RealTime IT News

Supply Chain Companies Collide in Court

Dallas-based supply chain management (SCM) solutions vendor i2 Technologies  said it is suing SAP  for patent infringement.

SAP and i2 are, respectively, the numbers one and three SCM vendors in terms of revenue.

The lawsuit, filed in the United States District Court for the Eastern District of Texas, alleged infringement of seven patents related to SCM.

i2 CEO and president Michael McGrath said in a statement that the company's strong position in this market is based on capabilities derived at under the patents at issue.

"Our patented innovations are an important part of these unique capabilities," McGrath said.

William Wohl, vice president of communications for SAP, said the company does not comment on litigation matters.

It may be no wonder, though, that i2 is attacking SAP in this manner.

Although both companies are market leaders, i2 has its work cut out if it wants to close the gap with SAP.

SAP has 11 percent of the market, or more than twice i2's share of the SCM space, and generates $654 million in revenues, versus $276 million for i2, according to AMR Research.

As reported by internetnews.com, the SCM market is growing by an estimated 6 percent this year, compared with just 3 percent in 2005.

Significant innovations recently introduced by SAP and i2 are driving renewed adoption of SCM solutions, AMR Research analyst Mark Hillman said last week.

"[SAP and i2] are evolving their applications to take more advantage of downstream data," he remarked.

Better visibility into sales data helps companies control their inventory levels and ensure they are not out of stock of popular items.

The lawsuit alleges infringements of patents awarded in the areas of process planning and planning coordination systems, among others.

In a note published last week, Hillman also noted that i2 is one of the few standalone SCM vendors building decision support solutions on top of an ERP  platform.

SAP is primarily known as an ERP solutions vendor.

Hillman would not comment directly for this story because of potential legal ramifications.