i2 Enlists Honeywell in Process Industry Play

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i2 Enlists Honeywell in Process Industry Play
S. McVey - May 17, 2000

Event Summary

i2 Technologies recently signed an agreement with Hi-Spec Solutions, a software division of IT conglomerate Honeywell International, Inc., to deliver a combined solution for process manufacturing companies to optimize their extended supply chains and collaborate with suppliers and customers.

Honeywell will place its Unified Manufacturing Solutions for production management and manufacturing execution systems atop i2's TradeMatrix platform. The solution will combine strategic planning, production planning and scheduling, real-time manufacturing execution, distribution management, demand management, and Internet marketplace capabilities.

News of the alliance follows shortly after Honeywell, i2, and United Technologies Corporation announced a joint venture to develop and operate a comprehensive open electronic marketplace for aerospace products and services called MyAircraft.com. Both moves have the potential to greatly enhance i2's currently thin presence in the process manufacturing industry segment.

Market Impact

The decline in i2's revenue growth over the last few years is an inevitable result of its successful penetration of the complex, discrete manufacturing market, especially that of high tech electronics. i2 has attempted to deliver solutions for the process industries but has yet to persuade a significant portion of the market that these are viable alternatives to established offerings. In Honeywell, i2 finds an opportunity to reverse this perception.

Honeywell brings a wealth of process industry expertise and a set of mature software products with a large install base comprised of companies in chemicals, oil & gas, and petroleum refining. Though i2 lists many companies in food & beverage, chemicals, and other traditional process manufacturing industries among its clients, the majority of these use i2 for discrete portions of their supply chains, such as distribution, packaging, and transportation activities.

Provided that i2 makes sufficient investments of capital and manpower in the alliance, and finds the right way to market the joint solutions, it can expect to capture a significant number of process manufacturing clients and even wrest market share from Aspen Technology, the leader and a competitor of Honeywell on the process control solutions side. In addition to Aspen, i2 faces competition from ERP giant SAP, which has made large strides into the chemicals and oil & gas markets and can boast the ability to provide an end-to-end solution from a single, unified suite devoid of external interfaces.

User Recommendations

Despite the glowing press release and seemingly boundless potential it suggests, users should set realistic expectations on the outcome of the partnership. Both i2 and Honeywell are successful companies in their respective domains but face a host of challenges ahead as they hammer out the best way to integrate their solutions.

For companies with complex manufacturing requirements spanning multiple enterprises where flexibility is important, i2 has a proven solution and is willing to take on large, multi-phase projects. Users in markets targeted by the new alliance including chemical, energy, pharmaceutical companies, should probably opt for solutions with demonstrated success such as those of Aspen Technology, at least until i2 and Honeywell can fully define the architectural details of the joint solution and demonstrate that it works.

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