Monday, January 13, 2003

ROI study is a huge embarrassment for i2. Nucleus Research has just published a study on the return on investment (ROI) for users of i2, a Tier I supply chain management vendor. It found that over half of the companies surveyed have not yet received a positive ROI from their investments in i2 software. The study, based on interviews with companies that i2 touts as references on its own Web site, is bad news for i2. Worse still, Nucleus is freely distributing the report, so anyone even thinking about i2 is going to hear about it, probably from i2's competitors.

The study found several factors contributing to negative ROI:
  1. Customers buying modules they will never use, due to i2 bundling of products.
  2. Software license cost based on upfront estimates by i2 of benefits that the client will achieve, resulting in license costs that are simply too high.
  3. Steep learning curves and long training periods, with average training time of nearly two weeks per user, and super-users requiring up to two months of training.
  4. Consultants from i2 not sufficiently knowledgeable in their own products.
  5. Implementation taking longer than estimated in nearly 70 percent of the companies surveyed.
Adding to the embarrassment, the study found that i2's Web site is overstating the benefits received for specific customers and that i2 continues to reference customers that are no longer using its products.

To be fair, many companies have been successful in implementing i2. And, i2 has been targeting the largest organizations with the most complex supply chain problems, a high-risk environment for any technology vendor. Furthermore, customers as well as vendors bear responsibility for the success of any software implementation. Nevertheless, it is impossible to escape the conclusion that in too many cases i2 has been over-promising and under-delivering. As a result, supply chain vendors, including i2, have already adjusted their strategies to simplify their applications, break up sales into more bite-sized pieces, and to focus on more targeted solutions, such as supply chain event management.

The study itself is on the Nucleus Research website. Computerworld has an article with some interesting, if somewhat muted, reaction to the study from i2.

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