Project Management Software
Small Business BuyerView | 2014
Every year, Software Advice talks with thousands of buyers looking for the right project management software for their team. The great majority of these buyers are from small businesses (those with annual revenues of $100 million or less), providing us with unparalleled insight into how they evaluate software.
We recently analyzed a random sample of 385 of our interactions with small-business buyers looking for new solutions for project management. By focusing on these buyers, we were able to learn their pain points and what features and functionality they want most in new software.
Nearly half of buyers in our sample were looking to replace manual methods: 46 percent were still using spreadsheets, email or pen and paper. Meanwhile, 35 percent were already using some form of project management software.
It's notable that approximately 9 percent of buyers were using a non-project-management software system to plan and track projects, and found it wasn't fully addressing their needs. These buyers mentioned using accounting software, Microsoft Outlook and time tracking applications. Six percent said they were not using anything for project management, and another 4 percent of buyers mentioned using multiple software applications.
Erika Flora is a certified Project Management Professional (PMP) and a principal at Beyond 20, a firm that provides project management training and consulting. Flora says manual methods are undesirable because of the potential for human error, and tools like Excel lack the central visibility that project dashboards and reporting features bring. In fact, one of Flora’s current clients has reached the same point as many of our buyers: having outgrown manual methods, they are evaluating project management software for the first time.
"They realized that the cost to invest in the commercial project management software was potentially less than a failed project," says Flora.
The majority of buyers did not indicate a deployment preference (75 percent). However, all of the remaining 25 percent expressed a preference for Web-based deployment. There were no buyers in our sample who requested on-premise deployment.
Damon Poole, an agile software development consultant for the high-tech human resources company Eliassen, says the preference for Web-based deployment is no surprise. Ever since Atlassian’s Jira (a project management tool that sold Web-based offerings from the start) began its rise in popularity, similar Web-based tools have enjoyed more popularity, as well.
Now, Poole says, Web-based deployment has become the norm. Most small-business buyers, he explains, want to just go to a website and click to sign up, rather than investing in the expensive hardware and time-consuming configuration an on-premise installation requires.
Flora agrees that many small-business buyers who have limited resources want a quick, easy and cheap solution. However, she notes that companies also need to keep in mind that as they grow, they may need to transition to a more advanced system.
“A lot of times these free or cheap cloud services are great for a period of time,” says Flora. “As you get larger, you have to think about how you are going to scale [your project management tools] so you continue to be successful.”
Project management software encompasses many different types of applications, from time tracking to project portfolio management (PPM). Some vendors offer a set of applications together—called an “integrated suite”—while others offer them as stand-alone, or “best-of-breed,” applications.
The vast majority of software buyers in our sample (88 percent) were interested in purchasing an integrated suite of two or more applications (for example, document management, time tracking and reporting). Only 12 percent of buyers were looking for a best-of-breed application.
It makes sense that most wanted an integrated suite, given that many of the buyers from our sample mentioned they were having trouble keeping track of projects managed across multiple platforms, and wanted to consolidate within a single system.
Of the buyers we sampled, the majority were in job roles that were neither related to IT, nor to project management. While these small-business buyers reflected a wide range of backgrounds, many were in leadership roles. Forty-three percent were executives or senior managers, such as department directors, CEOs, presidents and owners, and another 15 percent were in mid-level management.
Twenty-one percent of buyers were in job roles directly related to project management, such as project managers, product managers, Project Management Officer (PMO) roles or support staff dedicated to project teams. Finally, 8 percent of buyers had job titles related to IT, either as part of a software development team or as part of the company-wide IT department: for example, Chief Technology Officer (CTO).
Since our sample represents buyers from smaller businesses, it makes sense that more business leaders and managers were searching for software (in smaller companies, leadership tends to be more involved in these types of decisions; in larger companies, this responsibility typically falls to the IT department).
The buyer roles in our sample may also demonstrate the widening influence of project management methods in business today. For example, Kevin Archbold, PMP, writes on Project Smart (a UK project management online resource) of the growing “recognition that many of us are managing projects, whether or not we have the title of project manager, and that project management skills are beneficial for a wide range of employees. Similarly, there has been a wider recognition that projects in all industries benefit from project management, not just the traditional industries of engineering, construction and, more recently, IT.”
