DETROIT - Covisint LLC is pursing a new business strategy.
President Bruce Swift, hired in June to turn the struggling venture around, said Covisint cannot survive simply as an online auction house. Nor can it be the equivalent of an in-house information technology department, developing expensive software for limited use.
If Covisint is to be of value, Swift said in an interview last week, it will be as a portal for carmakers and suppliers - a messaging hub with a single logon that offers seamless and secure exchange of data, such as production schedules.
But for that to be successful, Swift and his team will have to convince suppliers that they will save money and see other benefits, such as greater speed, compared with using their own systems.
That won't be simple. Covisint, created by the Big 3 three years ago, has struggled for industry acceptance. Few suppliers used Covisint's software or services unless their customers demanded it. And many suppliers complained that Covisint's biggest revenue generator, reverse auctions, was little more than a way for automakers to determine how low suppliers were willing to go on price.
Kevin Prouty, an analyst with AMR Research of Boston, says the new strategy has promise, primarily because of the scalability of Covisint's technology. "They should have done it two years ago," he says. "I hope it's not too late."
A year ago, about 70 percent of Covisint's revenue came from auctions. Though he would not provide dollar figures, Swift said that percentage has declined to about 40 percent.
Swift, 47, a former Ford of Europe purchasing executive, said Covisint must make its new strategy work because its investors stopped funding last summer. Despite staff reductions and cost cutting, Swift acknowledged, Covisint has yet to turn a profit.