Kevin W. English
Chairman, President and CEO
Covisint, L.L.C.

Remarks Before the University of Michigan Management Briefing Seminars
Grand Traverse Resort
Traverse City, MI

August 10, 2001

Thank you, David (Cole).

Good morning. It's a pleasure to be here today.

What a great turnout! I hope I'm not keeping you from something more important… like your golf game. But if I am… I'm honored that you chose to listen to me, rather than to your golf partner swearing over a missed putt.

It's an honor for me to be featured in the same session as Bo Andersson of General Motors, Jim Bolte of Toyota North America and Dan Garretson of Forrester Research.

The other day, at the J.P. Morgan/Chase conference, I had the opportunity to address a number of analysts and suppliers. It was a very impressive crowd.

They were all interested in what Covisint was doing and how well we were doing.

I say that because it gives me an opportunity to address some of the misconceptions about Covisint. To set the record straight, if you will.

That's what I plan to do this morning.

Before I begin, however, I'd like to take note of an event that I find personally important.

For those of you who keep score of such things, Wednesday (August 8) marked my 100th day on the job at Covisint.

The date is important for two reasons:

I'm more excited about the value that Covisint holds for the auto industry than the day I started. Unlike President Bush, my first 100 days were no honeymoon. Today, I stand before you to say that I'm thrilled to be the CEO of Covisint. I couldn't imagine a more exciting, more fulfilling, more fun place to be. When I agreed to take this job, I did it with the full knowledge that the Board members of Covisint were all four-square behind giving the Covisint Leadership Team the authority… and the independence… to run the business and to make the decisions that would move this company forward to become a key player in the global automotive business.

That's exactly what we've been doing. That's exactly what we intend to continue to do.

When I arrived at the hotel last night, I was greeted with a copy of yesterday's "Show Daily."

Let me address this story directly, if I may.

The individuals named in this story are each talented, hard-working individuals with their own personal and professional goals. They served Covisint well during their tenures, and they're transitioning to new challenges that best suit their individual ambitions.

Also, we've never made a secret of the fact that we used consultants to help jump-start our operations. It was a great strategy that delivered superb results. But the consultants completed their jobs and it was time to replace them with employees of our own.

Covisint is an incredibly fast-paced, demanding environment. It's not for everyone. But it is the place to be for those who thrive on challenge… for those who want to make a difference.

I've been blessed with a remarkably talented and dedicated senior leadership team. To round out their talent and experience, I intend to add a few key leaders with finance, human resources, legal, sales and operations experience to the group to ensure Covisint's continued growth.

To give you a better feel for how well Covisint is progressing, I'd like to share some news with you. Yesterday, we had the second Board of Directors meeting since I joined Covisint. Several important decisions came out of that meeting. Let me highlight a few key ones.

The Board ratified the formation of Covisint, Inc., a Delaware corporation. Covisint, Inc. becomes the holding company for Covisint, L.L.C. (Limited Liability Corporation) I'm also pleased to announce that we have appointed several corporate officers. The officers include:

Dwaine Duckett, Senior Vice President, Global Human Resources Alice Miles, Senior Vice President, Global Customer Collaboration (as you can see, she isn't going anywhere) Peter Weiss, Senior Vice President, Global Alliances and Business Development, and Dan Jankowski, Vice President, Global Communications

Each of these individuals has made a tremendous contribution to the creation and development of Covisint, and I am proud to have them as members of my Senior Leadership Team. A press release detailing these actions will be distributed later this morning. During my brief tenure at Covisint, I've been amazed by some of the misperceptions that seem to follow us in the media and analyst reports.

As I indicated earlier, today, I'd like to address some of those misconceptions and shed some light on the truth.

The best way I know how to do that is to take a page from David Letterman and share with you the Top 10 Misconceptions about Covisint.

Of course, being a bit of a contrarian, I'll start with #1 and work my way down the list.

