Update: Ariba acquisition could cause conflict with i2

Ariba Inc.'s planned acquisition of Agile Software Corp., which was announced two days ago, is aimed at expanding the e-commerce software vendor's reach into "product life-cycle management" applications that control key information about products being developed and built by manufacturers.

But the deal also puts Mountain View, Calif.-based Ariba in potential conflict with i2 Technologies Inc., less than a year after those two vendors and IBM teamed up to market combinations of their software to business-to-business exchanges (see story). Dallas-based i2 last year bought Aspect Development Inc., a direct competitor to Agile, and has built that company's product life-cycle management tools into new versions of its supply chain and e-business software.

Ariba, i2 and IBM have jointly helped to set up dozens of B2B marketplaces thus far, and John Corshen, Ariba's vice president of corporate strategy, said he doesn't expect the Agile acquisition -- a stock-swap deal valued at $2.55 billion -- to change the business relationship between the different companies.

But Jennifer Tejada, vice president of corporate marketing at i2, had a different outlook on the Ariba/Agile deal. "We definitely view this as a competitive move," she said. "We'll now be competing in the same arena [as Ariba does] in many cases."

Karen Peterson, an analyst at Gartner Group Inc. in Stamford, Conn., said competition between the likes of Ariba and i2 is inevitable, as software vendors try to attract corporate users interested in establishing private online exchanges and Internet-based sales and B2B collaboration setups.

For example, Peterson said, Ariba has done well at selling software that powers online exchanges. But now the company has to broaden its focus to keep growing, she added. "Anytime there's a new market, you see a lot of new products [from different vendors]," Peterson said. "But sooner or later, [users] start looking for one throat to choke. They don't want to have to deal with multiple vendors."

Corshen said the Agile acquisition will give Ariba products that can be used by companies to collaboratively track and manage product data with their suppliers and distributors. "This stuff is traditionally stuck in back-office systems," he said. "We're hoping to provide more direct access to that product information."

Ariba expects to complete the Agile acquisition by mid-year (see story). Plans call for workers from San Jose-based Agile to move into Ariba's new headquarters during the summer, according to Corshen.

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