Project management comes of age
Web-based task-master software can help small shops stay on track.
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| Clarizen's management software helped Telizent pull off its largest project ever. |
(Fortune Small Business) -- Telizent Communications landed a $65,000 contract with the U.S. Department of Homeland Security in 2007, which both thrilled and unnerved the owner of the Denver-based telecommunications firm.
"The project was overwhelming in terms of detail and complexity," says Charley Ellison, founder and president of Telizent. "There were so many partners involved."
Telizent's assignment: to oversee the installation of a 500-person state-of-the-art phone system, managing five separate contractors and 20 project leaders in five states. Ellison's 11 employees had never handled such an elaborate venture.
To keep pace, Ellison knew he needed to upgrade his ability to track employees' and partners' progress. His old tools - Excel spreadsheets and weekly conference calls - wouldn't be nimble enough to organize hundreds of interlocking tasks. So he found a solution: online project-management software from Clarizen, a startup based in Tel Aviv.
Several dozen vendors offer Web-based project-management software, which lets subscribers share schedules from anywhere. Far-flung teams can collaborate by posting status updates and other essential data in real time. The software can monitor a project's progress, flag deadline changes, identify bottlenecks and even track billing cycles.
"Without Clarizen there would have been more errors and delays. The project's partners would have been mad at us because we were the central point of contact," says Ellison. "If there were any failures, our profitability would have been impacted."
Instead, Ellison says, his company proved it could manage large-scale projects across multiple time zones. That has helped him grow his client base by 10% in the past year and achieve 10% revenue growth for the third year in a row.
Ellison is not alone. As businesses demand more efficient ways of collaborating with clients, partners and subcontractors, the popularity of project-management technology is surging. Forrester Research predicts that the market for project-based solutions, now valued at $4.25 billion, will reach $6.5 billion by next year.
Project-management technology has come a long way since the late 1950s, when the hot tools for plotting tasks were bar charts and paper-based schedules. Software systems emerged two decades later, but they were too sophisticated and costly for most budding businesses. In the late 1990s Web developers began creating online tools that were more user-friendly and affordable, putting them in reach of many entrepreneurs.
"Project portfolio management is a concept that's been around for more than 50 years, but some of today's younger vendors have taken a more simplified approach," says Tim Harmon, a Forrester Research analyst.
Gone are the unappealing systems of yore: clunky interfaces running on in-house computers and maintained by high-priced tech specialists. Today's Web-based project-management suites boast user-friendly interfaces and offer affordable, subscription-based rates. And because they run online, these solutions don't have to be installed on employees' desktop computers or loaded onto in-house servers.
Companies that offer Web-based project-management services - such as AtTask, Clarizen, Daptiv, Intuit, Serena and 37signals - charge monthly subscription fees that range from $20 to $65 per license, depending on the level of customization and functionality.
Ellison says he chose Clarizen because of its low cost and intuitive interface. He currently spends $125 a month for five software licenses, each of which can accommodate up to three concurrent projects and 10 participants. That's a fraction of the $72,000 he estimates it would have cost him to run an in-house solution such as Microsoft (MSFT, Fortune 500) Project.
Another factor working in Clarizen's favor: a bare-bones feature set. Many on-premises project-management tools support multiple currencies, allow complex prioritization of tasks and are capable of simultaneously managing vast numbers of projects. For a small business with basic needs and limited IT resources, such robust functionality can feel slightly overwhelming - and wasteful.
"MS Project offers some sophisticated project-management capabilities that we don't have a need for," says Hal Anderson, Telizent's chief technology officer. "It's like hitting a tack with a sledgehammer."
But how to find a solution that strikes just the right balance between advanced features and user-friendliness?
"From a functionality perspective, you don't come out the door with all the bells and whistles that [on-premises project-management] competitors offer," admits Anderson. During the past year Telizent made its own modifications to the software, adding a time sheet, budget-management tools and document-sharing capabilities - features that users of on-premises project-management software take for granted.
Another challenge of Web-based software is security. Uploading mission-critical data to an outside company's server can be scary.
"The vast majority of software-as-a-service vendors have addressed security in their delivery architectures, but you can't say that across the board," warns Harmon. "A business has to look at a vendor and ask what it's done security-wise."
Still, more and more small businesses are finding it tough to resist the dollar savings promised by Web-based project-management tools. Just ask Abe McCallum, CEO of Clikthrough, a San Francisco startup that designs interactive-media software. McCallum recently switched from Microsoft Project to an online service from Daptiv, a small software vendor based in Seattle.
Rather than shell out nearly $25,000 a year on software licenses, implementation fees and the in-house servers needed to run Microsoft Project, McCallum says, he spends $500 a month for 10 software licenses to keep his marketing, software and legal departments "in sync."
"Using Daptiv in your day-to-day work environment really makes a business function much more efficiently," says McCallum.
Back at Telizent, Ellison is just happy that running a highly complex project-management solution isn't on his tab. "As the guy who signs the checks, I'd just as soon turn our computer room into a file storage room." 
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