The State of Project Management in SMEs

Small to medium enterprises (SMEs) make a key contribution to the economy in terms of employment, innovation and growth. Estimates suggest that more than 95% of enterprises across the world are SMEs, accounting for approximately 60% of private sector employment. The contribution of SMEs varies from 16% of GDP in low-income countries to 51% of GDP in high-income countries (Source: Edinburgh Group Research). Project management can play a significant role in facilitating this contribution, but there is a substantial difference between SMEs and Large enterprises, when it comes to choosing and using project management tools. In this blog we will look at the nuances of adoption of project management solutions in SMEs.

Smaller companies tend to be careful about their investments are less likely to have dedicated functional roles. Projects are typically managed by people for whom project management is not the primary skill. This creates a dichotomy of sorts; while there is a huge amount of reliance on success of projects, the focus on skills and tools seem to be almost absent. Software Advice, a Gartner company and trusted source for online project management software buyers, recently conducted a study with project managers and prospective buyers in the SME segment. Here are some of the key findings, which will help us understand the challenges and formulate the way forward.

Project Management challenges in SMEs

Reliance on Manual methods

Software Advice’s survey of Small and Medium Enterprise buyers found that an alarming 70 percent are currently using manual methods. In 2014 that number was at 42%.

Software Advice - current-methods

One of the main reasons for this is the focus on getting the job done vs. getting it done right. Kelly Bedrich, director of information technology (IT) and a certified project management professional (PMP) for nonprofit knowledge management research firm APQC, says, “Project managers have to work at a base level.” “Most people will whip out the Excel spreadsheet, and then likely transfer [it] into a project management software tool once things become more formalized.”

Lack of buy-in for project management tools and methods

Project management as a discipline, typically spans across functions and methodologies vary by industry vertical. Yet when they analyzed the tools buyers were currently using to manage projects, almost 42 percent use multiple methods (these methods may or may not include software).

These methods may keep companies running in survival mode, but in the long run they are bound to cause problems. This is often due to the fact that projects are viewed as simple to deploy, suffer from a lack of resources, or are given low prioritization by the organization. The current project management standards are frequently perceived by SMEs as complicated and overly bureaucratic, something undesirable in regards to time-constrained or low-budget projects.

Mark Fromson, a Certified ScrumMaster with Fromson Consulting says that internal barriers to standardizing a Project Management software solution are common in businesses of all sizes, as purchasing and implementing software on a widespread basis typically requires buy-in from various departments and leadership. Debates about inter-departmental use and cost-effectiveness can stall the process.

Making project management work for SMEs

Given the challenges it seems that SMEs require a simpler, more people focused workflows and project management system. The formality of the project management processes adopted will reflect the formality of the parent organization. The survey results further shed light on what project managers and buyers are looking for in a project management tool.

60 percent want Time Tracking and Task Management functionality

Drilling down into what functionality most prospective buyers are looking for out of their Project Management software, it is seen that 60 percent of the sample audience requests some form of employee time tracking, while another 60 percent seeks task management capabilities. Project tracking functionality, which includes status updates and dashboards, is also desired by a majority of buyers (53 percent).

Software Advice - functionality

These elements indicate how buyers want to track and measure project success through the life-cycle. Employee time tracking comes out as the most important aspect, mostly because it is closely tied to billing and budgeting.

64 percent want to Improve Organization and Workflow Efficiency

64% Buyers in the sample indicate that the most common reason they are seeking Project Management software is to improve organization and workflow efficiency. 40% want to improve tracking and reporting, which suggests that their current method’s analytics capabilities are insufficient.

Software Advice -reasons

Given the widespread use of manual methods, these result don’t surprise or shock. In fact, they align very well with prominent pain points. The factors for choosing project management tools are centered on visibility, efficiency and profitability.

Managers Seek Task Management, Scheduling and Deadline Functionality

While owners/executives and project managers tend to agree on most of the functionality they seek, a much higher percentage of project managers (64 percent) than owner/executives (38 percent) want scheduling and deadline capabilities. In fact, this is the top-requested functionality among project managers, along with task management (also sought by 64 percent).

By contrast, owners/executives cite time tracking as their top-requested capability (61 percent). While 55 percent of project managers also request time tracking functionality, a greater percentage overall seek task management and scheduling and deadline capabilities.

Software Advice -job-role

The disparity between owners/executives and project managers when it comes to scheduling can be partially explained by the fact that project managers are more involved with managing the day-to-day operations and requirements of projects, in which deadlines affect dependencies. If certain milestones are not hit, other parts of a project may suffer. Owners, by contrast, appear to be more concerned with cost-efficiency, for which time-tracking can provide insightful data.

Owners and executives seeking Web-based Project Management software are advised to communicate with their project managers before purchasing a solution. Making sure that a solution can perform all of the functions different team members will need it to can help avoid shortcomings and challenges down the road.

Solving the puzzle

As mentioned in our 2015 project management trends, there is a major shift from adoption of best in class multiple software to comprehensive solutions. Because project management encompasses so many disciplines and variables, many users combine Project Management software with other methods, including other types of best-of-breed software that have greater functional breadth and depth for a specific business process. It isn’t uncommon, for example, to find companies using Web-based project management software that integrates with a best-of-breed accounting program.

In most functional software deployments, the ROI depends on levels of adoption in the company. In order for organizations to obtain value, there needs to be a strong fit between project management practices adopted, nature of projects and organizational culture.

Buyers of Web-based Project Management software should consider how the software will integrate with other systems they might want to continue using. The goal is to make business processes as seamless as possible, and combining tools with integration capabilities can facilitate this goal.

In conclusion, SMEs will be better off comprehensive project management solutions that integrate easily with Legacy applications. Ease of use will continue to be an important decision point, but SMEs will look for end to end capabilities to maximize return on their investment.

Blog Author: Sanket Pai, Head, Customer & Product Experience at Celoxis

Sanket Pai

About Celoxis:

Celoxis is a comprehensive project management tool that helps companies streamline management of projects, time sheets, expenses and business processes, specific to their organization. Over the last decade, Celoxis has specialized in delivering improved collaboration and increased efficiency for teams of all sizes, both in SMB and Enterprise segments. To know more visit www.celoxis.com 

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