"To look back at a bubble and imagine it as a reality makes no sense at all"

As recently as 2000, he was worth an estimated $9.8 billion, ranking 24th on Forbes' list of 400 wealthiest people in America. Today, thanks to dot crash, his networth has shrivelled to about $400 million. But that,
Sanjiv Sidhu says, doesn't bother him. Instead, the 45-year-old CEO and Chairman of Texas-based i2 Technologies-a supply chain management solutions company he co-founded in 1988, with a colleague from Texas Instruments, Ken Sharma-claims to be focused on saving money for his customers-some $75 billion by 2005, to be precise. Recently, in Las Vegas, i2 put together a three-day ''thought leadership'' seminar on supply chain, attended by more than 4,000 people, with keynote speeches from former New York Mayor, Rudolph Giuliani, reengineering guru Michael Hammer, and Sun Microsystems Co-founder and CEO Scott McNealy, among others. In April, with Greg Brady leaving, Sidhu-a Hyderabad boy, who did his chemical engineering from Osmania University-reassumed the role of CEO. In between schmoozing with customers and partners, a busy Sidhu spoke to BT's R. Sridharan about i2's spectacular rise and the equally spectacular drop into the loss zone, and how he plans to reverse things. Excerpts:

It's been two months since you took over as the CEO. Are you happy the way things have panned out?

I think it's too early. The real test would be 12 months later.

Everybody tells me that Sanjiv is a painfully shy and modest person. So how easy was it for you to get on to the stage the other day and sell i2 to an audience of 4,000?

Very easy. The messages are extremely important and most of my team, including myself, is very passionate about the message. Value chain management is very important and it is the No. 1 strategy that a company can adopt to transform its level of efficiency.

As a student at Osmania University, did you think that one day you would be running a global corporation?

No.

So how did i2 happen?

It's hard to describe, but I think it was driven by the fact that as I worked for big companies and served markets, I felt there were two kinds of opportunities. First, companies were very inefficient. When I was working at Texas Instruments (TI), I found that TI was very innovative in the design of products. But there were lots of opportunities in improving the supply chain operations. TI gave me the opportunity to learn about supply chain management. At the same time, computers were getting cheaper and information was getting cheaper to collect, but companies were not able to use information to make intelligent decisions. So, computers were mainly used for bookkeeping. ERP systems were not geared towards bringing operational efficiency. At that time I used to work at TI's artificial intelligence lab and had the opportunity to look at new technology and new ways of thinking to transform the way big corporations worked.

At one point your net worth was as high as $9 billion. Now it must be down significantly to a few hundred million. How much is it?

I'm not sure, but the information is pretty public.

Does that worry you?

I'm worried for i2 shareholders. It's my responsibility to perform well for them. On the other hand, most people understand that we went through a bubble. And to look back at a bubble and imagine it as a reality makes no sense at all.

But i2 was anything but a dotcom...

Yes, but we were valued as a dotcom. We were valued at 400-500 times our earnings.

The challenge for i2, obviously, is of growth. People aren't spending money on stuff like supply chain management software. It's almost a recessionary market. How do you grow in such a situation?

i2 does not take a short-term view as most people do. If a strong athlete has a cold, people start thinking: ''How will he do well?'' I think it's bordering on the ridiculous to think so. Economies will get strong, people need cars and computers. And we help manufacturers make cars cheaper, computers more efficiently, and clothes more efficiently. So the need for our software grows as business becomes more global.

What about those who are still looking at solutions like ERP?

When I talk to CEOs what I encourage them to do is not to think of what comes first-whether they need to do ERP or SCM. But really think of what makes the difference to their customers. The problem today is that 90 per cent of it budgets is going to things that the end-customer doesn't really care about. Will the end-customer care if you can close your company's financials in two hours? Not really. We encourage people to think what the solution would do to their end-customers and to their competitiveness. I think 90 per cent of a company's it budget should go towards increasing their competitiveness and not just make their clerk's job easier.

It would probably need an evangelist to do that. Are you going to play the evangelist in the supply chain space?

I think there is need for more than i2 evangelism.

I think what will happen is that for the concept of value chain management there would be emerging methodologies like Total Quality Management, which was used for improving quality. Manufacturing Resource Planning, for instance, was supported by American Production and Inventory Control Society. Various societies and professionals will need to support and pay much more attention to this huge area of opportunity.

Most of your sales is skewed towards high technology companies in the US. Do you intend to broaden and deepen your market?

Historically, 50 per cent of our revenues came from hi-tech. But, last quarter it was very strong in retail. There are several other key announcements like the partnership with Shell to focus on oil and gas. And then you saw several other key successful presenters. There was the Taylor Made-Adidas golf equipment in soft goods. There was Cooper Tires and DaimlerChrysler in automotive. If you look at our customers in India, they aren't necessarily hi-tech companies. There's Asian Paints and there is a lot of interest from the steel companies. So, the applicability of i2 products is across industries. It just so happened that in the last three years the hi-tech companies were active buyers because they were very eager to improve their efficiencies. We became famous by working with Dell, and Dell showed outrageous efficiencies. That helped our progress in the hi-tech area.

