Only 30 years ago, initiation of projects within businesses was the exception rather than the rule. Only 10 years ago, the ability to support distributed project teams was an expensive and complex task. Today, thanks to the WWW, there are almost 100 software tools and applications that support distributed project management (DPM) functionality in both general and industry/process specific arenas. Distributed Project Management: Update 2002 (Volume 1) profiles 33 general DPM vendors; Volume 2 of the report will profile DPM vendors who have moved from the general DPM market to specific industry and process markets.

Half of the vendors profiled last year are again profiled this year; an additional 16 vendors are profiled this year. Also included in this report are virtual team tools (VTT), because there is so much feature overlap. The VTT vendors are: Lotus QuickPlace, Documentum Team Manager, Open Text LiveLink, and SiteScape Enterprise Forum. Although these vendors included some project management features, they excelled in features that focused on the management of documents and interactions between team members. 90% of the DPM vendors had document management functionality, with most vendors supporting functions like check-in, check-out, and version control.

10 trends are seen in DPM for 2002, including the use of Web services, increased ASP support for DPM tools, the incorporation of risk management and budgeting functions into DPM tools, features to support the project management office (PMO), support for micro projects, and the increasing integration with ERP data sources and critical business processes.

The number of vendors selling directly (rather than through a channel) increased about 13%, with enterprise licenses vs. ASP remaining at the 80%/20% ratio. Target markets for DPM vendors included government, professional services, IT organizations and software projects, pharmaceutical/ healthcare, oil/gas/energy, manufacturing (both discrete and process), financial services, aerospace, and new product development.

There is an increasing reliance of DPM vendors on partnerships, with the Big 5 consulting firms being the most common alliance both in 2001 and this year. Last year, Primavera and Niku were the most common vendors to be seen as competitors; this year, Microsoft has taken the top competitor spot.

Venture funding for DPM tools continues. Overall, about 1/3 of the vendors profiled received an average of $20M in two rounds of funding. However, only 2% of the vendors profiled saw capital investment as their growth strategy. In the past (2000-2001), the most popular growth strategy was to add new features and functions. This year, growth strategies have shifted from being technology-driven to marketing- and sales-driven efforts. We believe this is the sign of a rapidly maturing market. Additional evidence for this is the 15% increase in the average number of end users for a typical DPM implementation. However, the adoption and penetration of these collaborative technologies is still the number one challenge for DPM vendors.

20% more vendors are supporting both synchronous and asynchronous collaborative functions; some of these vendors have implemented these functions through partnerships with real time collaboration vendors like WebEx Communications, Inc. We also saw a corresponding increase in the level of interactivity supported by DPM tools, with the VTT being the best at this. 70% of the DPM vendors have some type of project budgeting functionality, but only 50% could do any additional financial analysis, such as risk management, earned value analysis (EVA), and activity based costing. Many of the vendors have also added functions to deal with all aspects of a project’s life cycle.

Although the DPM market is projected to be $7.2B by 2007, this last year has been challenging. Overall, DPM revenues dropped 22% from 2001, and projections by most vendors for 2003 were also decreased. However, staff level growth for these vendors and overall compound annual growth rate (CAGR) was about 25%, making the value of the DPM market for 2002 just below $1B.

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