THE GLOBAL ECONOMY'S widespread shakiness is contributing to the business process management (BPM) software market's fragmentation, creating a sector populated by dozens of vendors with single-digit market share, according to a report issued Friday by Aberdeen Group, in Boston.

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BPM software includes products for managing middleware IT infrastructure and corporate processes such as workflow. Spending in the sector reached $2.26 billion last year, under Aberdeen Group's calculations, with 75 percent, or $1.7 billion, of that total spent on integration services.

Of the three dozen or so vendors offering BPM products, IBM is the market leader, with a 16.4 percent share for a product portfolio that includes its IBM WebSphere MQ line (formerly MQSeries). Right behind IBM are FileNet, with an 8.5 percent market share, and Staffware, with a 7.2 percent share, Aberdeen Group said.

Low budgets for capital expenditures will dampen the BPM market's near-term growth and hold revenue for the sector to $2.54 billion in 2002, the analyst company forecasts. But a focus on IT integration technologies and tools for increasing corporate responsiveness will spur significant growth in the market over the next several years. Manufacturing, financial services, retail and distribution companies will lead the way, pushing total worldwide BPM spending to $6.32 billion in 2005, according to the report.

Unsurprisingly, Aberdeen predicts a shakeout in the still-developing sector.

"The BPM market is not only a market poised for growth, it is also a market ripe for merger and acquisition activity," the report said. "Aberdeen predicts that the majority of BPM acquisitions will occur over the next two years. For companies with money in the bank, the depressed economy and deflated share prices makes earlier acquisitions attractive."

North America is and will remain the primary market for BPM software, accounting for $1.47 billion of the total spent in 2001. Europe follows, accounting for $586 million in 2001 spending, with Latin America at the bottom. In that region, spending is forecast to grow only slightly, from $14 million in 2001 to $31 million in 2005.

Forrester Research, in Cambridge, Mass., also turned its attention to the BPM market this week. Forrester added BPM as the ninth category tracked by its TechRankings service, which evaluates vendors on a number of criteria and lets clients use online tools to sort and customize the research according to their own requirements.

Eight vendors responded to Forrester's call for evaluation participants and are included in the rankings: FileNet, Fuego, IDS Scheer, Intalio, Metastorm, Savvion, Staffware, and Ultimus.

"The evaluation results are indicative of an immature software market; they vary widely," Forrester analyst Sharyn Leaver wrote in a brief introducing the rankings.

In picking a vendor, one of the factors companies should consider is whether their internal processes rely more heavily on automated systems or employees, Leaver wrote. Each developer has its biases: software from Ultimus and Metastorm is best for processes that depend on human interaction, while Fuego and Intalio specialize in system-intensive processes, Leaver wrote in her brief.

But in a market so primed for merger activity, firms should mitigate their risks by placing their bets on BPM vendors that have already partnered with industry heavyweights, Leaver recommended, pointing toward IBM's recent acquisition of BPM vendor Holosofx as an indication of things to come.