of ARC Advisory Group in Dedham, Mass. But that may soon change: i2 has announced a partnership with Ariba, a leader in e-procurement software, and IBM, which provides consulting services in that area.

Research Director Jim Uchneat of Benchmarking Partners in Cambridge, Mass., says buying Aspect will allow i2 to include contracting capabilities in the exchanges it builds. That's critical, he adds, because the online exchange marketplace is headed in that direction, and Aspect has been a leader in developing contracting processes.