Covisint's Stalled Start

Crosstown rivals Ford Motor Co. and General Motors Corp. originally sought to operate competing automotive procurement marketplaces. Ford had recently launched Auto-Xchange, built on software from Oracle Corp., while GM had its TradeXchange, built with tools from Walnut Creek, Calif.-based Commerce One Inc.

But the automakers scrapped those competing operations in favor of Covisint LLC and brought in DaimlerChrysler AG. France-based Renault SA and Tokyo-based Nissan Motor Co. agreed to join the trade exchange last year as nonowner participants, and Paris-based PSA Peugeot Citroen SA did the same this year.

That beginning created immediate integration work for the start-up, but Southfield, Mich.-based Covisint was barred from getting started on that task because of antitrust investigations in the U.S. and Germany. It took an additional seven months for Covisint to get the approval of the Federal Trade Commission and Germany's cartel office, the Bundeskartellamt. During that time, Covisint was barred from hiring full-time employees, building the exchange platform, integrating systems from its founders and conducting transactions.

"They did a great deal of backtracking, re-engineering and tinkering when they started that was to their detriment," says Kevin Prouty, an analyst at AMR Research Inc. in Boston.

It wasn't until December 2000, 10 months after the initial launch and after months of internal squabbling over equity among the automotive and technology major players, that the start-up named its CEO, Kevin English, and that founders GM and Ford began shutting down their individual exchanges.

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Copyright © 2001 IDG Communications, Inc.

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