IBM, Ariba, i2 Form B2B Alliance

Venerable computer giant IBM (NYSE: IBM) (NYSE: IBM) announced today that it will form an alliance with Ariba (Nasdaq: ARBA) and i2 Technologies (Nasdaq: ITWO) to provide what it calls an "end-to-end solution for business-to-business (B2B) e-commerce and collaboration."

Saying the alliance will offer seamless integration of IBM's hardware, software and marketing clout with Ariba's and i2's B2B e-commerce platforms and business support services, IBM also said it will take a minority equity stake in both Ariba and i2. The financial terms were not disclosed.

While Ariba offers trading and procurement software, i2 provides supply chain management software focused around decision support, forecasting and supply chain management.

Sales Through IBM Channels

Under the terms of the alliance, the companies will create a B2B marketplace platform that will be sold through IBM sales channels. IBM said its global sales force will be responsible for selling the solution and its Global Services division will provide global operations, support services systems integration and hosting services for the alliance.

The agreement also calls for Ariba and i2 to enter into patent cross-licensing agreements with IBM. The companies said they will create demonstration centers in North America, Europe and Asia and conduct joint marketing campaigns as well.

The companies will also put the new alliance to the test to "capture and manage a significant portion of IBM's $45 billion (US$) annual procurement spending," they explained in a joint statement.

"E-markets are exploding and the companies that lead in the B2B marketplace will be those that get there first with the best solutions," said IBM Senior Vice President William Etherington. "That's why this alliance is so important. IBM, Ariba and i2 have taken the best of what we each have to offer and created a solution and set of tools that will immediately allow customers -- whether they want to improve internal efficiencies or become market makers -- to not only get in the game, but win."

Providing Open Standards

The companies claim the alliance would give B2B customers a set of open standards that have been inaccessible to date. Among those they intend to offer is single connection access to value-added marketplace service providers, an ability to run on multiple hardware and software platforms and an architecture that will allow integration from other application vendors.

All three bring considerable experience to the booming B2B market, which is projected by Forrester Research to climb over the $1 trillion mark in the next three years. IBM, of course, has long dusted off its antiquated approach to new technology to become once again one of the premier global technology companies.

The Mountain View, California-based Ariba has become one of the premier B2B leaders, battling with rival Commerce One for industry supremacy. Both have been hyperactive in recent months, building B2B marketplaces for industries such as oil and gas, automobile manufacturing, chemical and pharmaceutical manufacturing and the travel industry. Ariba lost $12.3 million in the quarter ending December 31st, on revenues of $23.5 million.

i2 Technologies, based in Dallas, Texas, is a supply chain software maker that is becoming a force in the B2B industry as well. The company is working with General Motors and Commerce One for the automobile manufacturing marketplace and United Technologies and Honeywell to create a marketplace for the aerospace industry. It booked fourth quarter revenues of $173 million.

IBM Involved in Other B2B Alliances

In addition to its alliance with Ariba, IBM also recently entered into an alliance with trading system newcomer Vsource, Inc., which provides a pure Internet e-procurement system that only requires an Internet browser. Both Ariba and Commerce One require that users have special client software on their PCs.

Vsource recently surprised the industry by entering into a deal with telecom giant US West, Inc. to serve as the technology beneath an online trading marketplace that US West is developing for the thousands of small and midsize businesses to which it provides telecommunication services.