Software Needs Cycle for PM: Determining Project Management Software Needs By Business Size

By: Eileen O'Loughlin on August 18, 2017

Selecting a new project management (PM) system is no small feat. Not only do you have to invest time and resources in vetting prospective tools, but you have to encourage user adoption after implementation.

One of the most common reasons we hear from PM software buyers looking to replace their current system is to improve ease of use so that more people actually use the tool.

When you’re choosing software on your own it can be hard to find the best match from the hundreds of available systems on the market. Some options may be too simple for the project at hand, while others may be over-inflated with features you don’t actually need.

That’s where we come in.

Each year, our Software Advice advisors have hundreds of conversations with prospective PM software buyers for small and midsize businesses (SMBs).

We took a closer look at those interactions and created the first-ever PM Needs Cycle based on the applications most often requested by buyers at different stages in their PM journey.

This research can help you learn at what stage of your PM and business development you should invest in certain software applications to help you start your PM journey, grow and develop your processes and finally optimize your project performance.

Here’s what we’ll cover:

Needs Cycle for PM Software [Graphic]

3 PM Software Applications You Need to Start

1. Task Management

2. Time Tracking

3. Project Scheduling

3 PM Software Applications You Need to Grow

4. Reporting

5. Resource Management

6. Document/Content Management

3 PM Software Applications You Need to Optimize

7. Portfolio Management

8. Budgeting

9. Risk Management


Next Steps


To create this Needs Cycle, we consulted the following research sources:

  • Discussions with real PM software buyers. We looked at a random sample of Software Advice advisor consultations with small and midsize business (SMB) PM software buyers from 2016 and examined top requested functionality based on the number of users needing access to the system.

  • Survey of Software Advice advisors: We surveyed Software Advice’s team of PM software advisors to vet our selections for applications featured in the Needs Cycle.

  • Analysis of Gartner research: We leveraged Gartner’s PPM maturity model and Hype Cycle reports, to help choose some of the technologies featured (the full content available to Gartner clients).

We’ve broken each stage down by number of users* as this criteria encompasses additional signs of growth and development, such as the number of project managers and/or simultaneous projects.

*Note: “Users” encompasses a range of personnel, from team members to project managers to executives. If you’re purchasing a PM tool for a select type of user rather than this range, e.g., just for team members to streamline collaboration or just for project managers to track and report on project status, your PM software needs analysis will likely look much different.

3 PM Software Applications You Need to Start

This section is for businesses who are just starting their project management journey. They need the basic applications required to help set up PM processes, to be used by between one and 10 users.

1. Task management

WHAT IT DOES: Task management software assists with scheduling a task’s start and due dates and assigning that task to a user. Other attributes can be assigned to the task, such as status or priority, and tasks can be organized or grouped together using labels or tags.

Tasks can be organized into to-do lists, showing the tasks to be completed by an individual or by a team. Notifications can be set up to alert users of new assignments, status updates or impending due dates. Audit trails provide a record of the task’s history and archive discussions surrounding task changes.

Learn more about task management software in our Buyer’s Guide.

WHY YOU NEED IT TO START: Task management is at the core of every successful project and project team. Especially when teams are small, going from manual methods to even a simple task management solution can make a world of difference in your project success rate.

For individual team members:

  • Users know what tasks they’re responsible for and when each task is due. They can access the task’s history at any time to locate relevant discussions and/or documentation.

  • These tools can help boost employee productivity by assisting users in organizing their workloads so they can tackle the highest priority items first.

For teams:

  • Activity feeds and group dashboards help teams stay apprised of project progress.

  • The ability to invite other users to collaborate on a task and share files facilitates a group workspace within the tool.

For managers:

  • These tools help increase visibility into employee workloads, allowing managers to more effectively schedule tasks to avoid bottlenecks.

  • They also offer insight into employee performance, helping managers identify high performers and key skill sets, which can help with future project planning.

This is why 80 percent of PM software buyers starting out are looking for task management, more than any other PM software application.


2. Time Tracking

WHAT IT DOES: Time tracking software allows users to record the time spent on project tasks. This in turn allows managers to track time per user, per task or for the project as a whole. Key features include time clocks, timesheets and the ability to set up time categories/classifications (e.g., billable/non-billable hours and pay rates).

