As part of a plan to shift its business model to one that relies more on consulting and industry-specific software solutions, supply chain software vendor i2 Technologies Inc. has restructured its sales, service and marketing organizations along industry lines.
The Dallas-based company also announced that its common stock will once again be traded on the NASDAQ National Market as of Thursday. The news came following a disclosure by the Securities and Exchange Commission (SEC) that it had filed suit against former i2 CEO Gregory Brady, and two former company executives, claiming federal securities laws violations.
The long-awaited relisting, meanwhile, should reassure customers about the viability of i2 whose financial struggles in recent years -- including restatement of financial results -- resulted in delisting in early 2003. "We hope that our customers view our return to NASDAQ as another positive step forward for our company," i2 CEO Michael McGrath told Managing Automation.
i2's shift to a vertical industry-oriented structure for the customer-facing parts of its organization matches a similar move earlier this year by rival Manugistics Group Inc. (Rockville, MD.) Manugistics restructured its sales force around four vertical industries, consumer goods, retail, government and revenue management.
i2 also is restructuring into four industry-specific groups. Senior Vice President Steve Estrada will head the new Consumer Products Industry Group focusing on consumer electronics, apparel, fast-moving consumer goods and consumer telecommunications; Senior Vice President Bob Barrett will lead the new Retail and Distribution Industry Group, which will focus on fashion and department stores, grocery and perishables and third-party logistics providers; Senior Vice President Kelly Thomas will lead the Automotive, Aerospace Industry Group, which will also focus on defense and metals.
i2 said it is still searching outside of the company for an executive to head up the fourth group, the High Tech Industry Group, which will focus on semiconductor, high tech contract manufacturing, infrastructure, computer industry and telecom equipment OEMs.
The vertical industry groups replace i2's previous regionally-based organization structure. The company said all four of the Industry Group leaders report directly to CEO McGrath. Executive Vice President and Solutions Operations President Pallab Chatterjee continues to be responsible for the company's solutions development, SRM, content and master data management products as well as operations in India.
The reorganization comes on the heels of McGrath's statements at the company's Planet user group meeting earlier this year that the company planned to emphasize consultative selling and solutions that are quick to deploy and focus on specific industry requirements. Supporting that strategy is the rollout of i2's Agile Business Platform which uses a service-oriented architecture to help customers and consultants deploy and customize targeted supply chain applications quickly.
McGrath said he expects the move to a solutions-oriented, consultative business model will help i2 return to growth. Last year saw i2's sales drop by 21%. Since 2003, the company has fallen from second in SCM market share to fourth, according to AMR Research (Boston.)
The latest restructuring is not intended primarily to reduce operating costs, said McGrath. "It is possible that a very small number of people could lose their jobs as a result of the reorganization, but there is no plan for a companywide reduction in force," said McGrath.
Meanwhile, despite the NASDAQ relisting, i2's financial difficulties -- specifically its restatement of results -- continued to reverberate.
The SEC suit filed against former CEO Brady, who resigned in April of 2002, former CFO William Beecher and ex-president of worldwide operations Reagan Lancaster, charged the three former i2 executives with engaging in "revenue tricks" that pumped up the company's results when they ran the company. Among other things, the SEC charged, the three entered into "side agreements" intended to artificially increase the company's revenues.
Brady, in a statement published on Friday, said the SEC enforcement action "lacks a factual basis" and he vowed to fight it. Brady, the statement said, "fastidiously complied with federal securities laws and GAAP requirements. To ensure such compliance, i2 established a multi-tiered system of internal controls. i2 had a revenue recognition group comprised of accountants whose sole responsibility was to ensure the company recognized revenue appropriately."
In the same statement, Brady's attorney, John M. Dowd, said, "We will defeat this lawsuit by the SEC in a court before a jury. Greg Brady did not commit fraud [and] did not mislead anyone ..."
i2 restated financial results in July, 2003 for the years 1998 through 2001. The restatement came after i2's auditor said the company's software during the period was not generally available and that it required services to make it function.
Brady said i2's decision to restate financial results was "reactionary" and forced by "pressure from regulators."