Recession Drives Demand for Hosted Project Management and Portfolio Management

"The biggest challenge we have is the large amount of unspent grant dollars at the end of the period. Because we didn't spend the money, we have to ask our funders for a carry-over request," says Govia. The problem with the Chicago Department of Public health asking funders like the Centers for Disease Control and Prevention if it can carry over funds from one year to another, he adds, "is that the grant could be cut for your inability to spend those dollars. The grantors look to reallocate those dollars to more productive programs."

Consequently, Govia is depending on Clarity to give the department a better way to track grants and to signal earlier when money isn't being spent, so that the department can redirect those funds to other programs.

For its part, 24-by-7 uses Clarizen's collaboration and project management software to track the progress of phone system installations and repairs for clients and to share that information with customers.

Prior to going live with Clarizen in January, 2008, 24-by-7 had mainly been using Microsoft Excel spreadsheets to track client work. Hal Anderson, the company's CTO, says that as projects for customers got more complicated, 24-by-7 needed a more interactive project management solution than a static Excel spreadsheet and something cheaper and more flexible than Microsoft Project, which some project managers inside the company used. (See How to Select Project Management Software.)

"A web-enabled, low-cost solution was really our preferred alternative," says Anderson.

Although a weakening economy wasn't the main reason Anderson initially sought out hosted project management software, he realized a software as a service project management solution would help his company provide better service to customers, and thus compete with its big competitors.

"At the time, the large manufacturers—the Siemens and Avayas—were starting to experience a tightening of large system purchases. We thought, the easier we were to engage with, the more likely we would be considered a viable option to take over maintenance and help deploy a new system," he says. "We needed to offer better service at a lower cost. Having on demand, SaaS tools to interface with our customers was critical to fulfilling that goal."

PPM Vendors Respond to Market Demand.

Because the recession is spurring companies to look for cheap project management software, some providers of hosted project management tools are experiencing their best quarters ever, at a time of decreased IT spending.

Avinoam Nowogrodski, CEO and co-founder of Clarizen, a provider of hosted project management software, says his two-and-a-half year old company, which targets small and midsize enterprises, benefited from "substantial growth" in September and October 2008 and that November was shaping up to be Clarizen's best month ever—all while the economic crisis roiled in the background.

"Customers are looking for a different type of solution that's more affordable, which has lower barriers to entry and doesn't require a big investment in hardware or maintaining servers in house. This economic crisis is an accelerator for the SaaS market," says Nowogrodski.

AtTask, another provider of hosted project and portfolio management software, is also seeing record growth. Scott Johnson, the CEO, says the fourth quarter of 2008 is shaping up to be the strongest quarter in his company's seven-year history. He attributes his company's fortunes to the fact that businesses need lightweight project management tools "to get more productivity out of existing resources" and to "better validate all of their IT projects." He says the software as a service platform is compelling to companies because IT budgets are tight.

Meanwhile, providers of on premise project portfolio management software are announcing new software as a service versions of their PPM products. CA unveiled its Clarity PPM On Demand project portfolio management solution at its CA World event in November.