Learn more about time tracking software in our Buyer’s Guide.

WHY YOU NEED IT TO START: Time tracking is a natural counterpart to task management. Together, these applications can help teams begin to establish basic PM processes, i.e., what are the steps and the time required to produce a desired result.

Knowing the time required for individual users to complete various tasks, and the overall time required for teams to complete different types of projects, is a crucial stepping stone toward more effective project planning (more on this in the next section).

This is why time tracking is the second most popular application among PM software buyers purchasing a system for one to 10 users, with nearly 60 percent of buyers needing it for their team.


3. Project Scheduling

WHAT IT DOES: Project scheduling tools help you plan out your project start date, end date and key milestones along the way. This process usually involves creating a work breakdown structure and determining the project’s critical path (often using visual tools, such as Gantt charts). Laying out the project in this manner helps you identify task dependencies and/or constraints that have the potential to impact the project timeline.

After project kickoff, most scheduling tools allow you to track the progression of work items along the project timeline. This helps managers ensure teams stay on track to meet deadlines and also offers an early warning if tasks or projects are in danger of falling behind schedule.

Learn more about project planning software in our Buyer’s Guide.

WHY YOU NEED IT TO START: During planning, you’ll work with stakeholders to set baselines for the project’s scope, budget and timeline. As these benchmarks are used to measure project success, it’s critical that you can accurately predict how long it will take your team to complete certain tasks and types of projects.

Scheduling tools not only assist with planning the project, but also allow you to track progress against your initial estimates. This can help you to make more informed predictions and plan out projects with more accuracy.

Forty-five percent of PM software buyers are looking to purchase project planning tools to help with scheduling projects for one to 10 users.


Although more buyers request reporting than project scheduling, we feel that businesses starting their PM journey should first invest in planning tools prior to reporting. That way, they plan first and track second. Otherwise, they’ll be reporting for the sake of reporting without first having benchmarks against which to measure success.

Key considerations: At this stage, most projects are going to be one-off activities which deliver a unique goal (e.g., product or capability). These projects likely align with individual leadership goals rather than an overarching business strategy.

The applications needed at this stage (task management, time tracking and project planning) can help you establish an open and collaborative work environment in which teams can start to define best practices.

As your organization advances in PPM maturity, these best practices will inform the creation of more formal workflows and PM processes.

Recommended reading:

3 PM Software Applications You Need to Grow

This section is for growing SMBs (with 11 to 50 users on their PM system), looking to refine their PM processes to better align with their business strategy. The applications cited here are expected to build upon the foundation created in the “Start” stage.

4. Reporting

WHAT IT DOES: Reports provide a quick visual way for stakeholders (e.g., executives, managers and team members) to get a snapshot of project progress and track key performance indicators (KPIs), such as actual vs. estimated time and costs and overall project health.

Key features include the ability to export data to share with internal and external stakeholders, as well as both “out of the box” and customizable report options.

Learn more about project tracking software in our buyer’s guide.

WHY YOU NEED IT TO GROW: For reports to have any value for growing organizations, it’s important to track meaningful KPIs that align with an organizational performance strategy. Otherwise you’re simply recording trends because you can, i.e., because the software you’re using has that metric as a reporting option.

At this stage, reporting should be more sophisticated than the productivity reporting (e.g., task and time tracking) conducted during the “starting out” stage. In addition to knowing what projects are on track (e.g., “on-time” and “on-budget”), you should start analyzing metrics such as return on investment (ROI), so you can more accurately measure the risk vs. reward for different types of projects and make more informed investment decisions.

Reporting is one of the most requested applications by PM software buyers in the “Grow” stage, with nearly 80 percent of buyers looking to purchase this type of software.


5. Resource Management

WHAT IT DOES: Resource management software is used to identify employee skill sets, track each employee’s availability and allocate them to projects accordingly. Key features include skills tracking, request automation and the ability to assign placeholder resources (i.e., when a certain skill is required for a project but that resource is currently unavailable).

Learn more about resource management software in our Buyer’s Guide.

