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A big fat geek wedding- JDA weds i2

On Nov 5, JDA Software Group announced its plan to acquire i2 Technologies  in a cash and stock deal of $396 m. The merger is said to bring in net annual cost synergies to the tune of $20m and help elevate JDA as a leading supply chain management software company with combined revenue of $617 m and EBITDA of $179 m. Unlike last year, when the much touted deal broke off due to JDA stating inability to borrow money, this time around, the deal  has been structured to ensure a high degree of completion certainty (through Plan A- Intended Structure and Plan B-Alternative structure). The deal is expected to close by Q1 of 2010.

JDA has a history of acquiring market leaders such as Arthur, Intactix, E3 and Manugistics and has successfully used these acquisitions to firm its footprint in retail, process manufacturing (mainly food and beverage with some foothold on consumer goods) and transportation space. Manugistics aquisition in 2006 helped JDA expand from Retail to process manufacturing (which accounts for roughly 50% of the overall manufacturing space). The other half is accounted by discrete manufacturing, where i2 has a stronghold. In addition to that i2 brings in strong solution in the transportation management space and managed services model. Through this acquisition, JDA would be able to offer a solution that links the extended supply chain through an integrated suite of planning, execution and optimization solutions. In addition to product offering, JDA would be able to leverage from i2’s focus on service based offering such as on demand capabilities and managed services.

JDA brings in strong marketing focus. For example, before JDA acquisition, Manugistics was facing the problem of customers showing unwillingness to upgrade to their latest 7.x version due to perceived product performance issues, leading to loss of upgrade revenues. JDA has done well in terms of stopping Manugistics customer defection. At one point in time every CPG/F&B company I knew was in the process of evaluating SAP APO as replacement for Manugistics, but now I am hearing about more companies going the Manugistics way, even in the retail industry where JDA Arthur/E3 products have had a stronghold traditionally. This leads me to believe that post acquisition, i2 will experience similar upturn in sales through JDA’s marketing and cross-selling abilities (JDA and i2 have 133 common customers as of today from a customer base of more than 6000).

What does all this mean for Infosys? Infosys has deep supply chain and domain expertise in Retail, CPG/process manufacturing and discrete manufacturing space, and package expertise in JDA/Manugistics and i2. We are structured in a way that every functional consultant gets to work on multiple packages within similar process areas- for example, a demand planning functional consultant can get to work on JDA/i2/SAP/Oracle. If i2 and JDA evolve towards a similar architecture, functionalities and look & feel, I believe, this would flatten the learning curve to pick up a new product, while at the same time provide exposure to an increased breadth of industries. We would also be able to gain synergies through merging our JDA/i2 Center of Excellence which would help our consultants and clients turn around implementation, upgrade and support projects much more quickly and effectively.


Insightful piece Venky. What I'm curious would be to watch how this dovetails to JDA's plans on reviving the Manugistics brand (which never went away in the last 2-3 years).
Secondly, while i2 has reduced product clutter quite a bit, there are still vestiges of a lot of older adventures that still need to be supported (production scheduler, product sequencer, strategic sourcing, which is essentially a spend analytics tool etc).
What will be the new i2 under JDA be known for? as a vertical specialist in hitech? as a platform player with ABPP? may be a revival of the older glories in core SCM like MP, DF, DP etc.? Where would that leave newer success stories like retail planning, MDM, TMS etc?
JDA's product roadmap for i2's current basket would be interesting to watch, to say the least.

Thanks Gopi. You may be surprised that Manugistics brand has been almost completely replaced by JDA brand in the client and consultant community. I remember in 2006 when Manugistics acquisition happened, our clients automatically started calling it JDA instead of Manugistics. At first it seemed kind of odd, but very soon it caught on. I believe the JDA brand usage was repeatedly enforced by JDA marketing folks with their client community. But now I hear they are consciously trying to revive the old brands, which means i2 brand will also likely be retained.

On the product front, JDA is yet to start thinking about the product roadmap. It will be interesting to see how things unfold.

Venkat, it's interesting when you say "If i2 and JDA evolve towards a similar architecture, functionalities and look & feel, I believe, this would flatten the learning curve to pick up a new product". I agree and also think that such a possibility will have impact not only on SIs, but also on the user base and competition. The entire eco-system of the industry needs to be prepared to face such a scenario. I have elaborated this thought in my post 'JDA i2 acquisition: 3 point view'.

Thanks for your comments Kirthi. You are right, the stakeholders are SIs, users and competitors. However, I feel the users will be most affected because when look and feel of i2 changes they will need to get used to it. By the way, I read your blog, it provides a very interesting 360 degree view of the merger.

It would be interesting to see how this acquisition shapes up the advanced planning market. Given the way Manu has shaped up after being acquired, i2 may also be on the upswing. This would give i2 the much needed stability. So is it the beginning of a 3 pronged competition between SAP, Oracle and JDA especially in the Advanced Planning market looks to be seen. For last few years the ERP vendors were scoring certain points based on their financial stability as compared to the best of breed.So there would be quite a bit of competition to the ERP vendors especially in the manufacturing vertical given i2 strength in the same

You have provided quite a few very interesting and useful facts in this article, Venky - thanks for enlightning us.
Strangely enough both the i2 and JDA board have very distinctively mentioned about the $20m cost savings factor this acquisition is going to ring in, more than JDA's enhanced product lines !!
This sounds to me as a case study where a M&A is driven more by the cost realization rather than the combined market share.

Gives a good insight Venky. After reading the article and looking at MANU now - I realise that it is in fact a 'slim and trim - sure to last long' wedding :)

Thank you Amit and Sreeroop for your inputs. To add to Amit's point , the consolidation of vendors will bring financial stability to the best of breed segment, in addition to product standardization and cross-pollination of best practices, resulting in their competitive advantage over ERP vendors. As for Sreeroop's point about this deal being driven by cost savings alone- my take on that is a bit different. Cost saving is an added bonus, but the real benefit is market coverage of complete manufacturing space(discrete and process). Thanks Amit and Sreeroop for providing your points of view.

Prabu, thanks for leaving your comment.

I realize that when you say "slim and trim" you were contrasting it with my title "Big Fat..". However, do you realize that your statement has much more depth to it than you might have intended? :-)

JDA has 2 modules known as ASR (Advanced Store Replenishment) and AWR (Advanced Warehouse Replenishment) which came as part of their E3 aquisition back in 2001. Now the interesting part is, before the acquisition, ASR was known as SLIM and AWR was known as TRIM.

If you don't believe me, look up this link :-)

Today I heard from some JDA insiders that the deal is done and sealed.

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