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Las Vegas

i2 Becomes Me Too

In Las Vegas, this week, Sanjiv Siddhu joined the brigade of former geniuses who are now wearing sackcloth and promising penitence. "We will execute better. We will delight our customers." The language came straight out of the business self-help literature. Let's hope that what they actually do has more nuance and precision.

4,000 attendees (claimed), but only 2300 seats at the kickoff session, many unfilled. Significant presence of CPG/retailers, definitely interested in buying traditional value chain software. Many customers getting up and saying, "This worked," though both VF and Chrysler used other software heavily, and the Chrysler presentation actually showed Dassault software, not i2's.

No one saw any upturn in the economy, though there seems to be some firming in the pipeline and some speed-up in the glacial pace of deals.

Bottom line. i2 is not dead and they're not in immediate danger. There's a product. There are buyers. There is a need. Yes, they're losing $50 million a quarter. But somehow or other, that will stop. In the next two quarters, reorganization and reform will reduce waste and give activity some semblance of order, just as they did at Oracle, PeopleSoft, and even JD Edwards.

Beyond that, there is worry. As Greg Owens, said, it takes longer than 6 months to turn a company around. The cultural and organizational changes proposed are profound, and it will take months just to think through all the details, much less have them make a difference. The entire sales method probably needs to be rethought, and that is a risk all by itself.

Craig Conway and Owens did it, but remember that Sanjiv won't be reforming during a technology bull market.

No matter what Sanjiv does, therefore, you won't have solid evidence about what the new company can really do for at least a year. You can bottom fish, or bet on a lift from better expense management, but you won't have really know what the lift portends.

Here's what Sanjiv envisions. There is a new, Japanese COO named Sam Nakane, who will be responsible for operations. There is a new product head, named Pallab Chatterjee, who will run development. The entire company will be focused on customer satisfaction. The company will set aside its big deal, big change mentality and sell mature products in bite-size chunks. This means more, small deals into the installed base and far fewer transformative deals.

Nothing new here. All the faltering software companies have tried these things, more or less effectively, in the past two years.

Are Nakane, an ex-SAP, ex-IBM executive and Chatterjee, who was CIO at TI, the right people to do it? Clearly, neither Nakane nor Chatterjee have deep experience with American software companies. Neither, for instance, seems to have studied what worked and what hasn't in other recent software company reform projects. But they can learn.

The underlying theory of this kind of reform is that arrogance, carelessness, and disorganization cause a company to lose touch with its customers and increase the cost of doing business with them. Fix the problems, a la PeopleSoft, and the customers will come back. As one senior i2 executive said. We went from $500 million to a $1 billion in a single year. We couldn't deliver that much value in so short a time. We're still paying it off.

True enough. But there's another theory. Sanjiv sells transformative software. Too often, the software hasn't transformed. The software could transform, could return huge value. But it hasn't. Maybe, the theory runs, there is a problem in the whole way i2 approaches transformation. It's not a deadly problem, because they do succeed sometimes. But there is still something fundamentally wrong, which needs to be fixed.

If that theory is right, then abandoning visionary leadership for soft mea culpas is a serious mistake. In that case, people still want leadership from you. If you haven't succeeded in helping them so far, they want you to figure out what is wrong and then go and help them. If there have been craters in the road, fill them in, don't just go the me too route.

More on why I think this problem exists, what i2 needs to do about it, and what customers seem to be thinking, in the second of these articles.

See also our other recent Short Takes.