WHY YOU NEED IT TO GROW: When teams are small (roughly 30 people or less*), it’s likely that individuals share many of the same responsibilities. High performers and developing skill sets can be tracked using basic PM tools or spreadsheets. Project requirements outside the scope of typical skill sets are outsourced.

However, as teams grow (i.e., reaching more than 30 people*), additional resources are brought on and employees develop specializations of their own. Resource management tools can provide the appropriate oversight so to effectively allocate your workforce.

*According to Gartner: “Small work teams (fewer than 30 people) generally don’t need automated tools, although they will need to still match capacity to supply.”

Requests for resource management nearly doubled among buyers moving between the “Start” and “Grow” stages, from 17 percent to 32 percent. This shows how pivotal this capability is for businesses taking on a higher number of, and/or more complex projects. As a result, they need more sophisticated tools to match supply with demand.

Analysts Robert Handler and Donna Fitzgerald advocate that at a minimum, businesses at this stage should focus on bottleneck resources, or those with the skill sets in highest demand, as they define the throughput of the entire system.

Source: Hype Cycle for Project and Portfolio Management, 2016 (content available to Gartner clients)

Requests for Resource Management **at Different Stages of the PM Software Needs Cycle**


6. Document/Content Management

WHAT IT DOES: Document/content management software allows users to create and edit documents, track changes and manage different versions, upload and store files in a central location and share files with internal and external stakeholders. Key features include the ability to set user permissions, add tags or categorize files with labels and maintain files in a searchable database.

Learn more about document/content management in our Buyer’s Guide.

WHY YOU NEED IT TO GROW: A centralized document/content management system is needed by businesses at this stage for several reasons, including:

  • On the business side: As PM best practices are refined and become standard procedure across all projects (and departments), those processes need to be easily accessed by all users to help with training of new members and continued development for more senior staff.

  • On the project side: Accurate project documentation must be maintained over the entire project life cycle. This helps create a traceable audit trail, so decisions around important changes can be reviewed at the close of the project and have actionable takeaways.

Over 30 percent of PM software buyers in the “Grow” stage are looking for document/content management tools to help them maintain their project database.

Requests for Document Management at Different Stages of the PM Software Needs Cycle****


Key considerations: At this stage, you should have identified your organizational goals and developed a business strategy to achieve those goals. As such, projects are likely more interrelated and each contribute to this overarching business strategy (instead of acting as one-off endeavors).

The applications needed during this growth stage (reporting, resource management and document/content management) reflect this broadening scope of PM efforts across departments and business units.

This growth and development of your PM processes will require an organizational change management team, and eventually, a project management office (PMO). You will also need to perform resource capacity planning so you can effectively juggle resource availability with increasing project demand.

Recommended reading:

3 PM Software Applications You Need to Optimize

This section is for established businesses looking to optimize their PM performance to support cross-departmental business efforts (now with over 50 users on their PM system). The applications cited here are expected to build upon the foundation created in the “Start” stage and developed in the “Grow” stage.

7. Portfolio Management

WHAT IT DOES: Portfolio management software helps businesses manage simultaneous projects, helping to automate workflows, allocate resources and streamline the planning, execution and delivery of each initiative. Key features include project life cycle management, advanced resource management and cross-project reporting and analytics.

Learn more about project portfolio management software in our Buyer’s Guide.

WHY YOU NEED IT TO OPTIMIZE: Businesses that are running concurrent projects that pull from the same resource pool will need greater governance and oversight than standard PM tools can provide. Project portfolio management (PPM) tools can provide this and more.

PPM tools require a dedicated project management office (PMO) to oversee implementation and facilitate user adoption and training over the life of the tool. Because these tools require a larger investment of time and resources, they are the best fit for SMBs in the “Optimize” stage who have reached a level of PPM maturity that is capable of delivering on these requirements.

Over 30 percent of PM software buyers in the “Optimize” stage are looking for PPM tools to support their efforts as they hone their PM performance.

Requests for Portfolio Management at Different Stages of the PM Software Needs Cycleportfolio-management-request-percentage

8. Budgeting

WHAT IT DOES: Budgeting and financial management software helps organizations manage project costs and track financial performance. Capabilities range from basic time and expense tracking, to project costing and forecasting up to tracking estimated vs. actual cost performance.

