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
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
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
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
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
See also our other recent Short Takes.