As B2B grows, contracts between companies are multiplying. According to Goldman Sachs' analysts, it is therefore imperative that companies adopt tools to efficiently manage their contracts.

"We have put a significant amount of time into understanding and validating the contract management business and the impact it has on the industries we researched," said Jamie Friedman, vice president, senior equity analysts for the Menlo Park, Calif.-based division of Goldman Sachs.

According to the research, the need for contract management software exists in across all vertical industries as business-to-business trading partners structure agreements in line with specific objectives.

Goldman Sachs reports that companies using contract management software can reduce annual contract management expenses by 20 to 50 percent. Analysts said also that they anticipate seeing the category reach revenues of $3.1 billion by 2005.

Among the companies rated by the research, I-many was described as the only "pure play" software company. "I-many is providing a strong value proposition in this space, as evidenced by their client base, and they are well positioned to expand their presence in this category through their first-mover advantage," said Friedman.

"DiCarta, a private company, is showing promise," he added. "Among incumbents, i2 and PSFT offer fairly advanced contract software."