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Is the recession driving IT project management software?

Today’s information technology organizations are responding to the most treacherous recession in memory. Their actions range from classic belt-tightening to innovating and improving value-added services in their organizations. A primary value-adding strategy for the most effective organizations is to further improve project management.

 

In view of this strategy, the project management software industry’s future looks especially promising. During the global recession, industrial countries around the world devoted billions in economic stimulus funds for infrastructure and other projects. This has created considerable demand for project management software.

 

In fact, the market for project management software and services totals about $1.2 billion annually, according to Forrester Research. The market for project portfolio management (PPM) software stood at $2.9 billion in 2008, according to IDC, which expects the PPM software and services market to reach $4.2 billion by 2013.

 

Companies and government agencies that are serious about project management have recognized for years that they can’t manage larger projects and programs effectively without appropriate software support.

 

Indeed, project management software helps analyze, optimize and manage projects, and this lets organizations determine the right mix of projects and resources to accomplish their strategic goals. Without project management software, organizations find it difficult to track individual projects, the resources allocated to them and the costs associated with them. Similarly, without project portfolio management software, it is nearly impossible to manage portfolios of projects and the dependencies among them.

 

So what’s the outlook for project management software over the next 10 to 15 years? For the answer, we must look at several trends that are helping to buoy the market for project management software and playing critical roles in its future.

 

Technology and Management Trends

 

On the technical side, software as a service, or SaaS, delivery models are making project management software more accessible to more organizations, particularly smaller ones. What’s more, the growth of Web-based social media–from Facebook to Twitter–has put a focus on making project management software more collaborative, flexible and user-friendly. Today’s project management software accelerates communication–across the hall or across great distances–and improves business results.

 

Another development that benefits project management software is the open-source movement. In the project management software market, this includes open-source versions of Project Workbench, one of the most popular project management software tools from the 1980s, and work-alike clones of today’s most popular project management software (OpenProj).

 

The open-source movement provides an alternative that markedly reduces the total cost of ownership for project management software. It also gives commercial software an incentive to keep innovating and to improve its value proposition to customers. Longer term, the open source movement grows the market significantly because those who use the free versions eventually outgrow them and trade up to commercial tools.

 

On the management side, organizations are slowly but surely turning to a project-oriented approach to trim costs and add value. Due to cost containment and regulatory pressures, the cycle of centralized management systems is expected to come into vogue again. This will spark stronger project management offices (PMOs), which in turn may reduce the number of projects as organizations recognize the problems associated with running too many projects concurrently (especially if they don’t have enough team members for each project). PMOs will look to project and portfolio management software to help them make these decisions.

 

The Potential

 

From our experience, every organization has the potential to improve its project management performance by an order of magnitude–or 10 times for each five to 10 year period, provided it commits to that goal. Given this potential benefit, along with economic and technological trends, demand for project management and project portfolio management software will almost certainly rise in the next 10 to 15 years. 

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