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Change At The Top For Covisint

Naming former GM exec as CEO suggests strategy shift for exchange
A leadership shakeup at Covisint LLC signals that the online exchange for the auto industry is narrowing its ambitious E-commerce agenda, a path followed by similar exchanges in other industries. Last week, Covisint, founded two years ago by the largest U.S. automakers, said that Harold Kutner, former group VP of worldwide purchasing for General Motors Corp., would replace Kevin English, who resigned as chairman and CEO.

The appointment of Kutner signals that Covisint is cutting back its plan to offer a broad range of supply-chain planning and design-collaboration tools, AMR Research automotive analyst Kevin Prouty says. Instead, it will focus on procurement and integrating smaller suppliers with automakers. The idea behind Covisint had been that automakers could divide the cost of building an online platform to run their supply chains and give suppliers one platform with which to integrate. However, automakers have continued to expand their own exchanges, which they're relying on more heavily for functions such as inventory planning and design collaboration with suppliers.

Covisint's primary moneymaker now is its auctions and its more sophisticated procurement offerings. Those include the ability for automakers to manage contracts with suppliers and to request proposals to build particular parts. Covisint will continue to target smaller auto suppliers that don't connect directly to automakers' private exchanges, Prouty says.

This isn't the first sign of a more limited role for Covisint. GM and Ford have embraced a design-collaboration tool from EDS called e-Vis, which they can run behind their firewalls. And rather than waiting for Covisint to build supply-chain management tools to let suppliers see their parts inventories, GM and Ford have added sophisticated XML-and EDI-based capabilities to their private networks.

Kutner's appointment also sends a clear message to suppliers that automakers are in charge of Covisint. The appointment of English, former head of E-commerce at investment bank Credit Suisse First Boston, reflected Covisint's original strategy of addressing equally the needs of suppliers and automakers. Joining Kutner is Bruce Swift, former Ford VP of purchasing, as president and chief operating officer. "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," Prouty says.

Citroen, DaimlerChrysler, Ford, GM, Nissan, PSA Peugeot, and Renault jointly own Covisint. Commerce One and Oracle also have a stake.