The online exchange will scale back its ambitious E-commerce operations.
Covisint LLC Friday revealed plans to scale back its ambitious E-commerce operations as part of a major restructuring effort. The online exchange, which was founded two years ago by some of the biggest names in the auto industry, also announced changes in its management team. Kevin English, 49, chairman, president, and CEO, said he is voluntarily resigning. Harold Kutner, 61, former VP at General Motors Corp., will become chairman and CEO.
Kutner's appointment indicates that the reorganization includes plans to cut back on planned supply-chain and design-collaboration efforts to focus on procurement and supplier integration to automakers, AMR Research automotive analyst Kevin Prouty says. Rather than relying on Covisint, automakers are opting to expand their own private exchanges to collaborate with major suppliers.
Covisint's primary money-maker is its auctions and sophisticated procurement efforts, which let automakers issue requests for suppliers to build particular parts, and contract management, which lets automakers manage their supplier relationships. Covisint will target smaller auto suppliers who cannot connect to the automakers' private exchanges directly, Prouty says.
The move away from Covisint in some areas of the supply-chain process was evident before the shakeup. For example, GM and Ford Motor Co. have embraced a design-collaboration tool from EDS called e-Vis, which GM and Ford can run from behind their own firewalls. Rather than waiting for Covisint to build real-time supply-chain-management tools that can provide visibility into automakers' parts consumption, the automakers added sophisticated real-time XML- and EDI-based capabilities to their own networks.
By appointing Kutner, Covisint is telling suppliers that automakers are in charge. The appointment of English, a nonautomotive business leader, reflected Covisint's original strategy of addressing equally the needs of suppliers and automakers. Kutner was one of the most powerful men in the auto industry when he controlled $90 billion in annual procurement for GM, Prouty says. "Kutner is the guy to stop all the hand-wringing about what Covisint will be and tell suppliers this is how you will need to use Covisint to do business," he says.
While Kutner takes over as CEO, Bruce Swift, 47, former VP of purchasing for Ford, will become president and chief operating officer. In a statement, English said he was leaving voluntarily. "In the past year, Covisint has grown from a sound idea to a solid business with a bright future," he said. "With the company near profitability, my goals are accomplished. I leave Covisint on solid footing and poised for profitability in the fourth quarter of this year." Before becoming CEO of Covisint in April 2001, English was managing director of E-commerce for investment bank Credit Suisse First Boston. In addition to the management change, Covisint said it would eliminate fewer than 50 jobs in the United States.
Daimler Chrysler, Ford, GM, Nissan, PSA Peugeot Citroen, and Renault jointly own Covisint. Software makers Oracle and Commerce One Inc. also have a stake.
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