Learn more about project financial management tools in our Buyer’s Guide.

WHY YOU NEED IT TO OPTIMIZE: As projects grow more complicated and PMOs juggle a higher project demand with a limited resource supply, budgeting and project financial management become more critical.

Simply put, if a one-off project were to fail in an organization just starting their PM journey, recovery is almost certain. If a larger, interconnected project portfolio were to fail, it could result in a domino effect that a business in the “Optimize” stage would likely struggle to recover from.

Additionally, at this stage, businesses should be conducting earned value management (EVM) analysis to evaluate project performance and control costs over the entire portfolio. Budgeting and financial management tools give them the oversight required to do so.

This is why this application was requested by roughly 14 percent of PM software buyers in the “Start” and “Grow” stages, but is now requested by 22 percent of businesses looking to optimize their PM performance.

Requests for Budgeting at Different Stages of the PM Software Needs Cycle****budgeting-requests-bar-graph

9. Risk Management

WHAT IT DOES: Risk management software helps organizations structure workflows and practice an effective risk management strategy (sometimes referred to as issue or change management). Capabilities that align with risk management processes include risk identification, risk assessments (both qualitative and quantitative analysis), risk response planning, monitoring and control

Learn more about risk management software in our buyer’s guide.

WHY YOU NEED IT TO OPTIMIZE: Risk management tools can help your PMO enforce strict procedures that guide your risk management strategy. This is the best way to ensure that each project manager at your organization is practicing risk management as an ongoing exercise over the course of the project life cycle, rather than as a one-off event during project planning.

Similar to project financial management, risk management is an important practice for businesses in the “Start” and “Grow” stages, but absolutely critical for those in the “Optimize” stage simply because they are managing a portfolio of concurrent projects, each with their own inherent and yet unknown issues.

This is why requests for risk management among PM software buyers in the “Start” and “Grow” stages are around 2 percent, but jump to 10 percent as businesses progress into the “Optimize” stage.

Requests for Risk Management at Different Stages of the PM Software Needs Cycle


Key considerations: At this stage, you should have established a PMO to oversee change management efforts and the growth and development of PM people resources. The PMO also helps to govern cross-departmental project efforts, allocating resources accordingly and managing simultaneous projects across various business units.

The applications needed during this optimization stage (portfolio management, budgeting and risk management) help maintain successful PM performance by proactively identifying potential threats to success before they become critical. They provide the necessary oversight required to operate at this level.

Recommended reading:


Now that you know what applications you’ll need at different stages of your PM development, you’ll have to decide how you want to purchase these tools.

For example, most vendors tend to bundle applications together in a suite, which can be useful if you’re looking to purchase all the applications required for a certain stage (e.g., task management, time tracking and project planning for “Start”).

You can also find many of these tools as standalone solutions—some even for free, including these five time tracking solutions. This can be useful when you’re in-between stages and looking to supplement your existing solution before you’re ready invest in a more sophisticated platform.

That’s right. These stages are fluid. The day you add an 11th user to your system, you won’t instantly require every application recommended at the “Grow” stage.

You might even choose to add reporting when you’re still under 10 users (provided you’re already using project planning tools so you’ll be tracking with a purpose), and then wait to invest in resource management and document management until you’ve reached 25 users.

The point of this Needs Cycle is not to be prescriptive, but rather to offer guidance based on the tools your peers are using at the various stages of their PM journey.

Next Steps

Software selection is relative. That’s why our advisors work with you to identify your unique industry, business and team requirements and then recommend a shortlist of products suited to your needs at that stage in your business and project management development.

These consultations will also take into consideration the industry-specific needs of your users, which are not reflected in the Needs Cycle above (for example, web and software development teams are going to need bug tracking and access to a code repository. Professional services firms who work on external projects are going to need billing and invoicing as well as a customer service module).

If you’re ready to start your software search, here are a few next steps:

  • Call our software advisors at (844) 688-1783 for a free phone consultation to help narrow down PM systems based on your specific needs

  • Fill out this online questionnaire for a similar consultation without the anxiety of talking on the phone.

  • Head over to our PM FrontRunner’s quadrant to review a list of the top performing products in the market, evaluated by the capability and value they provide SMBs (powered by Gartner methodology).