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Covisint: What You Should Do Now

The rich community of firms serving the computer needs of the auto industry is confronting a new 800-lb. gorilla in its midst.

The rich community of firms serving the computer needs of the auto industry is confronting a new 800-lb. gorilla in its midst. Its presence is raining havoc on their business-to-business (B2B) plans, product directions and daily lives. The gorilla, of course, is Covisint, the industry consortium formed by Ford, General Motors, DaimlerChrysler, and Renault/Nissan.

Its mere conception almost immediately cast a long shadow across the entire industry. Every B2B vendor serving the auto industry is now reassessing its strategy. These information-technology (IT) vendors are speculating on the potential impact of Covisint on their businesses and how they may operate in its environment.

The original equipment manufacturers' (OEMs) creation of this auto industry marketplace garnered tremendous publicity and attention right off the bat. However, it also unleashed a host of thorny questions. Primary among them is what stature will Covisint ultimately achieve? Assuming that Covisint accomplishes even 10% of its publicly stated goals, every vendor must also address how it will then play in such a Covisint-dominated world.

Depending on how they answer these questions, IT vendors may "bet the company" and bet wrong. This is the case because IT products and business efforts require months and potentially millions of dollars to bring to fruition. Correctly forecasting Covisint's impact, on the other hand, could lucratively land a vendor squarely in the middle of tomorrow's Internet-centric auto world.

Confounding such crystal-ball gazing is the shroud of mystery surrounding Covisint. No one is certain how successful it may be. The firm has absolutely no track record. Its employees have never worked together before. Its owners historically have been extraordinarily combative toward each other.

Covisint's importance overwhelmingly derives from the support of its owners. However, for Covisint to take hold, these OEMs must voluntarily relinquish considerable authority and power to their offspring. Otherwise, Covisint will find itself competing with its parents, an obviously weak position. In the short term, the greatest financial opportunity for Covisint is a successful initial public offering (IPO). If its IPO prospects dim for whatever reason, expect OEM support to wane commensurately.

While Covisint representatives have given many public pronouncements on its mission, direction and so forth, successfully executing on all these fronts is another matter. The firm is now reticent to announce timetables having missed some "go-live" dates already.

Let's assume all these hurdles are overcome. What should a computer vendor do? IT vendors that assume Covisint will be successful are taking a number of different approaches to position themselves harmoniously with the expected giant.

To date, hundreds of IT companies have knocked on Covisint's door presenting themselves precisely as what Covisint needs to become successful. These range from the world's largest IT firms down to individual entrepreneurs. The latter have pitched Covisint from their kitchen phones with dogs barking in the background, said Alice Miles, Interim Co-CEO of Covisint.

Dozens of IT firms dream of being acquired outright by Covisint. Others aspire to become key partners. The most coveted positions are to define the core technologies Covisint will deploy. As of October, 2000 only Oracle and Commerce One (and SAP to a lesser extent) have such coveted positions inside Covisint.

The next ring of intimacy will be those firms certified as compliant with Covisint; typically this follows testing and other checks of compatibility against Covisint standards and procedures. Such a partner-certification program is commonplace in the computer industry although none has yet been announced by Covisint.

This compliance will be predicated on Covisint publicly identifying and publishing the interfaces and business processes it will use to interact with the outside world. Minimally, an IT vendor playing in a Covisint-centric world will at least support such protocols and standards once they are established.

Given this situation, what should users of information technology do in the interim? Monitoring Covisint's progress closely is a must. In particular, look for Covisint to begin supporting specific business services soon. This could include maintenance, repair and operations (MRO) parts procurement (i.e., purchased materials that do not go on the vehicle).

Its first business services should be fully operational no later than January, 2001. Attaining such operational capability soon is a must if Covisint is to prove its mettle in competing with Internet companies that go live exceptionally fast.

In parallel, users should continue to investigate and selectively launch non-Covisint initiatives. These should be the projects and programs that are fast to implement and offer quick payback – even if the fit with Covisint is uncertain. Flexible, open, external interfaces on these systems should facilitate tying them later into whatever protocols Covisint eventually adopts.

Users should query their IT vendors to evaluate how and where their more strategic vendors expect to play with Covisint. Bear in mind that a vendor professing uncertainty about Covisint may be more honest than one claiming insider knowledge and offering roadmaps based on pure fantasy.

In sum charting the best course is possible in today's uncertain world. The most prudent path may be to move forward simultaneously on two fronts: accommodating a Covisint in one, yet pursuing another course where there is no expectation Covisint will become a blockbuster success. The far worse option is to take an indefinite, wait-and-see attitude that could leave a vendor or user hopelessly behind in both the Internet and automotive worlds.

Martin Piszczalski can be reached by email at: martinp@IC.Net

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