Clarus -Sprinting or Going the Distance?
Written By: D. Geller
Published On: October 20 2000
Clarus - Sprinting or Going the Distance?
Clarus Corporation (NASDAQ: CLRS) announced the addition of strategic
sourcing capabilities to its ClarusAuctions product. ClarusAuctions is
a hosted (i.e., ASP) B2B trading service that supports twelve different
kinds of auction. The enhanced capabilities in version 2.1 include:
for wireless access via phone and PDA
- The addition
of weights to the evaluation of RFQs. With this feature sellers can
apply weights to the individual items on an RFQ when determining which
response best meets their needs.
- The ability
to create a private branded auction within the public ClarusAuctions
site; access can be limited through secure encrypted access keys
- The capability
for bidders to remain anonymous
announced a number of new customers for its Clarus eMarket digital marketplace.
Clarus eMarket enables direct buyer-to-seller connectivity, without the
central hub associated with other marketplace solutions, such as those
from Ariba and Commerce One. It is the first Windows 2000-based digital
marketplace framework, and is built upon Microsoft's latest technologies.
The new marketplace customers include:
a commercial real-estate site that will also use ClarusAuctions
which is designed to provide Hispanic-owned businesses access to the
which provides access to genomic data
a financial services provider that is building a procurement service
that it will use internally and make available to its corporate customers
a builder of online communities targeted to vertical content
Just over one year ago Clarus divested itself of its entire ERP business
and dedicated itself to becoming an e-commerce company. The effect on
revenues of giving up the ERP business makes Clarus look almost like a
startup. Figure 1 shows the company's actual quarterly revenues, compared
to the pro forma revenues taking only the e-commerce business into account.
The Figure also shows comparable numbers for Ariba (NASDAQ: ARBA) and
Commerce One (NASDAQ:CMRC).
1. Quarterly Revenues
here to view larger version
we read the tealeaves, Clarus is trying to follow in the wake of industry
leaders Ariba and Commerce One while selling a different model. For example,
while the Market product boasts that it eliminates the intermediate vendor
hub, Clarus is still effectively in the hub business because it sees the
need to recruit suppliers through its SupplierUniverse trading network.
Grant for the sake of argument that Clarus provides better content management
and other support to its suppliers, as it claims; it isn't obvious that
this is a better model for buyers, and buyers are Clarus' customers. Certainly,
there are companies in the mid-range and somewhat larger that will want
a marketplace with Clarus' "direct" architecture (called ClarusDirect);
however, we believe that there is more to offer most companies with the
promise of a marketplace that is part of a larger network. Both Commerce
One and Ariba use this as a significant strength, in somewhat different
ways: Commerce One through the promise of trading in the global economy
and Ariba through its developing emphasis on the supply chain. We wonder
if Clarus' anti-hub emphasis is really going to catch the forward looking
fish it needs as customers.
we don't see Clarus as likely to be competing against Ariba and Commerce
One directly most of the time, they are both real and virtual competitors.
Real because they recognize the need to have a wider market: witness Commerce
One's tight partnership with mySAP.
Virtual because there are mid-market players offering product suites that
include procurement who connect to Ariba or Commerce One's marketplace,
in this way offering the homey touch in front-end software and the power
of a large trading network.
market for auction software is somewhat different. Although both Ariba
and Commerce One do have offerings, not to mention specialists like FairMarket,
this seems like a market that still needs to define itself. The new features
in ClarusAuctions seem to give it considerable strength and a real opportunity
to carve out a place for itself.
If you're looking to create a digital trading service, ClarusAuctions
is worth giving a serious look. TEC believes strongly in the weighted
evaluation approach, and if the items you envision your marketplace handling
are suitable for that sort of multi-attribute evaluation you'll want to
give this service a test drive.
definitely calls for a careful feature-by-feature analysis. If it is the
right product for you we think you'll also want to look very hard at Clarus'
financial position and pay particular attention to their sales strategy.
With almost $200 million in cash its easy to see a scenario in which an
aggressive sales and marketing program, together with the choice of some
key verticals, makes eMarket a premier choice. It's also not too hard
to imagine a scenario in which the company, whose valuation is about $325
million, becomes a takeover target for the auction product and some of
its technology, with eMarket softly and suddenly vanishing away.