Q&A: Sanjiv Sidhu, chief executive of i2 Technologies

Supply chain management software vendor i2 Technologies was one of many suppliers that enjoyed dot com boom. At its peak, the company was generating revenues of nearly $1bn, with 6,000 staff.

But the company became a victim of its own success and its rapid growth, and suffered hugely when the market collapsed.

The US Securities and Exchange Commission started investigating i2, after it misstated $1bn of software licence revenue over a five-year period to 2002.

This month, i2 agreed to pay a $10m penalty to settle the issue.

Computing met exclusively with chief executive Sanjiv Sidhu just days after the settlement to find out his plans for the organisation.

i2 has had a turbulent few years. How are you now positioning the company?

We believe that over the last few years, supply chains across the world have been restructuring. Outsourcing has been phenomenal.

Customers are looking at ways of handling the supply chain in an outsourcing world where there has been an explosion of product variety, complexity and variability. It plays to i2's strengths.

i2 went through a significant restructuring last year. But we are back. Most of the restructuring is now behind us. It's a new world and it's a new i2.

i2 went through tremendous growth and grew from $25m in 1995 to reported revenue of close to $1bn in 2000. In hindsight the growth was too fast and certain things didn't go as well as they could have. But we benefited in other ways. We spent close to $2bn in research and development and have very differentiated intellectual property right now.

Since we've restructured we need to come back and tell people about the new i2 because there are several misconceptions.

Where are you heading now? Will you get back to the $1bn mark?

We have 800-900 customers and revenue is $300-$400m at the moment. We said that if we could get $0.5m from each customer on average, we can double that and become a $1bn company. This is a significant opportunity, that could be achieved without getting any new customers.

Nokia, Dell and Infineon are all existing customers who have committed to multi-year, multi-million dollar contracts. The opportunity to be a $1bn plus company exists and we are executing on it now.

We are very committed to growth but it's not the best time for us to talk about it. We are coming out of restructuring and we are very humble. Next year I'll be thumping the table a lot more. We have the drive, we are focusing on basic fundamentals of delivering value and service. Last time we built a very big business but the foundation wasn't very strong. Now we are moving forward more slowly and methodically.

What are your customers asking for?

They want to respond to their customers' demands with more flexibility and want new products fast. There's a lot of efficiency for new products and most importantly customers are looking for fast time to value.

What they look for most is somebody who comes and delivers value very fast. i2's focus has to be clear in delivering time to value. Customers are tired of buying technology. They want to buy results and they want to do business with a company that deals with results. We are the doctors that say I won't just prescribe you with medicine, I want to help you get well.

Where is most of your competition coming from?

The most significant competition is inertia within companies. There are times when we are not competing with anyone, it's just inertia where customers have trouble making decisions.

In terms of competitors, many times it's the ERP companies such as Oracle and SAP, or niche vendors.

When we are talking to customers we are talking to the chief executive, the chief information officer, and the financial director. And they're all in projects to transform their businesses. They realise the supply chain can dramatically give more value to their business.

Which competitor would you like to remove if that was a realistic prospect?

Probably it would be SAP. They consume a lot of the customer dollar and they have bigger sales, marketing and press departments than us. Their propaganda machine is a challenge.

How damaging was the SEC investigation into i2's business?

It was very disruptive. It was disruptive in a management sense, but also in that we feel mission critical applications, and our customers were somewhat nervous. Absolutely, it was damaging. It could have been severely damaging. The reason it wasn't was that customers felt nothing could take away the value of our intellectual property and nothing could take away proven results and the value of customers like Dell, Nokia, Infineon speaking up for i2 and saying it's the best. Will business increase now? Yes it will, but we don't want to set unrealistic goals. It will take time. People shouldn't expect the impossible.

Who is a typical i2 customer?

Retailers, people who manufacture stuff, distributors, companies in logistics. People who move stuff. Dell has been one of our leading customers for many years. They need to be fast and responsive to customer demand.

Pasco Steel is the world's most nimble steel company. Texas Instruments and Woolworth's Australia as well. We are dealing with companies that say: I want to excel at supply chain management. Companies that say: I want to buy the biggest load and I don't care if the inventory sits around - these companies are not suited to be good i2 customers.

What changes have you seen in your customers?

We are seeing customer demand growing in certain sectors. That's going to help i2 in its restructuring. One is high-tech customers. They're coming back quite strong. Then we see companies who've been through ERP and are no longer enamoured by it. They said, 'I've spent a lot of money on ERP but I haven't seen any results'. They need to stop spending money. They're looking at some of the operational differences.

What's your biggest priority over the next 12 months?

It is to react to customer needs. To differentiate ourselves by guaranteeing ourselves. How do you do that? You integrate better, you synchronise data and processes, you provide a web services architecture. That's an important strategy because SAP offer integration, but they say rip out everything you have and replace it with what we have and then everything will be integrated. It's like going to a country that speaks five languages and saying I'm banning everybody from speaking these languages and introducing a new one and then everyone can speak to each other. That's what we call rip and replace. We go in and instead put in a layer that allows data and process integration.

The second thing will be countering misconceptions and explaining the new i2. That's one of the issues we have to put behind us, explaining and proving to people looking for supply chain excellence.

Are you planning on making any acquisitions?

Right now we have more to offer than we can distribute. We're focused on distribution. We looked at SAP but decided that we'd leave it to Microsoft. But seriously, we believe there will be a resurgence of ecommerce as we see the continued rise of companies such as Amazon.

Companies will do more on the web, and we will continue to be the leading provider for that. We develop new capability for customers and have differentiated in our ability to exploit Indian-based development capabilities. Most people look to India for cost, we do it for strategic reasons. We have been able to work 24 hours on a customer problem. We get a much faster turnaround.

What's your biggest regret over the past few years?

We grew too fast. Some reasons are obvious when you grow too fast and the market changes. When there was the ecommerce bust there was a cost structure that was too high.