I2 users concerned about vendor’s finances, future

Attendees at i2 Technologies Inc.’s recent annual user conference said the struggling software vendor has made noticeable improvements during the past year in how it treats customers. But a half-dozen users expressed misgivings about the myriad financial and legal challenges facing i2.

The Dallas-based company’s woes deepened just four days before the i2 Planet 2003 conference began, when Nasdaq delisted its common stock on May 9. That move followed five straight quarterly losses for i2, disclosure that the supply chain vendor is reauditing its financial results as far back as 1999 and the news that the Securities and Exchange Commission is investigating its accounting practices.

Blake Kresl, manager of technology at Southwest Airlines Co. in Dallas, said business executives at the airline have taken note of the unanswered questions about i2’s finances. Because i2 and Southwest are based in the same city, the vendor is “constantly in the morning news,” he said. “So whenever a story hits, we’re asked about what’s going on. Obviously, being so public, it’s a concern.”

But, Kresl added, he remains confident that, “in one form or another, the applications we want will keep going.”

“Certainly, there is a concern about the delisting and the financial problems,” said George McAfee, supply chain project manager at Cooper Tire & Rubber Co., a Findlay, Ohio-based manufacturer that runs i2’s production scheduling and transportation management software. “We’ve put a lot of money on the line and have high expectations from (our senior) executives.”

But McAfee said i2’s problems won’t stop him from buying more of the company’s software. And like other users at the conference, he said he has seen a positive change in the way i2 operates since it overhauled its senior management in April 2002.

Before the reorganization, McAfee said, i2’s leadership was “more focused on growing the business at all costs and trying to sell the software to everyone in the world, instead of nurturing the existing client base. I think the mission was very shallow, and that’s why it failed.”

Kresl also said i2’s attitude toward users has improved. “There was a little bit of hubris (before),” he said, adding that i2 is easier to work with now and is more willing to acknowledge and address shortcomings or bugs in its applications.

“They’re not looking at selling back into the company, but at making a success out of what they’ve already sold us,” Kresl said. Southwest uses i2’s parts management and demand-planning software.

“The last year has been a challenge for i2,” said Janet Eden-Harris, i2’s chief marketing officer, during a speech. “But it’s a stronger company than it has been for the last several years,” she added, referring to the management changes as well as downsizing moves, new product rollouts and improving customer-satisfaction rates on i2’s surveys.

Even so, the combination of the SEC investigation, the reaudit and the stock delisting continues to weigh on i2. Some users said the reaudit process, which is due to be completed next month and is expected to lead to a restatement of i2’s financial results for several years, will be a key milestone for the vendor.

“We watch our critical trusted suppliers very carefully, and at present, this is not satisfactory for anyone,” said Jeff Poole, senior vice-president of procurement strategy at Airbus SAS, a Toulouse, France-based aircraft maker. “We’ll wait and see what happens when the (reaudit) report is issued – not that anyone is particularly expecting any difficulties around that.”

J.B. Hoyt, supply chain project director at Whirlpool Corp. in Benton Harbor, Mich., said via e-mail that i2’s management has said the reaudit should have a “benign” affect on the vendor. If the conclusion of the process “is negative, then we will all have to assess the outcome at that time,” said Hoyt, who didn’t attend this week’s conference.