From Software Business Community

Covisint: An auto industry purchasing platform

Covisint was an attempt by a group of automobile manufacturers to create an online marketplace to manage the supply chain for auto manufacturers. A group of auto companies (Daimler Chrysler, Ford, GM, Renault, Nissan) formed an internet marketplace called Covisint (Connectivity, Visibility, Integration) for the procurement of parts.^[1] The aim was to transfer key business processes to the internet. The emphasis is on performing information searches and bids for bulk purchases of parts. It also includes electronic data interchange (EDI) between suppliers and customers for information such as forecasts, shipping schedules, and advanced shpping notices, as well as means to share quality and readiness attributes among customers. Covisint has a number of technology partners (such as Oracle, Commerce One, Powerway, etc), so in effect it operates as an auto industry representative in acquiring and deploying technological solutions to joint business challenges. This illustrates one organizational model for achieving the needed level of coordination and interoperability.

Relevance to software business

As discussed in the shared ownership article, joint ownership of not only an infrastructure but also an application is an increasing need in software software categories, and particularly inter-enterprise software. The experience of Covisint teaches some of the pitfalls, and suggests better paths to success.

Summary of the research literature

Covisint is now owned by Compuware, and it has been forced to redefine its business model to survive. It has expanded its business beyond automobiles into health care. Its mission statement: "The future of business is here, now - business now, a next-generation web-based platform that spans time, distance, culture, and capability. Covisint provides this secure global environment, where people, information, and applications come together to unleash a bold new world of business results. Go beyond B2B, plumb the depths of SOA and experience SaaS. Decrease decision time, increase collaboration and reduce costs. Don't wait. Do business now."

The auto industry in the context of inter-organizational systems (IOS), starting with EDI in the 70's and 80's.^[2] Currently many IOS ha ve moved to the public internet using standards based on XML The architecture has also shifted toward the portal, which is a single point of entry that allows collaboration through acess to multiple sources of information. Portals are often initiated by large buyers to facilitate interaction with and among suppliers, examples being GE's Trading Process Network and Boeing's PART marketplace. The paper then proceeds to discuss standards underlying an IOS, using Covisint as an example, emphasizing the power relationships instrumental in molding the standards. Initially Cosivint was formed by a small core of OEM's, but was unable to attract other OEM's or their Tier-1 suppliers because of incompatibilities in both portal technologies and more fundamentally in business processes and methods making harmonization difficult, and because suppliers felt threatened and had limited input into the development of the portals. Ultimately a group of suppliers defected and formed their own portal called SupplyOn with a similar vision to Cosivint, but controlled by suppliers and under their control. The bottom line is that both Cosivint and SupplyOn have failed to achieve their vision of an auto industry-wide IOS. This is very difficult to achieve since it may work against the interest of incumbents and because of divergent interests and business models.

Practical perspectives

Opportunities for research

Links

Covisint homepage
Compuware homepage

References

1. ↑ J. Kandampully, "B2B relationships and networks in the Internet age," Management Decision, vol. 41, pp. 443-451, 2003.
2. ↑ M. Gerst, "Shaping IT Standardization in the Automotive Industry - The Role of Power in Driving Portal Standardization," Electronic Markets, vol. 15, pp. 335, 2005.