Covisint is controlled by the Big Three

Not true. Let me be honest. When I came to interview for this job, I had some concerns. It didn't take long to figure out that my concerns were unfounded. The executives from the auto companies were completely in-synch with the need for Covisint to be totally independent. They spoke with one voice, and the message they sent was clear. I would be given complete management control over the future of Covisint. They were also clear that the control I was given came with a healthy dose of accountability. But not accountability just to them. Accountability to the entire Board of Directors, which, when complete, will number seventeen, myself included. That means that, of the full Board, 59% are not OEM members. In other words, the OEMs do not have majority rule. I'd also like to add that, since my arrival, not once have the members of the Board tried to influence decisions or direction for Covisint. They've asked a lot of tough questions, they've looked closely at the results, but in the end, they've stuck by their word to run Covisint as an independent company for the benefit of suppliers and OEMs.

Covisint is too expensive

Not true. We have structured our pricing to bring value in such a way that even the smallest of suppliers can use our services, tools and processes for competitive advantage. Whether our customers are using procurement tools that are charged on a per-transaction basis, or our collaborative tools that are charged on a per seat subscription basis, they can control their costs by controlling how and what they use… and the level of involvement they choose. In other words, our customers can build their budgets to use Covisint a little… or a lot. , Covisint provides a reliable, scalable, secure infrastructure for e-Commerce. Balance the cost of using Covisint to the enormous capital expenditures that would be required if you were to try to build an e-business for portals, supply chain management, engineering collaboration and procurement applications on your own.

My competitors will know my secrets

Not true. The fact is that Covisint is built on a philosophy of confidentiality and integrity. We have safeguards in place both from technology and from policy. Data security and confidentiality is of utmost importance to us and to our customers. As it should be! Bear in mind, the way our solutions work, there is no way a competitor will see the data unless the originator - the owner of the data - wants the competitor to see it. Since that's not likely, there's no rationale argument that supports the perception that secrets will be shared. I assure you, THEY WILL NOT!

Covisint isn't ready. We can't wait.

Not true. There is no doubt that we're ready. In fact, we've made tremendous strides in growing our business since we started. We have focused our efforts on four main areas: portals, procurement, supply chain management and engineering collaboration. That focus is reaping results.

For example, through the first six months the year, through the end of June, Covisint has:

Conducted more than 420 on-line procurement events with an aggregate throughput value of over $36 billion. (By the way, one analyst who follows us closely had predicted we wouldn't reach the $40 billion throughput level until the end of 2002! He called our performance "surprising and impressive.")

Also, contrary to some media reports I've seen, more than 85% of the procurement done through Covisint was for highly engineered parts - not commodities.

Supported more than 20,000 catalog transactions on over 200 catalogs containing more than 2.5 million individual items
Registered more than 500 seats for our collaborative product development and quote management products,
Sold more than 1,500 seats for our supply chain management offerings.
Through the end of July, we've registered more than 1,700 companies to participate in our initiative.
And, in June and July, our revenue more than doubled over what we accomplished for the previous five months combined!

So, as you can see, we are absolutely ready!

You should know that we've been focusing our efforts on establishing ourselves with the large, global OEMs and Tier 1 suppliers. There is a sound reason for this. If Covisint is to succeed, we must ensure that we achieve critical mass as quickly as possible. By focusing on the global OEMs and Tier 1 suppliers, we will be able to achieve critical mass quickly, and more readily transition all suppliers into Covisint.

Ultimately, as we establish ourselves securely in the automotive industry, we will seek to engage other, similar global industries. For example, our solutions translate very well to the heavy equipment, farm equipment, marine, trucking and motorcycle industries worldwide.

Our long-term vision is to become the universal operating system for the global industrial economy.

Covisint is just a way to squeeze suppliers.

Nothing could be further from the truth! Covisint was established to drive out costs and waste from every participating company's supply chain, purchasing and product development processes. That means that suppliers and OEMs can benefit from partnering with Covisint's capabilities in portals, supply chain management, collaborative product development and design, and procurement. Savings will come not just from the price paid for materials, but from improved quality, the time and costs needed to develop components, and the visibility into the supply chain and product development process that will enable even the smallest supplier to sense and respond to the changing demands of its customers…worldwide.

More importantly, as our customers get more familiar with Covisint's solutions, they'll find many more imaginative, ingenious ways to use our products and services than we've even been able to consider. And, with our customers' insight and assistance, we will continually refine and strengthen our value proposition

Covisint is for commodity products.

