According to a report by Inc.com, 49.2 percent of the U.S. employees in the private sector work for small businesses ( Complete report here). While the SMB market faces its own unique challenges, it continues to grow in size and significance. Over the last decade or so, project management software providers have recognized the growing potential of the SMB segment and have started catering to their specific needs.

Small & Medium Business Project Management Outlook - 2016
Source: Pixabay.com

In 2015 we wrote an article “How small businesses are looking at project management” based on a report by Software Advice. Based on their 2016 study “Web-Based Project Management Software SMB Buyer Report – 2016”, we bring to the Celoxis viewpoint on SMB project management outlook for 2016.

SMB Project Management methodology

The 2015 report showed that over 60% of the SMB segment was still using manual methods for project management. In 2016 that number has dropped to 44%. If you look at it with a “glass is half full” perspective, that’s a 16% improvement. But the reality is that there is a huge gap when it comes to technology adoption in small and medium enterprises. Yes, the gap is narrowing but it is also important to understand the reasons for lack of adoption. Is it lack of awareness, cost barrier or lack of process mindset? Experts who watch the SMB space closely believe that the lack of structure and processes in the initial phase lead to indecision in the scale-up phase.

SMB Project Management - Current Methods
Source: Software Advice

Software Advice believes that this is a clear indication 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.

For SMB it is still a functionality game

In 2015 buyers preferred advanced functionality over basic. This year, Software Advice found an interesting split between the functionality buyers most often request: Both basic and more advanced capabilities top the chart.

SMB Project Management - Functionality preferences
Source: Software Advice

This graph paints a very interesting picture; it almost creates 3 distinct levels of desired functionalities.

Task management considered a basic software capability is requested by about 70 percent of buyers. The same goes for time tracking (43 percent). Time and task management are the fundamental drivers of project success, so buyers obviously wouldn’t want to compromise on these features.

The need for scheduling and resource management functionalities indicate deployment of bigger teams and larger projects. These are considered mid-tier functionality and gain relevance as complexity and scale grow. They 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.

You can tie these three distinct categories to organizational maturity. As teams mature in their PM methods, they require more advanced functionality that allows them to forecast farther into the future. Having said that, is graduation the best strategy. Every time you want to add the next level of functionality you end up going through the entire journey of evaluation to implementation to adoption. We believe that’s highly inefficient. The money you would end up saving with a modular approach is wasted in learning curve and inefficiencies. In today’s business context, a comprehensive end to end project management platform is the best answer. (Read: The Case for Comprehensive Project Management Tools)

User Experience is gaining prominence

In 2015 buyers said that outgrowing the existing system was the top driver for replacing software. This year better user experience has emerged as the top driver.

SMB Project Management - 5 pain points replacing software
Source: Software Advice

The top 2 reasons clearly indicate that buyers are now seeking value and not just functionality. The need for better user experience also indicates the challenges involved in implementation and user adoption. When guiding our potential customers in the evaluation phase, we insist they thoroughly test the following:

  1. Alignment of functionalities with project management methodology & roadmap
  2. Speed, responsiveness and downtime.
  3. Get users involved in the evaluation process – Rate user experience & get a sense of learning curve
  4. Quality of support provided

Once a project management solution is implemented, you should not have a reason to replace it. That’s the mark of a good evaluation process.

Conclusion

We have provided commentary on Software Advice’s SMB reports over the last three years. One of the most obvious insights that emerge from them is that organizations tend to ignore their PM maturity and plans as a factor when it comes to evaluating solutions. It’s pretty much like buying a house. You don’t just buy a house based on how it looks on the outside and replace it later if it doesn’t suit your needs.

Hat tip to Software Advice, always a pleasure working with them.