Compuware buys the remains of Covisint

6 February 2004 Software tools supplier Compuware is to acquire the remains of Covisint, just two weeks after the automotive ecommerce co-operative sold its online procurement service to FreeMarkets.

Detroit, Michigan-based Compuware is buying Covisint for its messaging, portal and web services technology. Its flagship product is the Automotive Industry Operating System, a collaboration infrastructure for the automotive sector.

Terms of the deal were not disclosed.

Covisint CEO Bob Paul will continue to run Covisint as a separate unit within Compuware, taking 100 of Covisint’s 120 staff the few miles from Southfield, where Covisint was headquartered, to Compuware’s Detroit HQ.

The purchase will bring to a close Covisint’s short, but turbulent history.

Founded by Japan’s Nissan and the ‘big three’ US car makers in February 2000, Covisint had been set up to provide an eprocurement portal that would enable them to drive down the prices of car parts. The founders invested some $500 million in the company, according AMR Research analyst Kevin Mixer.

However, component manufacturers were understandably reluctant to join — fearing that it would squeeze their already tight margins to the benefit of the big car makers — and Covisint never achieved either the turnover or profits originally forecast.

It had been expected to achieve sales of $240 billion of car parts annually, but instead traded about half that amount since it opened for business in January 2001.

Its last round of funding was in June 2002 and since then the company has undergone repeated rounds of cost cutting.

The e-procurement portal — the lion’s share of Covisint’s business — was sold to online reverse auction specialist FreeMarkets on 31 December 2003, just three weeks before FreeMarkets itself was gobbled up by rival Ariba.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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