Not true. As I mentioned earlier, more than 85% of the procurement done through Covisint was for highly engineered parts - not commodities. That's because our collaborative tools - Quote Manager and Virtual Project Workspace - and the sophisticated online bidding capabilities of our Procurement Suite, allow for even the most highly-engineered components, systems and subsystems to be sourced, designed, developed and delivered in significantly reduced timeframes, with higher quality and reduced costs.

That capability, which also enables improved accuracy and quality, can help the global industry achieve its desire to be more responsive to changing consumer tastes, bringing the Build to Order model closer to reality.

Covisint is no different than EDI.

Not true. Covisint is significantly different. EDI is an expensive means of moving data electronically from one location to another. The capital expenditures associated with EDI are such that, in the 20 years since it was introduced, EDI has yet to become a system of choice for automotive companies in Tier 2 and lower.

Covisint, on the other hand, is Internet enabled. As such, our pervasiveness will be limited only by the willingness of the industry to adopt it. The smallest supplier, using a PC, a web browser and an Internet connection can tap into Covisint and find value in our solutions.

Of course, for more sophisticated applications, you'll need more processor power and a speedier connection. Whatever you choose, though, you can be assured that Covisint will support the connection. So you can use ANX, ENX, JNX, T1, cable modems or dial-ups and still connect with Covisint. Of course, the faster and more secure your needs, the faster and more secure the connection you should choose.

Covisint is not a global standard. After all, not all OEMs use it.

True. Not all manufacturers use it today. For example, Volkswagen and some others announced that they intend to use their own technology to connect with suppliers.

I would like to repeat my invitation for Volkswagen, BMW and SupplyOn to join hands with Covisint to ease the burden on the global automotive supply community by supporting a common platform that all OEMs and suppliers can use to make their businesses more efficient and connected.

When the concept now known as Covisint was first announced, it was very clear that one of the reason's for its creation was the concern among leaders of the automotive industry worldwide, that they did not want to be placed in the inherently inefficient position of having to support multiple e-commerce protocols. The suppliers did not want to repeat the expense and disruption they endured … supporting multiple CAD/CAM systems, for example.

Covisint is a solutions provider - a technology company that was created to provide the global automotive industry with leading collaborative product development, procurement, portal and supply chain solutions that enable our partners and customers to reduce costs and bring efficiencies to their business operations worldwide.

Covisint isn't afraid of competition, but I am concerned that the proliferation of different technical platforms will bring us back to a time where standards aren't supported.

Dot-coms are dead. Covisint won't last.

It's true that many so-called "dot-com" companies bit the dust in the past 18 months. If you look closely, you'll see that the ones that did were the ones that:

didn't have a solid strategy and implementation plan
had investors "drinking from the Internet Kool-Aid," with no appreciation for the realities involved in turning a good idea into a profitable and sustainable business.
spent themselves into oblivion under the misperception that continual growth and expansion - even to the detriment of profitability - was the only true path to success.

Covisint is not like those companies. Also, Covisint isn't a "dot-com." Covisint is a business. Not only will it last - it will thrive and succeed. The reasons are clear:

Covisint has a solid, competitively superior global strategy and implementation plan that is enabling us to drive significant revenue today. Covisint has a knowledgeable, experienced leadership team and we are continuing to attract world-class talent.

Covisint is delivering exceptional results to a fast-changing global industry today.

We don't need an exchange.

We don't need an exchange.

That's true. You don't need an exchange. Covisint isn't an exchange. It's a solutions provider where global automotive companies can utilize the technology they need today. If Covisint didn't exist, you'd all be trying to figure out a way to invent it on your own.
Why would you do so?

In fact, why would any company in the automotive industry be trying to create a Covisint-like entity of its own?

Are world-class automotive leaders in the business of creating new technology standards? Or are they in the business of building great cars and trucks for the global market?

The fact is that, in this global, competitive industry, anything you do that lies outside your core business competency is a distraction and should be seen as a waste of valuable time and resources.

