Web-Based Project Management Software SMB Buyer Report – 2016

Each year, hundreds of buyers from small to midsize businesses (with $100 million or less in annual revenue) contact Software Advice for a free project management software consultation. These conversations provide us with unique insight into the project management (PM) market, including:

  • How small and midsize businesses (SMBs) are managing projects
  • What functionality buyers want most in new solutions
  • Challenges driving businesses to purchase a PM platform

To learn more about SMB buyers searching for Web-based—also known as “cloud-based”—PM solutions, we analyzed a random sample of recent consultations and compared our findings with those from 2015.

This report can help guide other PM software buyers as they evaluate cloud software.

Key Findings

  • The majority of SMB buyers (60 percent, combined) are looking to purchase PM software for the first time, a trend that has remained consistent since 2014.
  • The two most-requested software tools are task management (70 percent) and reporting (49 percent)—an interesting split between basic and advanced functionality.
  • First-time buyers cite the need to automate processes (30 percent) as their main purchase driver, while most repeat buyers want to improve ease of use (32 percent).

Majority of Prospective Buyers Aren’t Using PM Software

Only about one-third of the buyers in this year’s sample (35 percent, combined) are currently using PM software to manage projects.

On the other hand, a combined 60 percent are using manual methods (pen and paper, spreadsheets or email); non-PM software (including office management suites, such as Microsoft Office or Google Apps) or nothing at all.

 

Prospective Buyers’ Current Methods

The rough one-third/two-third split between buyers replacing software and purchasing it for the first time is a consistent trend across our annual PM buyer reports:

  • In 2014, 35 percent were looking to replace their existing system, versus a combined 61 percent who were using manual methods and/or non-PM software.
  • In 2015, 32 percent were using PM software, while 70 percent of the buyers sampled were using manual methods.

This tells us that first-time buyers remain the largest demographic in the PM marketplace, as SMBs continue to find manual methods and non-specialized software insufficient for managing projects.

Cory Chaplin is the director in the Technology Integration practice at West Monroe Partners (a business and technology consulting firm).

Chaplin says businesses often use Microsoft Excel to manage projects when the complexity and number of projects is low, eventually making the jump to PM software as both increase.

What’s more, Chaplin notes, the shift to specialized software can be triggered by the growth of the team. Managers of larger teams must manage resources more effectively—especially when teams are geographically distributed.

Kurt Schmidt is the director of project management at The Nerdery, a custom software design and development firm. Schmidt notes that as teams grow and advance in PM maturity, they require software that provides the necessary structure to scale management processes across an organization.

In addition to this structure, PM software offers visibility and data analysis capabilities that other methods simply can’t provide.

“It’s important for [buyers] to be planning years out—not months out—on what that scalability is going to look like,” says Schmidt.

He advises organizations to estimate the future growth rate of both the size and number of projects: More growth means they’ll need a PM solution with a greater breadth of functionality.

Buyers Want PM Platforms With Well-Rounded Functionality

This year, we found an interesting split between the functionality buyers most often request: Both basic and more advanced capabilities top the chart.

 

Top-Requested PM Software Functionality

Task management (requested by 70 percent) is considered a basic software capability, because it deals with the day-to-day management of work items. The same is true for time tracking (43 percent), which allows managers to assign tasks for the immediate future and measure the time it takes to complete them.

Given this, most vendors include these capabilities in their base packages.

Tools that allow users to forecast or plan resources, tasks and schedules are typically considered mid-tier functionality. These include Gantt charts (21 percent) and more advanced resource management tools (37 percent).

Finally, capabilities that allow for long-term project planning and analysis, such as reporting and analytics (49 percent), are often reserved for top-tier packages.

As teams mature in their PM methods, they require more advanced functionality that allows them to forecast farther into the future.

According to Schmidt, the difference between basic and advanced tools is simply how far into the future they allow the project manager or the project management office (PMO) to see.

Project Tracking Is #1 Software Capability Buyers Seek

This leads us to an important finding not immediately borne out in the chart above:

Taken together, project tracking tools (reporting, dashboards and Gantt charts) are requested by a combined 94 percent of buyers in our sample.

 

Top-Requested Project Tracking Tools

This makes project tracking the number-one capability buyers are looking for when evaluating new PM software.

Tracking tools provide managers with an overview of actual progress made against initial estimates set for a project’s scope, budget and timeline—key metrics that are later used to determine project success.

    • Reports help managers capture a snapshot of this progress, which is helpful when making comparisons across teams or projects.

West Monroe’s Chaplin notes that the last decade has brought an influx of sophisticated cloud-based systems with project tracking capabilities, noting that “metrics tracking and visualization are key components to support team productivity.”

The Nerdery’s Schmidt says dashboards, in particular, have had a huge impact on his organization’s success:

[Dashboards] allow us, at a glance, to take stock on where we are within either a single project or a group of projects in a portfolio or program.

