January 19, 2012 / 12:45 PM / 7 years ago

Cloud tech firm Clarizen sees 300 pct sales growth

* Plans to go public within one or two years

* Expects to be profitable by end of year

* Project management market worth $4 bln a year

By Tova Cohen

TEL AVIV, Jan 19 (Reuters) - Israeli start-up Clarizen forecast its sales would rise by 300 percent in 2012, similar to last year’s growth rate, as it benefits from the rapidly expanding cloud computing market in which data and processes are hosted remotely on the Web.

Clarizen, whose technology enables Web-based project management, also expects to go public on Nasdaq within a year or two, Avinoam Nowogrodski, its co-founder and CEO, told Reuters.

Clarizen’s annual sales are in the tens of millions of dollars and it plans to be profitable by year-end.

“We have plans to grow this company, building on our success,” he said. “We grew 300 percent from last year in terms of sales and we don’t see ourselves as an acquisition target. We see ourselves going public.”

Last month SAP announced the $3.4 billion purchase of SuccessFactors as it tries to catch up with rival Oracle and pioneer Salesforce.com in the software as a service market, where business applications are hosted on the cloud, or Web.

Web-based software is popular because companies can vet the products before buying, pay by the month, and do not need to buy expensive hardware.

“We are doing for project management what Salesforce did for CRM (customer relationship management),” Nowogrodski said. “We have a cloud solution fully hosted by us, users don’t need to install it and we help them manage their work pipeline.”

Work and project details for all employees are managed and maintained in one centralised, online location.

The company’s product can also be integrated with that of Salesforce, whose applications exchange offers customers a link to Clarizen’s product.

Microsoft, with its traditional project management system Microsoft Project, is the biggest player in the $4 billion a year project management market, accounting for about one quarter.

Many other large companies such as Oracle, SAP, HP and IBM also have on-premise project management solutions, or software hosted on a company’s own computers.

“I think in general the cloud is going to replace on-premise software for 90 percent of the market. This is one of the biggest revolutions happening now and it’s part of adopting the Internet to be a part of our business operations and not just part of our private life,” said Nowogrodski, who co-founded SmarTeam Corp, which was acquired by Dassault Systemes in 1999.

He believes companies like Microsoft would like to move into this model but are challenged because the technology is disruptive to their business model.

Clarizen’s advantage is that it was built from the ground up as a cloud company and does not face the difficulties of its competitors in changing its way of doing business.

Clarizen — a combination of clarity and zen — has raised $37 million, including $12 million last year from Opus Capital, Benchmark Capital, Carmel Ventures and DAG Ventures.

It has 1,500 clients, including Roche, Federal Express, Hertz, the state of Indiana and the city of Denver, and it is adding over 100 new customers a month. A typical contract ranges from $10,000 to $100,000 a year and 99 percent are renewed.

“We received about 900 orders in 2011 from existing customers for expansion,” Nowogrodski said. “Our business model creates an amazing predictability because of the recurring aspect of our business.”

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