Why Do SME Hesitate to Buy PM Software?
| Translated by Julian Hammer
The commercial success of a company depends strongly on successful project management and on the use of suitable project management software. After all, more than a third of all work in Germany is carried out in projects, and the trend is rising. According to a GPM study on “Projectification 2.0”, the added value generated by projects in Germany already amounts to 1,2 billionen Euros.1
Despite the evident benefits of project management software, many SME in Germany hesitate to implement such software. In this article we examine the reasons for this reluctance and offer solutions.
Study: Use of Project Management Software in SME
It is astonishing that many companies do not implement the findings on the benefits of project management software: According to a Capterra study2, noch bei 54 % of German companies still use Excel and Outlook for project management. The study indicates German market trends and identifies areas in which companies could substantially increase their efficiency in order to have more success with their projects.
The study’s highlights
- Half of the companies are ready to invest in new project management software.
- 54% of German SME do not use project management software (only Microsoft Excel and Outlook) and carry out many tasks manually
- almost 60% are ready to pay more for software from Germany and data protection that complies with German legislation.
Why do so many companies still run project management without software?
Purchasing project management software alone is not enough. Before buying suitable software, the PM processes in companies must be established and the type and objectives of the projects must be defined. The type of software must be clearly defined, e.g.:
The company must identify the features it requires for efficient project management. Then it must find the providers that offer the right software. They are then carefully examined and tested.
The selection process alone takes up company resources. It is therefore little surprising that these processes are often interrupted or not even started. Professional project management for SME means making a big investment. Costs, effort, and benefits must therefore be carefully assessed.
Project Management without Software in SMEs
Do SMEs save at the wrong end when it comes to project management software?
Projects must usually be realized with a limited budget and defined deadlines. In addition, company resources (employees, teams, machines or skills) are usually deployed in different projects at the same time. Managing all of this without software support is sheerly impossible.
Here, a good resource planning software is required. Without this, not only the quality and the deadlines promised to the customer are at risk. Resources may also be wasted while they could be used more efficiently with a better overview of their utilization. A good resource management software can already indicate bottlenecks in resources throughout all projects at the planning stage.
The purchase of suitable software can spare the nerves of all persons involved in the project, prevent double data collection, and help you to establish good communication and efficient processes around your projects. Poor communication alone is responsible for a third of all failed projects.3
But who says that you always have to spend months creating requirements catalogs and years implementing the software?
A small team that knows the processes in the company and the main requirements for the use of the software is sufficient for the software selection. It can use the test version to identify the advantages of project planning with the new software.
A good company makes decisions in a spirit of partnership and enables the successive implementation of the new software in its different areas of use/departments. Ideally, the product is close enough to the standard version that it can easily be implemented while at the same time offering sufficient flexibility to map company processes and allows you to modify them at a later point in time.
Cloud vs. On-Premises Project Management Software for SEs
Overall, only 18% of the study participants surveyed by Gartner use cloud software. German companies often hesitate to implement cloud solutions for reasons of data security. 55% of respondents stated that they only use software made in Germany or which comes with data protection standards comparable to those applicable in Germany. Nowadays, there are a large number of collaboration tools with project management features that are provided by cloud providers as standard solutions. Such solutions are suitable for many small small teams that can install and use their tools without any management decision being required. They can usually be used very quickly and are often free of charge for a small number of users.
Especially software providers with on-premises solutions offer the option to customize and map company processes in the software. Therefore, 59% of German companies prefer these solutions.
Some software products offer templates for mapping company processes according to certain standards (e.g. DIN, PMI, PRINCE2). This facilitates the implementation process of the PM software. Good to know: Browser-based solutions are not necessarily cloud solutions. In browser-based solutions, the software is installed centrally on a server and can be accessed quickly via the browser. The server can be located in your own company, at the software manufacturer or at a provider — that would be the cloud solution.
Agile Projects Only?
In fact, the importance of agile PM methods has increased for companies worldwide: 71% of the participants of the international PMI survey3 use this method more or less regularly. As a result, projects with a duration of several years are declining, as in the fast-moving world it is easier to react to current situations and requirements in agile projects.
This development is not yet reflected on the German market: only 2% of those surveyed2 stated that they predominantly use agile methods. This is a very low figure, even if we consider that agile methods cannot be applied to all types of projects.
Agile methods are particularly suited for reacting quickly to new requirements, to keep communication within the project team fluent and structure work packages flexibly.
Not everything can be planned agilely, highly regulated areas such as projects in the pharmaceutical industry or complex product development projects in the mechanical and plant engineering sector rely on the traditional planning model with waterfall and milestones.
The management wants to conduct an opportunity-risk analysis and be able to identify the status of all projects including possible delays. Traditional PM software is perfectly suited for this type of monitoring in multi-project management.
Ideally, both methods can be combined in one single system. How multi-project features can also be used for agile (sub-)projects.
Using Project Management Software in SMEs
Whether software is used in project management or not depends primarily on the management and of the economic sector:
- In the Internet sector, 67% of companies use software.
- 70% of the banks use software.
- In the healthcare sector it is only 35% and in the consumer goods sector only 28%.2
If you want the benefits of tool-assisted project management to be reflected in your business figures, a professional software solution becomes indispensable. Supposedly free tools can affect the efficiency of the company as a whole. A decision to purchase project management software must be made by the management. However, the management is usually deterred by the implementation costs and effort involved. The reason for this is that less attention is paid to increasing efficiency and cutting costs.
Checklist: What to Consider when Buying Project Management Software
Sources
2 International Project Management Survey Germany, Capterra – a Gartner company: Analysis of the use of project management software in small and medium-sized enterprises in Germany