Kurt Schmidt, Director of project management at The Nerdery

First-Time Buyers Seek Automation and Standardization

Owing to the large number of first-time buyers in our sample, we looked at pain points for this group separately from those of buyers replacing an existing system.

The top purchase drivers for first-time buyers include the needs to:

  • Automate processes and reduce errors (cited by 30 percent)
  • Standardize processes and workflows (26 percent)
  • Increase visibility and accountability among team members (23 percent)

 

Top Reasons for Evaluating PM Software for the First Time

These pain points are not uncommon for first-time buyers—especially for those using manual methods. Many businesses that start out using spreadsheets, for example, eventually run into version-control issues or errors due to manual data entry.

Manually managing everything in Excel is virtually impossible, because [users] can’t be simultaneously logged on and making data changes.

Anonymous first-time PM software buyer

Excel can’t manage any actual deliverables or tasks. Employees have to manually email out project schedule updates, which is incredibly time-consuming.

Anonymous first-time PM software buyer

These types of issues can be further compounded when processes and workflows aren’t standardized across a group. For example, if different teams update task status notes at different times of day, it can be hard for managers to accurately gauge project progress.

Cloud-based PM systems can help solve these problems for businesses by automating daily task management and resource management and scheduling.

Cloud systems automatically update in real time, as progress is made on tasks or changes are made to a project schedule.

Even better, the platform itself serves as a standardized, structured work environment for users.

Better Ease of Use Is Top Driver for Replacing Software

The most common reasons buyers are looking to replace existing PM software include:

  • To improve ease of use (cited by 32 percent)
  • The desire for an integrated suite (29 percent)
  • The need to manage more complex projects (23 percent)

 

Top Reasons for Replacing Software

These findings reflect the fact that purchasing software is typically the easy part. Implementing the system and training employees to use it are areas where businesses tend to run into problems.

Simply stated: If end users don’t find the new software user-friendly enough, they won’t use it.

One way to combat this issue is to trial potential products. Most vendors offer product demos or free trial periods where businesses can vet products before they buy.

Make sure the team members who will actually be using the product day-to-day are part of the demo group—after all, successful implementation depends on how easy the system is for them to use.

Trialing products prior to purchase also gives businesses the opportunity to evaluate platforms based on their integration and API (application programming interface) capabilities.

Chaplin says many businesses will need to leverage their project data in other systems. Thus, a PM platform that integrates with other software or has an open API allows them better access to this data.

For companies with projects that are growing in complexity, Schmidt recommends a software-evaluation tactic that works well for his teams at The Nerdery.

They conduct internal surveys with both internal and external stakeholders, gauging their feelings about the service and data their current software provides and how it’s helping them achieve goals.

“I might send a survey to our executive committee, asking them if they feel they have a good understanding of the health of our project portfolio,” Schmidt says. “[And] I might send a survey to a client asking if they feel the level of communication and the KPIs and the data that they’re receiving is helpful.”

According to Schmidt, this gives him a good outlook on how the software is either enhancing or detracting from users’ ability to deliver projects successfully. If the tool is no longer adding value, it’s time to upgrade to a more advanced system that’s better equipped to support more complex projects.

Conclusions

Based on the results of our research, prospective buyers of cloud-based PM software should evaluate their organization’s PM maturity and plans for growth before investing in new solutions.

This will help buyers assess what their needs will be in the years to come, and whether they’ll require software with more advanced functionality to support those needs.

If your team or organization is ready to start exploring cloud-based PM systems, here’s what you can do:

  • Call our Software Advisors at (855) 998-8505: We have PM experts on staff who can help you start your software-selection process. After a short phone consultation, they can provide you with a list of several cloud-based products that fit your needs.
  • Take an online questionnaire: For individuals who prefer to answer questions online, our PM questionnaire will guide you through a similar set of questions to evaluate your business needs. At the end, we’ll match you with up to five vendors of cloud-based PM software.
  • Read reviews: Once you have a short list, head over to our reviews page to read how other customers have rated those systems for qualities such as ease of use and customer support.

Demographics

The industries with the highest concentration of buyers in our sample include:

  • IT/software and technology (16 percent)
  • Manufacturing and engineering (16 percent)
  • Marketing/PR and advertising (12 percent)

 

Prospective Buyers By Industry

We also took a look at the buyer breakdown according to business size (keeping in mind that this report looked specifically at SMBs with $100 million or less in annual revenue):

    • The majority of buyers in our sample are from businesses with between $1 and $25 million in annual review (a combined 60 percent).
    • The largest percentage of businesses have between 101 and 500 employees (27 percent).
    • The majority of businesses are looking to purchase cloud-based PM software for between two and 15 users (a combined 64 percent).
By Annual Revenue: Prospective Buyer Size
By Number of Employees: Prospective Buyer Size
By Number of Users: Prospective Buyer Size

A detailed methodology for this report can be found in the Buyer Report section of our methodologies page.

If you have comments or would like to obtain access to any of the charts above, please contact eileen@softwareadvice.com.

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