Old economy is back in favour on Wall Street. So would you be focussing on manufacturing companies, which really have a lot of waste in their processes to eliminate?

That is correct. It's region by region. Retailers say that they are keen to improve their efficiencies. There is a lot of interest from the oil and gas companies in the Asia-Pacific. In India, too, there's a lot of interest from the oil and gas sector. So it's very region-based. Right now the focus is on the automotive industry worldwide.

A lot of manufacturing is moving to China. Is China going to be a big thrust area for i2?

With our Planet Asia coming up in Beijing in October, you will see a lot of momentum. Already we have scored some critical wins with Legend, which is China's leading computer maker. It has benefited hugely from i2's software. That's making a big difference. The level of interest towards our products is at an all-time high in China. It's one of the fastest growing regions for us.

How important is India in your scheme of things? Already a lot of your R&D is happening in Bangalore...

I don't really have a clear view of that, but right now the way the Indian companies are having to compete with global companies, these technologies are going to be extremely important.

Some analysts believe that Microsoft's acquisition of Great Plains and NavVision might be a wake-up call for companies like i2. Do you agree with that?

It's really early to say that because Great Plains participates in a very different marketplace from what we do. So does NavVision. So it's really very early.

But is consolidation imminent in your business?

We're not really planning to buy Microsoft (manages to keep a straight face). There might be some possibilities, but that isn't something we think about a lot. Our focus is really between ourselves and our customers. We find our customers fighting their inefficiencies. We are totally obsessed with understanding and solving those problems and building the right kind of mechanisms for delivering value outside of software. To bring that holistic solution to the customers, we believe in doing our job right and doing it best. Then the doors to opportunity will be continuously open to us. Historically we've been an acquirer of companies and we will continue to look for opportunities that fall in line with our obsession to remove inefficiencies in our customers. If we find good opportunities, we will continue to look at those.

You acquired two companies in 2000 and another two in 2001. How conducive is your stock price to continue with acquisitions now? Is that going to be a barrier?

Not really. It's a wash. Because when our stock prices were high, we were buying companies that were valued highly. Now when the prices are not that high, our calculations are simple. If you think a company will contribute 10 per cent of our future earnings and if we have to pay 5 per cent of the company to buy that then it's a good deal. So it's a wash for us. It doesn't really matter.

Would i2 be open to any kind of acquisition by, say, Microsoft?

I think it would be inappropriate (for i2) to comment on it. We believe that we have a tremendous future on our own.

In the past, companies like Nike and Siemens have complained about i2's product quality. How do you deal with such situations?

Unfortunately, it has affected us unfairly. What is not understood is that Nike had tried our competitors' software and failed. And we went into a very difficult situation, where size-colour-style is an issue (of footwear and apparel) that no competitor had been able to solve. i2 was the only company in the world to solve the problem. At Nike, we have now solved the problem and it is a happy customer. So I think that the situation got a little over-blown. That happens once in a while.

But isn't it unusual for a customer to go public with a complaint before speaking to the vendor?

That's why I believe it was overblown and both parties wish that it didn't get overblown the way it did. But the real situation is that i2 is the most reliable supply chain software provider, and again, the proof was at Planet, where 100 companies presented their results... $29 billion of value delivered. So, first, even if Nike went wrong, it doesn't prove anything. It's just one out of hundreds of successful customers. Secondly, Nike didn't go wrong. Nike shows i2's tremendous strengths rather than weaknesses. Since i2 is a leader, people need something to attack us on. That's fine.

Will Wall Street see i2's return to profitability at the end of this year?

We are not actually predicting when that would happen. But surely it is one of my goals. Our primary goals are that our customers should be excited about i2, reduce time-to-value, to be time-to-value leaders, and to deliver maximum reliability and highest quality. Associated with that is the goal of not just returning to profitability but being one of the premier software companies.

A question about alliances. You already partner with IBM and now Sun. Does anything stop you from partnering Microsoft if that can take your products to a greater number of customers?

The partnerships are largely dictated by what our customers are asking for. And if our customer base is looking and could benefit from a partnership with Microsoft, we would partner with Microsoft. We partner with them in several areas already. We support NT in a fairly big fashion and we are working with them on 64-bit NT as Intel's 64-bit architecture becomes more and more mature. So we are working with both Intel and Microsoft in that area. Our primary allegiance is to our customers and whichever partners can help us deliver reliable, faster, and cost-effective solutions to our customers, we will do that.

Last year i2 stormed Indian B-schools with top-dollar salaries. And when the slowdown struck you had to withdraw a lot of those offers. A lot of the graduates must be pretty unhappy about it. Do you have anything to say to them?

I think the message is simple. i2 is a like great athlete suffering from a cold. Once we get the cold behind us we will start executing our strategies.