The risk is probably transitioning to new software pricing structures and such to figure out the financial model associated with the new world.
It seems companies enabling e-commerce are making strong a strong bid to build an annuity type stream from their efforts. ITWO is following this route with an upfront price, and then a followup price dictated by utilization of the system - a small percentage of all sales for instance. I like the idea, because I feel the technological lock-in will be high (high switching cost).
As far as risk in pricing - yes it's there, but i2 has experience with performance based pricing. My understanding is that in the past some of ITWO's revenues are contingent on the performance of a given installation, and meeting certain efficiency improvement goals. (Correct me if I'm wrong here, but I believe this was mentioned in previous CC's.)
Honestly, I'm not worried about ITWO's place in traditional SCM deals and their selling to individual customers. Old customers keep coming back for more, and they're making inroads into automotive/industial, which could be huge. In Deals with Ford, GM, CAT and others tell me they're moving in the right direction there. ITWO also owns hi tech. Leveraging the business to the next level by linking multiple vendors/suppliers/customers into the same system is the next big leap, and I'm excited to see how it develops. I'm still thinking gorilla opportunity here.
Shane |