Now, if the answers to those ten questions haven't helped you better understand what Covisint is all about, let me add a few additional points to emphasize our resolve at becoming the focal point for the global automotive industry.

The companies who have chosen Covisint are no industry lightweights. They include DaimlerChrysler, Delphi, Ford, Freudenburg NOK, General Motors, Lear, Magna, Meridien, Nissan, PSA Peugeot Citroën, and Renault to name a few. Despite their fierce competitive positions, they see the wisdom of rallying around a common platform for engineering collaboration, portals, procurement and supply chain management.

Thanks to seemingly endless months of preparation and hard work by an incredibly talented leadership team, Covisint has quickly become a force for change and improved effectiveness for the automotive industry.

It didn't come easy. In fact, it took a lot of "heavy lifting" to get where we are today.

But the effort is paying off. In the past year alone, we:

Created an organization that managed to support the individual requirements of seven of the most competitive automotive companies and their suppliers
Established a solid strategy and implementation plan
Attracted a seasoned, experienced leadership team
Successfully completed an in-depth, extensive review of every aspect of our business by both the Federal Trade Commission and the comparable German regulatory agency (Bundeskartellamt).
Just last week we received word that the European Commission - our last regulatory hurdle - had cleared us for operation.
Developed and deployed a robust suite of applications that serve specific needs for the automotive industry… worldwide.
Began operations, generating significant revenue in this, our first year.
Developed a strong North American, European and Asian/Pacific presence, giving us a significant global footprint with world-class talent, worldwide.

As you can see, we've accomplished a lot in a surprisingly short time. Our mission is clear: to connect and enable the global automotive industry. The path we've chosen, while not the easiest, holds the greatest promise of success - for ourselves, for the global industry we serve today, and for the global industries we will serve in the future.

The results speak for themselves.

You've heard the numbers.

Numbers are one thing. Equally important, though, is the fact that our customers around the world are seeing significant savings in cost and in time, improvements in quality and are beginning to achieve greater efficiencies and productivity. Weeks and, in some cases, months have been removed from previous processes. Double-digit percentage improvements have been more the rule than the exception. Finally, speed in product development has accelerated as collaborative tools have become more familiar and comfortable for our users, enabling them to work more effectively from their own desktops.

As impressive as this may seem, we know that we have only scratched the surface.

Covisint is still in its infancy. We have many challenges and opportunities before us. Even so, we are making progress.

For example, a significant percentage of the world's automotive industry leaders have joined us. We have about 80 percent of the North American market, 60 percent of the European market and approximately 40 percent of the Asian market… and we are just beginning to partner with and serve the automotive industry worldwide.

Of course, as I mentioned earlier, companies such as BMW, Porsche and Volkswagen in Europe and Toyota and Honda in Asia would be welcome additions to the Covisint family. So too would be any other automotive manufacturers and suppliers - big and small - from every corner of the world.

Should they choose to join us, they will find that the technology and solutions we have and will introduce will bring them significant results as well.

Covisint represents a revolutionary change to the way business is conducted in the global auto industry. It is changing the way automobile industry people work on a day-to-day basis. Decisions are being made faster. Negotiations have become more dynamic. Mission-critical information is becoming more readily available.

The net result for the auto industry:

Faster time to market, which can result in increased global competitive advantage
Reduced waste, and greater efficiencies and productivity
Reduced costs, which can result in higher profit per vehicle and
Improved quality and more exciting products, which can result in greater choice for your ultimate customers - the car and truck buying public.
Clear and accurate communication throughout the global supply chain.

Remember, this is your industry. Covisint is your partner. We are here for you to use to bring value to your organizations.

Do you want to reduce waste in your operations?

Do you want to drive excessive costs out of your processes… and supply chains?

Do you want to improve quality and reduce the capital tied up in inventory?

Do you want to be a stronger, more responsive, more effective competitor in the global automotive marketplace?

Then come to Covisint. Kick our tires. Take us for a test drive.

Embrace the technology!

That's the real and significant value Covisint brings to our industry!

We at Covisint are prepared to deliver the value you are seeking. Together, we can reduce costs, eliminate waste and help drive improved performance for your business.
 

Thank you.