The Rise of SaaS Portfolio and Project Management Solutions
A year ago, I had an astonishing conversation with an editor of a widely read information technology publication. When I asked him why the publication had dedicated sections for CRM (customer relationship management) software and ERP (enterprise resource management) solutions, but not for project management, he responded, “Nobody cares about project management.” After I caught my breath, I offered him some reasons why the information technology audience might choose to care. Allow me to present the background first.
While project management as a discipline is sometimes considered a modern endeavor, it is most likely ancient. The creation of structures such as the Egyptian pyramids or the Roman Coliseum was most likely the result of well planned efforts. In terms of the modern notion of project management as a more scientific effort, we can thank people like Frederick Winslow Taylor for theories of scientific management. Henry Gantt and Henri Fayol were both students of Taylor’s theories and sought to improve project management efficiencies. Gantt of course is considered the “father of project planning and control.” We all know and love the charts that bear his name. Fayol’s five management functions form the basis of today’s project management body of knowledge (PMBOK).
Therefore, project management is not a new discipline. However, the technology landscape is constantly changing and improving, shifting the tools that are available for project and program managers. A few technologies have converged in the last decades that offer new methods and even paradigms for project management.
The first disruptive technology was the Internet itself. While the Internet was originally created and used by the government, educators, researchers and the defense industry, once it became publicly available, it permitted the World Wide Web (www) to arise. Once people got used to looking for information on the web, they wanted the web to be more interactive. This pushed technologists to create interactive websites, which were then followed by software applications that were web-based. In the portfolio and project management space, the first web-based project solutions were marketed around the year 2000.
While client-server project systems existed before the year 2000, these were high-end solutions that were installed on-premise, at the customer site. These software solutions, like Primavera and Niku (now Clarity), were expensive, complex and took months and sometimes years to fully implement. The technical limitation of client-server technology meant that the project information was housed behind a corporate firewall and not accessible outside the company’s own four walls.
The second disruptive technology was software-as-a-service (SaaS). Essentially, instead of housing the software on-premise, the technology progressed so that a project team could “rent” the application through a SaaS solution provider. Among the first proponents of SaaS were Salesforce.com, offering an online CRM; Project Insight, offering a web-based project management solution; and Quicken, offering its accounting program in a hosted environment.
As opposed to older client-server applications, web-based task, project and portfolio solutions have the advantage of allowing all team members, whether internal employees, or external sub-contractors, partners, or vendors, to access the project schedule, update individual tasks and collaborate on projects from any computer that is connected to the Internet.
In the last ten years, the market for SaaS portfolio and project management solutions (PPM) has grown exponentially. The term SaaS had not really taken off at that time, so “online,” “hosted” and “web-based” were terms more commonly used. I remember back in 2002 and 2003 having conversations with people who asked, “What’s a web-based application?” Now SaaS solutions are more accepted and commonplace. For example, InformationWeek surveyed its IT professionals and found that SaaS solutions are on the rise. The top category solution that IT managers said they are most likely to invest in next year is portals and collaborative workspaces, of which project and portfolio management solutions are a part.
In fact, Google holds that two million companies already use GoogleApps. Microsoft, a relative late-comer to the SaaS and cloud offerings, reports one million customers. In terms of SaaS revenue, Gartner believes that the overall market will rise to $14 billion by 2013. As for PPM solutions specifically, Gartner research states that the market for PPM solutions will reach $10 billion by the end of 2010.
Now back to why that IT publication should care about project management. Not only is the market for solutions growing as stated above, but we also see the profession growing and being taken more seriously. Thanks to the efforts of the Project Management Institute (PMI), there is an increasing awareness about project management.
This non-profit standards body has not only evangelized about project and program management, but they have created several certification and education programs which legitimize and standardize. Just as accountants require a CPA to practice, I believe that one day, a PMP (Project Management Professional) or CAPM (Certified Associate in Project Management) will be required at many corporations to be hired as a project manager or project coordinator. As of April 2010, the PMI boasted 315,000 members worldwide. In addition, they counted 317,000 active PMPs. (Yes, the PMP count is higher than the membership.)
Another reason to care about project management is the fact that about $12 trillion of the world’s global domestic product is related to projects. (McKinsey and Company) An additional trend is the increase in project management offices (PMOs) in the United States. While this may be driven in part by organizations trying to comply with Sarbannes-Oxley, when PMI surveyed its membership, 67% reported having a PMO. Of those, 50% reported that the PMO improved their project success rate.
We are seeing a trend of un-nesting project management from a departmental level to having a PMO, meaning that project management has its own leadership and budget. This decoupling of project management may also mean additional clout and power within an organization. We are witnessing many organizations beginning to realize that project management is not simply another hat one wears, but it is its own role and profession.
As a testament to this fact are articles like this one from Baseline Magazine in May, whose title is, “Project Management is the New IT.” (http://blogs.baselinemag.com/bottom_line/content/careers/pm_is_the_new_it.html?kc=BLBLBEMNL05252010STR2 ) The point of the article is that IT team members do not simply have to understand technology, but also need to know how to manage and lead projects to their successful conclusions.
What we are witnessing is a convergence of three factors which poise our market (SaaS project and portfolio management) for exponential growth:
-The market – There is a general readiness of organizations for project management as a discipline and there are enough professional people to help with these efforts.
-The technology – There are many SaaS and web-based solutions available for project teams, whether simple task management tools, mid-market project and portfolio management solutions, or more complex high end systems for more mature project teams.
-The processes – There are plenty of education providers and consulting organizations ready to help organizations improve their project processes, develop standards and become more mature and efficient.
These three factors are mission critical for the project management success in organizations. I always tell my customers, “A good PPM tool is ‘one leg of a three legged stool.’ If you take one away, your stool will tip and the organization will fall off balance. However, the growth of SaaS PPM software is one indicator that companies are getting serious about project management and that they do indeed, ‘care about project management.’
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Cynthia K. West, Ph.D., is vice president of Project Insight, based in Irvine, California. She is a sales and marketing executive with over 20 years of experience in the information technology industry. As a ‘serial entrepreneur, ‘she specializes in taking new divisions and start-ups from zero to $20 million in sales, putting in place the sales process and structure in place for new entities, determining the marketing emphasis and then executing the plan. Cynthia has been with Project Insight for nine years. She previously worked in Silicon Valley for 10 years. There she was involved with 3 start ups, one which was acquired by R.R. Donnelley & Sons, another which was an early stage MP3 player that went public, and the last which was backed by Ernst & Young. She can be reached at [email protected].