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Compuware buys auto industry hub Covisint

Software and services supplier Compuware will acquire Covisint, an automotive industry e-services firm.

Covisint was created in early 2000 when a consortium of auto manufacturing firms, including Ford Motor and General Motors, teamed up to create a business-to-business supplier exchange.

But as the tech boom backfired and enthusiasm for online exchanges faded, Covisint struggled to attract customers and redefine its goals.

Under the leadership of chief executive officer Bob Paul, appointed in June, the company's assets were put up for sale. The company's auction business sold in late December to FreeMarkets, which agreed to merge with Ariba soon after.

Compuware will acquire Covisint's Communicate portal software, its Connect EDI (Electronic Data Interchange) messaging system, and its Problem Solver dispute resolution technology. One hundred Covisint's employees will move to Compuware's Detroit headquarters.

Covisint will operate as a separate business unit, run by Paul, and its products will be added to Compuware's portfolio as an additional suite of offerings.

Customer services will not be affected by the transition to a new owner, Paul said.

"One of our issues is that we have very high service-level agreements. If we shut down, we shut down customer manufacturing plants."

Compuware's backing will also give Covisint the resources to expand its business internationally.

So far, it has been focused on the North American market, although discussions are under way with several companies in Europe about the logistics of forming a messaging consortium there similar to the one Covisint has in the US. 

AMR Research analyst Kevin Mixer said the takeover will benefit both Covisint, which faced an uncertain future, and Compuware, which gains 135,000 end-users and credibility as a business applications supplier.

The deal is also advantageous for Covisint's existing customers.

"It allows them to start enforcing SLA requirements, since Covisint will now have the wherewithal to back them," said Mixer. "The win for the industry is that for most people that were betting on Covisint, it's going to have a sustainable future."

Stacey Cowley writes for IDG News Service


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