METAspectrum SM Evaluation 100 Leader 80 60 40 Challenger United Management Technologies Expert Choice ITCentrix PlanView Pacific Edge Alinean Artemis Enrich Consulting Business Engine ProSight 20 0 0 Follower 24 May 2004 20 40 60 80 100 Presence META Group is a trademark, and METAspectrum is a service mark, of META Group, Inc.
Market Summary Market Definition This market is composed of approximately 10 very small to small software vendors. Four of the players have a heavy project portfolio management heritage, four have a pure portfolio management focus, and the two others offer deep financial analysis or vertical focus (e.g., pharmaceuticals, high tech). Target buyers are typically business and/or investment decision makers or individuals responsible for implementing business/investment decision-making models, processes, and governance. Portfolio management tools are predominantly a discretionary purchase. However, interestingly, they are used to uncover critical, long-term opportunities, track and assess current business/investment positions, or serve as a controlled, consistent backup for decision modeling and making. Market Forecast This market totaled approximately $85M in 2002 and grew to $180M in 2003. Although growth was slower than originally forecast in 2002, we believe early adopters (which typically pay higher prices) have been seeking lower-cost implementations because such approaches tend to drive portfolio management adoption. As we forecast in 2002, template-based implementations began to take hold in late 2003. Through 2004, this market will fully transition into its early majority phase, driven by expanding adoption of templates or similar packaged deliverables that focus on a particular problem (e.g., IT application rationalization, revenue yield management, customer profitability, merger/acquisition/divestiture, policy demutualization). We believe this market will reach $480M in size by 2005, fueled largely by services companies that instantiate their own models in one or several brands of portfolio management tool, with a modicum of revenue growth from clients seeking to buy a suite of functionality from a single vendor. Undoubtedly, the core discipline of portfolio management (and the functionality of the tools from this market) will expand in project management and asset management tools as well as practices within enterprises of mostly medium and large enterprises. Key Findings Market standards and key criteria used to evaluate vendors in this market center primarily on functionality and the ability to build an indirect sales channel. These capabilities will become critical opportunity drivers regardless of market dynamics, and we expect significant consolidation and competitive landscape changes during the next 18-24 months. Existing players will complete one or two significant acquisitions or become acquired by either a consolidating vendor or large software vendor seeking to augment existing revenue streams (e.g., Oracle project management, PeopleSoft resource management, SAP resource management, Microsoft project management). Market success will remain more dependent on performance (e.g., functionality) than presence through 2004. Indeed, it takes time to refine core portfolio management functionality, exemplified by leaders that have had such functionality in production or in client test sites for at least 18 months. Over time, because the market will trifurcate, performance (as measured by execution and less so by technology) will become a larger success driver, as leaders acquire technology, increase their installed bases, and strengthen market share control points (e.g., distribution, intellectual property best practices, exercisable patents, etc.). The predominant criteria users should consider in their evaluations of portfolio management tools/vendors include technology (functionality, including templates), channel development (as well as the ability to control it), and the ability to keep up with maturing customer needs. In other words, vendors must possess the base functionality, have an external channel to sell it, and account for the fact that customers will want to enhance the discipline over time. Although the technology is replaceable with an alternative approach, there will be nothing more worthless than an investment that provides value for only a year or so. And while the process and methods may remain the same, a technology change is considered an unnecessary disruption and valued only in terms of how inexpensively it can be completed. METAspectrum 23.2 2
