The number one challenge small businesses face when planning technology investments is identifying the right tools for their business needs, according to Capterra’s 2018 Top Technology Trends survey.
This makes sense. Small businesses have fewer resources to invest with and so have to make strategic decisions on what technology to invest in.
Purchasing software to streamline core business functions such as accounting, data security, and customer relationship management may be a no-brainer.
But what about project management technology? Just how critical are these tools to your business success?
As part of our Top Tech Trends survey, we asked more than 700 small and midsize business (SMB) leaders in the U.S. about the role that project management technology plays in helping their organization achieve its business goals (click here for more details on our survey).
Our research indicates that by 2020, more than 70% of SMBs will be using PM tech to improve strategy execution and achieve their growth goals. And, despite an increasingly cutthroat war for talent that threatens that growth, we estimate that they’ll achieve their goals 15% faster than those that have not invested in PM tech.
Our findings, presented below, can help you evaluate how critical these tools should be to your business strategy and weigh the potential return on your investment, so you can make a more informed investment decision.
SMBs are increasingly adopting PM tech to improve employee effectiveness
Analysis: Employee effectiveness has a direct impact on a small business’s ability to achieve growth goals. High performers are more productive than average workers and achieve results more quickly.
There are three main ways an SMB leader can seek to improve employee performance and productivity:
- Hiring and retaining the right talent
- Improving outdated processes and techniques
- Investing in the right technology
When we look at our data as a whole, we see that 57% of SMBs are currently using project management technology and 14% are planning to invest in these tools in the next year or two (see Figure 1).
The rate of adoption tells us that small businesses across industries are increasingly embracing PM tech as a means to improve employee effectiveness, break down silos, and gain insights into project analytics—ultimately helping them become more competitive and profitable.
When we break down the “currently using” response by industry, we see that trade-based industries have an above-average adoption rate of PM tech (see Figure 2):
Average for “currently using”: 57%
- Construction: 73%
- Manufacturing: 59%
- Services (IT, software, and/or consulting): 59%
These are the same industries that have been hit the hardest by the skilled labor shortage. They can’t increase productivity by hiring high-performing talent, so they’re relying on PM technology to improve the effectiveness of their existing employees.
When we break down the “planning to use” response by industry, there are two fields with above-average adoption (see Figure 2):
Average for “planning to use”: 14%
- Healthcare: 26%
- Financial services: 25%
If you’re an SMB leader in healthcare or financial services and you have not yet invested in PM technology, we recommend that you start evaluating systems with the intent to implement these tools by 2020 or risk being outmatched by your competitors.
Key takeaway: To achieve growth, small businesses must lead cross-functional change initiatives. And if they can increase employee productivity with the right PM tech, creating high performers out of average workers, they can achieve their growth goals in less time.
High performers are more productive than average workers and can achieve results more quickly. A study by McKinsey found that if you have a project that’s expected to achieve results in three years and you replace a fifth of your average workers with high performers, you could achieve the same results in less than two years (about 30% faster).
Strategic investments in PM technology can help SMBs bridge the strategy-to-execution gap
Analysis: Across all respondents, 47% of SMB leaders say that PM technology is critical to their business, indicating that these tools directly impact their ability to achieve business goals (see Figure 3). Simply put: They have more successful business outcomes when using PM tech.
Meanwhile, 46% say that these tools are beneficial for their business. This indicates that while not a requirement for their business to function, they believe that using PM tech is advantageous for them.
Just 7% of respondents say that PM tools aren’t necessary for their business success.
This breakdown of how important PM tech is to business success remains fairly consistent across industries, with the exception of the following (see Figure 4):
- Construction: An above-average number of SMBs in construction say PM technology is critical to their business (65% versus 47%).
- Retail: 14% of SMBs in retail say that PM technology isn’t necessary for them to do business, double the average for all industries.
These differences are important to note because though PM tech is clearly beneficial to many, it becomes more or less important depending on the business strategy that SMBs are trying to execute.
For example, our Top Tech Trends survey shows that digital marketing is a priority investment for many small businesses as they seek to acquire new customers.
However, when we break the data down by industry, we see that just 34% of construction firms say digital marketing is critical to their business, while 65% of construction firms believe PM tech is.
This makes sense. Because of the skilled labor shortage, most construction firms are actually turning down jobs because they have more work than they can staff, so acquiring more work isn’t their main concern. Instead, they’re looking to increase the efficiency of existing workers to get more done with less staff.
Meanwhile, we see in Figure 2 above that while 54% of SMBs in retail are currently using PM technology, 14% believe it isn’t a necessary investment, which is double the industry average.
If we use the same example of digital marketing, we see that 68% of retail businesses say digital marketing is critical for their business, while 36% of retail businesses believe PM tech is. It’s clear that it’s a higher priority for SMBs in retail to acquire new customers than it is to increase worker productivity.
Key takeaway: We know that the top three business goals for SMBs over the next two years are:
- Grow revenue
- Grow customer base
- Increase working productivity
To achieve these goals, your business will have to make strategic investment decisions and choose the best tools to help support your efforts.
Our research shows that 47% of SMBs believe PM technology is critical to their efforts as they strive to bridge the strategy-to-execution gap and achieve their goals. However, these tools play a larger role for some industries than others.
Specifically, trade-based industries currently struggling to hire and retain talent because of the skilled labor shortage are not only adopting these tools at a higher rate but also say at above average numbers that PM tech is a crucial component of their strategy execution (see Figure 4).
PM technology can deliver an almost immediate ROI for SMBs
Analysis: Although we don’t know the exact date that respondents started using PM technology, the vast majority of SMBs are already seeing a return on their investment in PM tech, or expect to by 2020 (see Figure 5).
This indicates a very short ramp-up period before PM software starts to deliver its intended benefits.
Key takeaway: According to PMI in its 2018 Pulse of the Profession report, almost 10% of every dollar is wasted as a result of poor project performance.
SMBs that use PM tech to improve project performance can re-invest those savings into other areas.
Additionally, the short ramp-up period before PM technology delivers ROI indicates that SMBs that have already invested in PM technology or plan to before 2020 will be able to achieve their growth goals more quickly.
Based on our research, we estimate that the 30% of SMBs that have not yet invested in PM tech by 2020 (see “evaluating” and “not planning to invest” in Figure 1) will be at a major disadvantage as their competitors grow at a faster rate, gaining prominence in the market.
Identifying the right PM technology for your SMB
PM technology plays an important role in helping organizations improve project success rates by keeping initiatives on time, on budget, and on track to deliver business benefits.
Not only can it have a profound impact on employee productivity, but it can also help you improve profitability by recouping funds lost to poor project performance.
Information on Capterra’s Top Technology Trends for SMBs survey
Capterra conducted this survey in June and July 2018 among 715 U.S.-based SMBs with more than one employee and annual revenue of less than $100 million. The survey excluded nonprofit organizations. The qualified respondents are decision-makers or have significant influence on the decisions related to purchasing technologies for their organization.