Ariba scraps second merger as B2B plans fall apart

NEWS The companies have blamed "adverse economic and market conditions" for the failure of the deal. The merger with Agile Software would have filled the gap left by i2's departure, providing technology essential to Ariba's new value chain management strategy. The plans, announced by Ariba last month, signalled a move away from pure e-procurement to a more collaborative approach, incorporating supply chain partners. Agile's product description software for B2B catalogues was to have played an central role for the new strategy. Rivals Commerce One and i2 have already adopted this integrated supply chain management approach with respective partners SAP and Rightworks. "It's becoming clear that B2B is not just about indirect e-procurement, but about collaboration on direct procurement. Agile would have helped them here, but now Ariba is going to have a tough job convincing customers to go with it," said Eduardo Gonzalez, an analyst with Frost and Sullivan. Ariba was not available to comment on the news, but in a statement the company CEO Kevin Krach admitted he had not foreseen the downturn, and that almost no revenue will come from sales of Ariba's exchange technology this quarter. Nigel Montgomery, analyst with AMR Research, warned that the next few weeks will be a critical period for Ariba. i2, which also today issued a profit warning and announced over 600 lay offs, admitted that it had also failed to predict its current fall in profits. But Sarah Sherman, director of marketing at i2, insisted the merger with Rightworks would be finalised by the second quarter despite the setback. A spokesman for Commerce One said the company did not regard Ariba as a direct competitor, but added: "It is difficult to see where they will go from here. Only time will tell if this is fatal."