Market Summary The following vendors and respective products are included in this report: Alinean ValueIT 3.0 ITCentrix Value Accelerator 3.12 Artemis International Solutions Corp Pacific Edge Portfolio Edge 2.1 Artemis 7 PlanView Portfolio Management 7.3 Business Engine BEN 5.2 ProSight Portfolios 4.0 Enrich Consulting Portfolio System 3.0 United Management Technologies Portfolio Expert Choice 2nd Edition for Groups 2000 Management Suite 8.1 Leaders Leaders in this market have functionality that centers on scenario creation, assessment, and planning; highly automated optimization techniques that produce actionable opportunity models (e.g., efficient frontiers); and decision output for downstream managers on which to execute. Leaders in this market also have an indirect sales channel that will accelerate sales and fuel much-needed maintenance revenue. Most popular indirect channel partners are services organizations with either vertical or niche expertise or brand recognition and regional and local distributors with established local client relationships. There is no time to build large sales and services organizations that already exist within other established software and services firms. Relationships with large software firms (e.g., Microsoft, Oracle) drive the perception of impressive sales potential, but can become equally challenging to support and realize the desired revenue from if they cannot be appropriately structured and adequately supported. Challengers Challengers in this market have less depth and breadth of functionality than leaders do, predominantly due to either their heritage (e.g., project portfolio management orientation looking to provide pure portfolio management functionality) or lack thereof (e.g., functional or channel development immaturity), and/or their focus (e.g., smaller or niche players banking on unique expertise and function to stave off competition). Interestingly, a few challengers scores landed them right on the market borders (relevant market limits), similar to last year s report. We believe these players are most ripe for acquisition, because they lack the presence needed to execute an acquisition strategy (which other, more established players have). Followers This market will no longer have followers. There is no substitute for time in terms of industrializing and then commercializing the functionality into a generally available product for open market consumption. Undoubtedly, competitors exist, but they have not surfaced enough yet to be considered relevant to this marketplace. Any other technology will mostly be one-off, client-specific development efforts. Bottom Line This market will trifurcate into acquisition candidates, consolidation players, and large system providers offering portfolio management functionality integrated with other business processes. Before making a tool investment, users should ensure that such functionality is not already available in current releases of project management or project portfolio management software licenses they already have. If such a purchase is necessary, focus should be on core functionality, followed by methods to accelerate implementation and solve investment decision process issues first, and then techniques to boost investment decision quality with secondary and tertiary facilities. Business Impact: Although the tools in this market can solve exceptional business problems, most often at the boardroom level, the evolution of this market as a whole will have little influence on business in general. These tools enable executives to rationalize, manage, and improve their ability to make increasingly complex business, operational, and organizational decisions driven by risk tolerance, investment performance goals, revenue generation, cost savings, etc. METAspectrum 23.2 3
Vendor Analysis Vendor Evaluated: ProSight Product Evaluated: Portfolios 4.0 and related products 1 - Overall Vendor Ratings Presence ProSight Weighted Score Presence Criteria Area Relative Weight Category Rating Points Score Vision/Strategy 12 Very Good 84 10 Channels/Partners 23 VG/Exc 92 21 Awareness/Reputation 20 Excellent 96 19 Geographic Coverage 5 Good/VG 74 4 Business Drivers 15 Very Good 84 13 Industry Focus 10 Fair/Good 41 4 Investments 10 Good/VG 73 7 Share 5 Very Good 80 4 TOTAL 100 82 Note: The sum of the individual scores may not match the total score due to rounding. ProSight Weighted Score Criteria Area Relative Weight Category Rating Points Score Technology 25 Very Good 85 21 Services 20 Good/VG 67 13 Pricing 15 Good 62 9 Agility 10 Very Good 80 8 Financials 10 Good 58 6 Execution 15 Good/VG 74 11 Personnel 5 Good/VG 71 4 TOTAL 100 72 Note: The sum of the individual scores may not match the total score due to rounding. METAspectrum 23.2 1
Vendor Analysis: ProSight 2 - Vendor/Product Evaluation Vendor: Headquarters Address: Vendor Contact Information ProSight Phone: (503) 889-8900 URL: 9600 SW Barnes Road, Suite 300 Portland, Oregon 97225 www.prosight.com Evaluation Summary ProSight ranked as a leader in this update for several reasons. The company made significant technology improvements (e.g., optimization), delivered on several templates to speed implementation and appeal to significant emerging markets (e.g., Office of Management and Budget Capital Planning and Investment Control), began to harvest revenue from its channel/partner program, and expanded geographic coverage outside the US. What ProSight lacks in size, it makes up for in activity. However, ProSight is at an interesting crossroads. It has now grown large enough and has investors, but it will need to maintain its focus as it becomes known as one of few market leaders. Strengths Strong indirect presence through channels/partners. Direct US geographic distribution and mix of customers. Much better technology than the majority of the market. Strong vision, leadership, and experience to make the right decisions at the right time. Limitations Under-resourced quantity of industry-focused personnel. Position as the vendor to beat. METAspectrum 23.2 2