Wachovia Corp. is joining the growing number of banks positioning themselves to reap the benefits of electronic commerce.
The Winston-Salem, N.C., company will use electronic procurement software from Clarus Corp. and offer it to corporate customers.
Wachovia announced last week that it had licensed the software, but it did not reveal financial terms.
Wachovia's step is less dramatic than recent moves by Citigroup Inc. and Chase Manhattan Corp. but reaffirms banks' growing interest in the booming business-to-business electronic procurement market.
Citi said last week that it would build a portal for buyers and sellers with Commerce One Inc., the nation's largest electronic procurement software provider. Chase, meanwhile, is forming a procurement company with Deloitte Consulting LLC.
Wachovia expects to start using the software internally by the end of May and begin realizing cost savings in "the tens of millions of dollars," said William Huber, senior vice president and head of strategic sourcing at the $67 billion-asset company.
By early fall Wachovia plans to be using Clarus' software to create customized intranets for its corporate customers, offering them Internet access to a variety of suppliers that comply with pre-approved guidelines.
The service will be marketed to Wachovia's 6,000 corporate cash management customers and its 220,000 small-business clients, said Ranjana Clark, senior vice president and group executive in charge of product management for Wachovia's treasury services division. Fees for access to the site have not been determined, Ms. Clark said.
Wachovia chose Clarus because it creates customized intranet sites for each customer, Ms. Clark said. Also, she said, a Wachovia corporate customer would need to pay only a one-time subscription fee to use the software; some competing software firms would charge for each transaction.
"We liked their core product and their partnership approach to designing the product based on the needs of our customers," Ms. Clark said.
The Wachovia deal is Clarus' second licensing agreement for its eProcurement product, and its first with a bank, said Steve Hornyak, Clarus' vice president of strategy and business development.
"We expect radical growth in this marketplace and are planning to sign multiple agreements in the near future," Mr. Hornyak said. Clarus' first licensing agreement for the eProcurement software was with the Philadelphia-based cable company Comcast.
Clarus used to be called SQL Financial and sell back-office services. It entered the business-to-business electronic commerce market in 1998 by purchasing Elekom, a Seattle procurement software company.
The next year SQL renamed itself and sold off the back-office services operation to Geac Computer Corp., a Canadian software company.
Clarus ranks third among procurement software companies in market capitalization, at $902 million. The leaders - Commerce One Inc. and Ariba Inc. - are much bigger, with combined market cap of about $30 billion.
Clarus said that to raise awareness of its new business model, it is planning a secondary stock offering on March 6.