As a small or midsize business (SMB) leader, it’s important to stay apprised of your peers’ investments in technology and project management (PM) tools.
Knowing what’s driving their search for software, what capabilities they’re looking for, and what they’re budgeting can help you evaluate and prioritize your own needs.
But how do you connect with these like-minded peers, let alone find the time to review their PM processes and technology investments?
Don’t worry, we’ve done the groundwork for you. As the leading online resource for business software buyers, we’ve helped thousands of SMBs find the right PM tools for their business needs.
These interactions with prospective small business PM software buyers are a valuable data source, and we’ve analyzed a random sample to help you keep your finger on the pulse of the industry.
In this article, we’ll review a sample of our 2018 data to give you a market snapshot on purchase drivers, key software features, and budget considerations. We’ll also compare this to our 2014 data so you can see how your peers’ tech needs have changed over time and offer recommendations on how to use these insights in your own buying process.
Purchase drivers: First-time buyers need transparency; SMBs replacing software need more advanced functionality
Purchase drivers provide context as to why SMBs make the decision to purchase PM software. Bringing these circumstances to light can help you recognize—and remedy—signs of ineffectiveness within your own organization.
In 2018, 54% of the SMBs in our sample realized that managing projects using manual methods and spreadsheets wasn’t cutting it anymore and decided to invest in PM software. (Click here to jump to the demographics for the SMBs evaluated for this report.)
For these businesses, whiteboards, sticky notes, and spreadsheets could no longer support the number and/or complexity of projects. There was little visibility into job status, things fell through the cracks because of inconsistent processes, and teams and information were siloed.
If these issues sound familiar to you, it’s time to look for an automated PM solution.
The remaining SMBs in our sample were already using an automated system to manage projects, but it was no longer meeting their needs. They needed a better fit for their workflows, wanted to improve the ease of use, or needed functionality that their current tool didn’t have.
Of course, even if you’re a first-time buyer, there’s still a lot you can learn from the SMBs looking to replace their current system.
Knowing the challenges your peers face with their existing software can help you avoid those pitfalls in your own investment.
Key features: Collaboration is more important than ever
Not surprisingly, the software capabilities that SMBs most often request are project planning and tracking and task management. These functions serve the core business needs for the vast majority of small businesses and there’s little change in the number of buyers requesting this functionality between 2014 and 2018.
More remarkable is the increased interest in collaboration and the decreased interest in time tracking:
- Requests for collaboration more than doubled from 22% in 2014 to 61% in 2018.
- Requests for time tracking dropped from 68% in 2014 to 44% in 2018.
It’s interesting that the biggest jumps are in areas that are considered more supplemental (e.g., collaboration/communication, document management).
Supplemental in this case means that, typically, if small businesses need collaboration or document management functionality outside of what’s available in their task or project management system, they will supplement their main offering using stand-alone tools.
Many vendors that don’t offer these capabilities within their task or project management offering, or only include limited capabilities, create prebuilt integrations with well-known specialized products. For example, a vendor that offers limited storage might integrate with a document management solution such as Dropbox or Box.
It’s also important to note that the majority of SMBs in our sample need a system that can support a range of user needs (as opposed to a tool that’s highly specialized to one purpose, such as time tracking):
- In 2018, 72% of SMBs looked for solutions with three or more of the above capabilities (55% need three to four, while 17% need five or more).
Of course, how big a range of needs can vary drastically. For example, if you’re looking for a tool to help your team manage tasks, share files, and collaborate to solve issues, you probably don’t need a full-featured PM solution, and instead could look at task management or collaboration platforms. Otherwise, you’d just be paying for features you don’t use.
However, if you’re looking for a tool to help forecast and scope project requirements, track your teams’ progress and achievement of milestones, and allocate resources based on skill level and availability then you’re going to need something more advanced than a collaborative task management solution.
Budget: SMBs are spending significantly more on PM software
Budgets have significantly increased. In 2014, just 22% of SMBs were planning to spend up to $50 per user, per month on PM software, but in 2018 that’s jumped to nearly 50% of SMBs.
What’s more, one-fifth of SMBs are prepared to spend up to $100 per user, per month for PM software.
Knowing that the majority of SMBs in our sample are budgeting $50 to $100 per user license, we can calculate their estimated, annual spend* based on the number of users they’re purchasing PM software for.
Roughly 80% of SMBs in our sample are looking to purchase PM software for between two and 50 users (see demographics below), so we’ll focus on those groups:
2018 estimated annual PM budget* based on license cost and number of users
*Budget estimates do not include costs associated with setup, maintenance, support, etc.
Comparatively, in 2014 the largest percentage of SMBs (40%) were looking to spend $30 per user, per month. For 21 to 50 users, that’s an estimated annual PM budget of $7,560 to $18,000, which is significantly less than what SMBs are planning to spend now.
As a small business leader, there is no busier (or more critical) time than now: Q4 heading into next year.
You need to finalize strategic goals, plan your budget, and square away technology investments so you can hit the ground running—all while juggling “business as usual” operations and trying to get ahead of industry trends.
With a tall order like that, auditing your PM process to ensure teams have the right tools is a task that could easily fall to the bottom of your list. But that would a be a costly mistake.
Organizations that fully value PM—that prioritize investments in tools, talent, and techniques rather than adding them as an afterthought—report significantly higher project success rates: 92% versus 32%, according to PMI in its 2018 Pulse of the Profession report.
It’s clear that by investing in the right technology so that project teams can do their jobs effectively, you’ll gain a competitive advantage and vastly improve your project success rates.
If you’re ready to start comparing solutions, check out our list of popular PM solutions, or head over to our market directory where you can filter by the exact capabilities your team needs, or by average user rating (i.e., three out of five stars).
The demographics for the SMBs evaluated for this report are as follows:
- Business segment: In 2018, the greatest percentage of prospective PM software buyers in our sample were in engineering/manufacturing (16%).
- Annual revenue: In 2018, 51% of the prospective PM software buyers in our sample were small businesses with $5 million or less in annual revenue.
- Number of employees: In 2018, 70% of the prospective PM software buyers in our sample were from small businesses with 100 employees or less.
- Number of users: In 2018, 82% of the prospective PM software buyers in our sample were purchasing software for between two and 50 users.