Ariba to end collaboration with i2

Ariba Inc. will end its collaboration with i2 Technologies Inc., as the company does not see a viable future for online marketplaces.

“We will focus on procurement, supply chain management and CPFR (collaborative planning, forecasting, and replenishment). These are areas in which i2 is our direct competitor and I don’t see why we need to work together,” said Ariba Chairman Keith Krach in an interview on Wednesday.

Krach and Larry Mueller, who replaced Krach as CEO of Ariba last week, are both on a European tour to talk to customers and the press.

Ariba is active in an alliance that creates online marketplaces with i2 and IBM Corp. One marketplace the companies have created is the WorldWide Retail Exchange (WWRE), a trading hub for retailers and more than 100,000 suppliers, partners, and distributors. Krach said Ariba would continue to support existing marketplaces created by the alliance.

“Marketplaces won’t be successful in the near term. Our relationship with IBM will stay in tact, as will our contacts with Microsoft in the UDDI (Universal Description, Discovery and Integration) directory project,” Krach said.

Mueller said in a separate interview that he thinks only “a few industry exchanges (such as the WWRE) will be successful” and that i2 is “a great company” for advanced planning systems in the SCM (supply chain management) field, but “Ariba will own the procurement of all goods and services.”

“Private exchanges will be pervasive. That’s one single enterprise reaching out to all their trading partners,” said Mueller, adding that companies active in an industry marketplace will also have their own private marketplace.

In a few lines Mueller positioned all his competitors in other markets, leaving procurement as Ariba’s domain.

“Oracle (Corp.) will continue to do very well in the database business and some of the applications business. SAP (AG) will try to hang on to their large enterprise customers and continue to sell them as many applications as they can. Siebel (Systems Inc.) will do very good in the front office, establishing stronger customer relationship,” he said.

Commerce One Inc., another a business-to-business software vendor, will likely be bought by German software giant SAP AG, Mueller said.

“Commerce One just had to borrow US$25 million from Microsoft. They haven’t been cash flow positive ever, they have a very weak balance sheet, and they’re very tied to SAP. It seems obvious to me that SAP will buy them,” said Mueller.

Commerce One denied that a takeover by SAP is in the works.

“The rumor has been going around for a while, but SAP won’t buy us,” said Chris Phillips, director of marketing at Commerce One for the Europe, Middle East, and Africa (EMEA) region. “Ariba has failed and publicly pulled out of the electronic marketplaces arena. I think there are some sour grapes there,” he said.

Commerce One is in good shape, according to Phillips.

“We are the leader in marketplace infrastructure, Microsoft and SAP have recognized that and are working with us. We have been gaining in market share and revenue has been growing,” he said, noting that the market Ariba is focussing on, the procurement market, is extremely competitive.

Nobody at i2 was available for comment.

Ariba, in Mountain View, Calif., can be reached at I2, in Dallas, can be contacted at

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