i2 Signs New Customers; One Deal Raises Questions About Its Ties to Ariba

Updated from 3:43 p.m. ET

i2 Technologies(ITWO Quote), the supply-chain software company that has recast itself into a major business-to-business player, said Tuesday that it landed its biggest software contract ever through a deal with Siemens.

Under the terms of the deal, i2 will supply Siemens, the German electronics manufacturer, with its full TradeMatrix e-business software suite. Siemens will install that software over the next three years, the company said in a statement. The software will help it not only in procuring material it needs to build its products, but also in planning, designing, fulfillment and selling.

Siemens, which has been undergoing a major e-business initiative since May, plans to funnel online as much as 80% of the money it spends on materials used in manufacturing.

Jim Pickrel, an analyst at Chase H&Q who rates i2 a buy, said the Siemens' deal is notable, and could be valued in the high "tens of millions of dollars." (His firm helped underwrite i2's IPO in April 1996.)

Pickrel said the deal could be seen as a negative for SAP(SAP Quote), the German software company that has partnered with Commerce One (CMRC Quote). Siemen's already uses SAP's business software for its internal computers. While SAP has been saying lately that it has state-of-the-art supply chain software, Siemens apparently thought i2 could serve it better.

The Siemen's deal also raises more questions about i2's alliance with Ariba(ARBA Quote). While Siemens chose i2 for its supply-chain needs, Siemens already has picked Ariba arch-rival Commerce One for its business-to-business procurement software. I2 went so far as to emphasize how well its products will work with that software in its statement.

"The i2 open e-business architecture is designed to support applications from other Siemens' technology partners, such as IBM (IBM Quote) and Commerce One," the company said.

It's the second time in two days that i2 has made a significant announcement without uttering Ariba's name, while highlighting initiatives from Ariba's competitors.

On Monday i2 announced a partnership with BroadVision(BVSN Quote) to address the sell-side needs of B2B. BroadVision has squarely targeted Ariba lately as a B2B software competitor.

That deal pushed up BroadVision's stock 20% on Monday. After analysts issued notes Tuesday stressing the deal's positive aspects, BroadVision's stock continued to rise. It closed up $1.44, or 6.6%, to $23.38.

Separately, i2 said it landed a deal with Caterpillar(CAT Quote) to launch a private e-marketplace for the manufacturer, and to integrate some of Caterpillar's homegrown software into its own platform. I2 said it would then sell that integrated software to other customers as well.

Cat said it expects the i2-built marketplace will save cut costs by $100 million in its first year.

i2 says that deal illustrates how "non-technology companies benefit from e-business by lowering costs and shortening product-development time." Of course as a major manufacturer Cat already uses plenty of technology in its plants.

Notably, i2's stock didn't get a boost on the news. Its shares were down $4, or 2.3%, to $169. The two announcements came out of i2's Planet 2000 conference being held this week in San Diego.