The economic stimulus assistance injected into major industrial countries to counter the effects of a global recession shone a spotlight on the need to rebuild their infrastructures. The need to manage such public works investments efficiently has generated a huge potential market for project management software and related services.
Even without the stimulus packages, though, worldwide spending on such projects is truly eye-popping — making the market for PM systems similarly astounding.
“Current estimates are that (US)$12 trillion per year is spent on fixed capital projects worldwide, representing 20 percent of global product,” J. LeRoy Ward, executive vice president of ESI International, told CRM Buyer.
The market potential for PM software systems has hardly been tapped in terms of its use for both public works and private industrial projects, and it will grow as more businesses and governments embrace the concept.
Market Surge Ahead
The PM market will likely grow even more when a related function — portfolio management — is added. The two are sometimes rolled into one market, referred to as “project and portfolio management,” or PPM. Estimates of the current market for PPM software and services vary, depending on the scope of applications.
The PM market accounts for about $1.2 billion annually, according to Margo Visitacion, an analyst at Forrester Research.
PPM, on the other hand, was an estimated $2.9 billion market in 2008, said Sanjeev Pal, a PM specialist at IDC.
The market is expected to grow substantially over the next several years; PPM software and services will reach $4.2 billion by 2013, projected Pal.
“Project management is a systematic and organized set of repeatable processes that bring order and efficiency to the execution of a project,” said Mark Langley, executive vice president and chief operating officer of the Project Management Institute.
“Project management is characterized by the application of knowledge, skills, tools and techniques to achieve defined objectives,” he told CRM Buyer.
PM is not just a rigid or institutionalized system but is an “art and a science” incorporating a human dynamic as well, noted Mary Gerush, a market analyst at Forrester.
“Strong project management relies on the abilities to build teamwork, collaborate and facilitate,” she told CRM Buyer.
The use of IT will be absolutely critical to the efficient management of projects in the future.
“Project management software solutions help to facilitate the analysis and management of these projects to help organizations determine the optimal mix of projects and resources to achieve their goals,” said Christian Gravelle, senior technical analyst at the Branham Group.
“Without these solutions, it can be difficult for organizations to assess which projects they currently have on the go, what resources have been allocated to them, and the ongoing costs associated with those projects,” he told CRM Buyer.
Two Avenues for Growth
Among the trends likely to have an impact on PM market potential, two stand out. One involves the continuing advances related to information technology, such as Software as a Service. Another is the broadening scope of managerial science that can be enhanced through PPM technology.
Advances in e-commerce will be increasingly valuable in encouraging the use of PM technologies, noted Branham’s Gravelle.
“These solutions are beginning to incorporate more of today’s Internet culture,” he told CRM Buyer, “such as Web-based interfaces, support for mobile devices for workflow approval, RSS feeds for status updates, and Web services to incorporate third-party solutions into complex processes, including human workflows and system-to-system orchestration.”
Another PM trend worth noting is the increasing importance of portfolio management, according to Melinda Ballou, program director for IDC’s application life cycle management research.
While project management focuses on the efficient use of resources within a specific project, portfolio management entails the effective orchestration of a wide scope of projects.
For example, a builder may use PM for constructing an office building, while also using PPM to keep track of the status of all the individual projects undertaken by the company.
“With limited resources and the need for greater productivity, enterprises need to do a better job of prioritizing the full spectrum of their activities, and that’s where PPM comes in,” Ballou told CRM Buyer.
In addition to tracking current projects and portfolios, enterprises are seeking to use technology to predict situations and model future outcomes — a capability that could be met with PPM technology, added Ballou.
Changes in traditional management techniques will be a major factor shaping the use of PPM software, added Forrester’s Gerush.
“Organizations are seeking to cut waste and focus on activities that add value without adding overhead,” she told CRM Buyer. In the future, enterprises will jettison standard command-and-control management and shift [toward] more simplified and informal procedures.
The PM community and the IT providers serving the PM market have some formidable challenges to address, observed PMI’s Langley.
“The continuing influx of different cultures in the workforce, combined with the increasing globalization of business internationally, will no doubt impact project management in the future,” he told CRM Buyer, “creating challenges such as such as language barriers, communications synchronization and additional training requirements.”
PM vendors must fully embrace the access issue, said Ballou — that is, make PM technology relatively easy to use and affordable. The development of Software as a Service capability, which reduces the front-end investment, will be increasingly important.
“The majority of vendors that do not yet have SaaS delivery models will have them, including cloud alternatives, within the next 12 to 18 months,” she notes in IDC’s August report on PM technology.
Vendors Poised to Enhance Offerings
Fewer than two dozen companies currently provide most of the technology resources used for PM.
Major players include Microsoft, Oracle, CA, Serena, Daptiv, Planview, Compuware and HP, according to the Branham Group.
The solutions offered by all of these vendors go well beyond the original Microsoft Office Project capability and provide the centralized management of previously distributed project and resource information, says Branham.
In addition to the vendors Branham counts as major players, IDC names Planisware, @task, InnotasIBM, SAP and BMC Software.
While most firms have broad capabilities, Planview and CA are leaders in providing enterprise PM programs, IDC notes, while Daptiv, Innotas and @task are strong in providing on-demand and SaaS offerings.
Still, Microsoft is the dominant vendor, and Oracle’s acquisition of Primavera in October 2008 has put that firm in a strong marketing position.
Vendors will be quite aggressive in enhancing their products over the next year or so, predicted IDC’s Ballou.
“The range of products available and the breadth of participating vendors — from small startups to the largest software providers in the industry — exemplify a vibrant, dynamic market,” she says in IDC’s market report. “This means that users have a broad palette from which to choose in evaluating and adopting appropriate solutions.”