Once viewed as the poster child of the new web-based B2B world, Covisint, the auto industry exchange jointly created and owned by the major automotive OEMs (GM, Chrysler, Ford, etc.), sold its remaining data messages and collaboration services platform to Compuware, a company known mostly for its software development tools. A few months previously, it had sold off its auction services to Free Markets, which in turn is being acquired by Ariba.

Times have really changed. While obviously, virtually everything was affected by the Internet bubble, Covisist seemed real , given the strong financial and business backing of the auto giants, and statements that implied suppliers would be forced to trade across the exchange. I didn't go back and look at the numbers, but I remember the calculated potential was huge - tens of billions spent by the auto OEMs with suppliers, nearly all of which would eventually go through Covisint. In those heady and irrational times, there were statements along the lines that Covisint would eventually be worth more than the auto makers themselves, which made no sense on its face but was certainly said.

Well, the last vestige of Covisint was sold off last week, with Compuware estimating it could squeeze maybe $20 million in revenues out of the thing. Would love to compare that number to the total investment that was made over the last 5 years.

What happened? Changing process is always harder than most people think. There was distrust between the OEMs and suppliers about how the data would be used, and how this would impact the balance of power. Each OEM had to run its own processes and methods through the exchange, which limited the overall value. Auctions proved to be less useful than expected.

While private exchanges and web portals seem to be slowly but surely gaining traction, the large public exchanges, with a few modest exceptions, have frankly not had much impact on the market.

Was it the fundamental Covisint model that failed? What went wrong? Is the overall public exchange concept one that will never really succeed? Let us know your thoughts.