The problem: Your product development team is spread over three buildings in Boston, marketing is based in New York, the consultants live in London, the software is written in Calcutta, hardware comes from Duesseldorf and Sao Paulo, and the inquisitive chief executive is on a two-week swing around the world, visiting subsidiaries and business partners.

Hundreds of phone calls, e-mails and faxes later, nerves are fraying. Nobody knows who has the latest agreed version of the spec. The project is in big trouble.

The solution

The solution to this problem has an ugly name - project collaboration software - but it could be the next big thing.

The idea is simple. Use the internet to create a virtual office where all people working on a project share ideas, blue prints and spread sheets, co-ordinate their activities and take decisions fast.

It is the software for the globalised economy. Cumbersome company departments are out. Ad-hoc project teams with members drafted from inside and outside the firm take on the job.

Virtual offices

The task at hand requires more than project management software and a good e-mail network.

A number of start-up companies have begun to provide the tools. All it takes is a browser, an internet connection, a web server and the software to integrate standardised office applications like Word, Outlook and Lotus 1-2-3.

Every team member has an instant overview of the project's progress, can track developments and share the workload.

This virtual office is the glue that holds teams together, whether they are divided by an office corridor or an ocean.

Jostling for market share are young firms like Inovie Software with their TeamCenter and Netmosphere with ProjectHome and giants like Microsoft with its NetMeeting product and IBM Lotus which supplies QuickPlace.

One of the market leaders, though, is Instinctive Technology with its eRoom software.

Cheap trials

The beauty of such project collaboration software is that it comes cheap but can grow quickly. It does not need the company-wide multi-million dollar investment like enterprise software provided by Oracle or SAP.

That made it easy for Instinctive Technology to win its first customers, says Jeffrey Beir, the firm's president, chief executive, and one of its founders.

He persuaded companies to make some space on their servers and trial eRoom in small project teams. Not charging for the software helped as well.

Customer satisfaction and word of mouth did the rest.

Today's list of eRoom customers reads like the who-is-who of global business: Andersen Consulting, KPMG, A.T. Kearney, Deloitte Touche, Hewlett Packard, Intel, 3Com, Siemens, Reed Elsevier, BP Amoco, Pfizer among others.

Corporate software

Instinctive Technology clearly aims at the corporate end of the market, supplying firms that have their own servers to run the software in a secure environment.

But Jeffrey Beir plans to expand into the "application server provider" business, where small companies can rent space in server farms to establish their own little eRooms.

It has been a rapid rise for the Cambridge, Massachusetts, based firm, which shipped its first product in September 1997.

Today Instinctive Technology can quote surveys that say it has captured about 50% of this emerging market, while turnover is increasing about 45% quarter on quarter.

One reason for the success is a nifty marketing strategy. The firm pitched eRoom at management consulting firms. As the consultants hopped from company to company, they spread the eRoom gospel.

On average, customers make an initial investment of about $20.000, and scale up if they like the product.

About 55% of Instinctive's revenues comes from repeat customers who expand their eRoom user base.

Installing the server software costs $9,995 (£6250), plus $199 (£125) for each user. In the UK, where eRoom has just launched, clients get licences for an initial 25 users thrown in for free.

One-product companies?

Despite all the success, Instinctive Technology is still making a loss. The company declines to provide exact figures, but Jeffrey Bear promises that they are getting smaller.

Soon he will have to be more specific. Running on about $30m venture capital after the third round of funding, the company's founders hope to float the firm on the stock market in the "near to mid-term".

The roll-out of eRoom 5.0 this summer and the introduction of non-English versions of the software in the second half of 2000 should provide further momentum.

But even if "project collaboration software" is the next big thing, there is a nagging doubt about firms like Instinctive Technology and its peers.

Ultimately, they are one-product companies. Rivals keep popping up which provide similar software solutions tailor-made for specific industries.

Because introducing the software is relatively cheap, competitors could snatch away market share in no time.

Jeffrey Beir says he will make sure that this won't happen - and uses eRoom to keep his 115 employees to their development deadlines.