Revamped Supply Chain Vendors Take on ERP Giants - ' Page Two '

Still, the two vendors are hardly cut from the same cloth. They show differences across target markets and other aspects of their future strategies, analysts say.

Also, their "in the middle" status doesn't necessarily translate into lower opportunities for profitability, according to O'Marah. Competitors such as Manhattan Associates and Logility Inc. are also "in the middle" but are faring much better financially.

"Maybe that's because, unlike i2 and Manugistics, [Manhattan Associates and Logility] never overshot themselves during the boom years, so they've never had to pare back," he said.

During a recent conference call with journalists and financial analysts, i2's McGrath spelled out a future strategy involving "big results for customers, reigniting enthusiasm," and use of the company's restructuring to set a "strong foundation" for future growth.

"Cheesy as it might sound, i2 is trying to be a solutions provider. Manugistics is going for a somewhat similar kind of approach, but i2 might have a little bit of an edge because it has a CEO with the buying and selling background of McGrath," O'Marah said.

"Customers look at [IT deployments] in terms of projects. They say, 'We need to fix our replenishment system,' for instance, and i2 tends to budget and execute in much the same way," he said.

McGrath said that i2 is also eyeing licensing its MDM technology to systems integrators—as well as to vendors outside the supply chain—for use in "non-supply chain" application areas such as financial services, health care and education.

Currently, i2 is strongest in the high tech vertical, O'Marah noted. But during the fourth fiscal quarter of 2004, for instance, i2 added 19 new customers, including users as diverse as US Foodservice Inc., Oji Paper Co. Ltd., and metals manufacturers China Steel Corp., NTN Corp., and Aluminum Konin-Impexmetal S.A.

Meanwhile, Manugistics CEO Joe Cowan has declared that, under its recent restructuring, sales is no longer a distinct division at Manugistics.

Instead, sales functions—along with products and services—have been rolled into each of four new SBUs (specialized business units): CG (Consumer Goods); Retail; Government; and Revenue Management, a unit that also folds in travel and hospitality, Cowan said during an earlier interview with CIOInsight.com.

"Manugistics has been working in this direction for a few years anyway—but possibly the message hasn't really been getting out there until now," Banker said.

For its part, Manugistics has shown the most customer wins so far in the CG market, according to O'Marah. The retail market could be a tough one for the company due to competition from both SAP and Oracle, he added.

Government and hospitality don't have much transferability to other sorts of supply chain applications, O'Marah said. "So maybe if Manugistics put [even more] effort into [CG], it'd be better off," he said.

Publicly, Manugistics has been highlighting existing relationships with blue-chip CG customers such as The Coca-Cola Co. and retailers such as Circuit City Stores Inc., as well as emerging co-development work with government customers like the U.S. Navy.

Both supply chain vendors' restructurings have also involved job cuts, including layoffs of longtime sales reps, a factor that industry analysts generally acknowledge as one contributor to the revenue slowdowns.

"I'm afraid that [company restructurings] can have the effect of making customers more cautious. But although this is something [for vendors] to worry about, it is not a backbreaker," O'Marah said.

"Vendor viability is simply not that thin, especially when customers are already hooked in," he said.