English, 48, previously was managing director at Credit Suisse First Boston and chief executive of TheStreet.com, an online financial news site. English will begin at his new post May 1, Covisint said.
Covisint, announced with great fanfare last February by automakers General Motors, Ford Motor and DaimlerChrysler, is one of the highest-profile business-to-business marketplaces. It is intended to help save millions of dollars in administrative costs by using the Internet to automate purchasing of supplies and raw materials.
Renault and Nissan have also joined the exchange. Since its founding, Covisint has been run by three co-CEOs drawn from the sponsoring carmakers.
Despite its early promise, the exchange has been slow to get rolling due to technological complexity, administrative bickering and a souring market for B2B exchanges, analysts said. An early--and high-profile--Federal Trade Commission investigation also slowed progress. The FTC approved Covisint last fall.
English was not Covisint's first choice for chief executive, analysts said. At least three executives turned down the post, including former Oracle President Ray Lane, according to reports.
English's experience on Wall Street, and with TheStreet.com's initial public offering, could help Covisint in its plans to go public. Covisint executives have reiterated plans to take the company public sometime in 2001, or later in 2002, depending on market conditions. Analysts have anticipated that the exchange could reach a market capitalization exceeding $10 billion by 2005.
Covisint is also counting on English to smooth relations with supplier partners, which have been slow to join the exchange.
"Everything I do will be focused towards customers. I will spend most of my time on customer acquisition, support and retention," English said during a press conference Wednesday morning. "We have to go out as a new company and ensure suppliers that they are number one in our world. Product development is second, I will focus on developing our technology beyond existing products."
But English's experience at TheStreet.com was mixed. When he joined the company, English was charged with building a profitable media company, but by the time he resigned, the company was reporting widening net losses of $7.8 million for the most recent quarter compared with $3.2 million for the same period a year earlier.
English took the company public in May 1999, but the stock--which went as high as $73 on its first day of trading--quickly deflated. Today the stock is trading around $2, and many critics charge that TheStreet.com went public too young in its corporate life cycle.
The executive board at Covisint has been working on building the exchange and finding staff while also conducting a hunt for a chief executive. In January, the exchange introduced a board of directors made up of senior Detroit auto executives.
Covisint founders envision the exchange as a central marketplace for parts auctions and project collaboration among as many as 40,000 companies doing business with the automobile industry, from paper clip manufacturers to multinational chemical conglomerates. Covisint executives claim that when fully operational, the exchange will handle up to $750 billion in annual purchasing.
The Automotive Consulting Group estimates that participating carmakers and suppliers could save $174 billion in 2005 through Covisint, which would represent a cost savings of roughly $3,000 per vehicle.
While Covisint founders expected the exchange to be up and running within a matter of months, technological and administrative complexity have kept the exchange on the sidelines. Early fears of antitrust violations hampered progress and slowed the search for a permanent CEO, and supplier partners have been hesitant to join the exchange because of competitive concerns, analysts said.
Meanwhile, Covisint has been burning through millions of dollars per month, according to analyst estimates. AMR Research estimates that Covisint has spent $140 million so far on technology licenses and services contracts, and will spend another $70 million this year. The exchange is expected to spend up to $350 million before it is profitable sometime in 2002.
"The main reason they are spending so much money is they are building an entire company from the ground up," said AMR Research analyst Kevin Prouty. "It is the equivalent of building the infrastructure of GM, Ford and DaimlerChrysler combined, so the up-front capital is painful" but necessary.
"Timing is everything. Right now (Covisint's spending) may raise some eyebrows. But it really doesn't matter when you look at the long-term savings the companies hope to gain," once their supply chain is brought online, Prouty said.
News.com's Melanie Austria Farmer and Rachel Konrad contributed to this report.