End of the road for car makers' inhouse IT

NEWS Web-hosting company Exodus will now manage all of Covisint's global infrastructure and operations, including storage, security, applications and network services. The move is part of a cost cutting scheme by the company as it tries to meet a $280bn transaction target within the next year. The outsourcing plans have been welcomed by Covisint technology providers, Oracle and Commerce One, who claim the exchange needs to drum up more business. This is despite last week's $2.6bn shopping spree by Daimler Chrysler, which was the largest ever deal made through such an exchange, and reports have been confirmed that French car manufacturer Peugeot has joined the exchange today. While financial details of the deal have not been revealed, exchange members claim the move will save a significant amount of money, and let it concentrate on building liquidity. Analysts say that failure to reduce expenditure at this stage could have prompted buyout bids from founding members such as Ford or General Motors. Meeting transaction targets is particularly important for Commerce One, which holds a seven per cent equity stake in the e-marketplace. Patrick Meyer, director of corporate communications at commerce One, said: "We're determined to see Covisint succeed. Our goal is to build up relationships with buyers and sellers. If outsourcing reduces costs and lets us concentrate on that, then it's what we'll do." While Oracle, which provides the exchange's applications and databases, does not have the same financial involvement, the software giant's B2B marketing manager Phil Wood welcomed the move. "Information technology is not Covisint's core competency. It's automotives. Cost issues may have accelerated the move, but I think it was always on the cards," he said. Covisint has been live since September 2000 and counts Ford, General Motors, Nissan and Renault among its founding members.