Jon Quigley, PMP, is the author of works on project management, such as Total Quality Management for Project Management. He says that the diversity of buyers is related to the ubiquity of project management in businesses today.
Quigley cites multiple reasons for this proliferation, such as the availability of cheap software and effective outreach about the discipline of project management by the Project Management Institute (PMI), a leading professional association. However, Quigley points to one day-to-day reality in particular that has influenced small businesses to adopt project management techniques and software: the prevalence of outsourcing and remote teams. Many businesses find they need project management tools to effectively manage and coordinate remote and distributed projects.
It’s not surprising that nearly the entire sample (98 percent) wanted “project management” as an application. However, other top-requested project management applications may be connected to the breakdown of buyers' job titles. Since many of our buyers were business leaders, it would follow that the applications they were seeking would be more aligned with higher-level business objectives. Indeed, the top-requested applications have a direct tie to the business case of projects, such as revenue and project profitability.
For example, time tracking applications were requested in 66 percent of buyer interactions, making them the second most popular. Time tracking can not only help small businesses track revenue for billable projects—it can also help with project planning, in terms of determining profitability.
“[Project acceptance is] based on some estimated cost of the project,” says Quigley. “Your time tracking is going to give you some sort of feedback on the human capital you have invested in the project.”
Similarly, task management applications (requested in 52 percent of buyer interactions) and resource management applications (requested in 41 percent) are tools companies can use to help make sure they’re distributing tasks and using company resources efficiently. Quigley says these application requests are not unique to our small-business buyers, but reflect a larger trend across the market in ensuring profitable projects.
Requested far less were document management (19 percent) and project collaboration tools (12 percent): applications that are important to team communication and information-sharing, but with less immediate ties to profits or revenue.
Of the buyers in our sample, 41 percent said they were looking to improve efficiency and accuracy with a new project management system, making this the most-cited reason. Thirty-two percent of buyers cited the need for greater functionality, and 12 percent said they wanted to automate the project management process. This makes sense, given that (as mentioned earlier) many companies were using manual methods or software unrelated to project management.
Seventeen percent were looking to consolidate their project management system by getting all of their project planning, tracking and communication needs into a single solution. Meanwhile, 10 percent of buyers said they needed to update or modernize their system.
Growth was also a factor for 9 percent of small-business buyers. For example, one buyer, the CEO of a small company, stated that the business was "expecting to bring in many more accounts" and needed software in preparation for this increase in business.
Another 7 percent expressed a desire for better customer support. And even smaller percentages of buyers expressed pain points such as their system being cumbersome and slow (4 percent), needing a system that was easier to use (3 percent), wanting a cheaper option (3 percent) or having a system that was too complex (1 percent).
Our sample was isolated to smaller businesses, with the majority (64 percent) of project management software buyers from companies with 1-50 employees. Meanwhile, 34 percent were from businesses with between 51-1,000 employees.
When we drilled deeper into the data to look at the annual revenue of buyers’ companies, we found that over half had $5 million or less: 30 percent with $1-5 million, and 22 percent with less than $1 million. Among the remaining, 25 percent represented companies with annual revenue of $6-25 million, and 14 percent represented companies with revenue of $26-50 million. Only 9 percent reported annual revenue of $51 million or above.
When we compared the industries represented by the buyers in our sample, we found that there were four main segments: technology, public service, industrial and marketing/advertising. These four industries made up a combined 66 percent of our sample.
Management consulting made up 8 percent of the sample, and professional services accounted for 6 percent. Coming in at 5 percent and under were healthcare/pharmaceutical (5 percent), architecture/construction (5 percent), energy (3 percent) and real estate/interior design (2 percent). Six percent (the “Other” category) were from various industries that each, on their own, accounted for less than 3 percent of the sample.
Software Advice regularly speaks with organizations seeking new project management software. To create this report, we isolated a sample of small-business project management software buyers (from companies with annual revenues of $100 million or less). We randomly selected 385 of those interactions to analyze. If you’d like to further discuss this report or obtain access to any of the charts above, feel free to contact me at firstname.lastname@example.org.