The Rise of Cloud-Based Project Management Software
January 27, 2020

Eileen O'Loughlin
Capterra

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Cloud-based project management (PM) software has become increasingly popular in the last five years. Our research into PM software user trends shows that it's now the predominant deployment method, with 60% of businesses using cloud-based PM tools in 2019, compared to 46% in 2015.

Below, we'll dig into the data from our 2019 PM software user report and expand on the rise of cloud-based PM tools, highlighting who is using these tools and what they're using them for.

Why There's Been a Rise in Cloud-Based PM Tools

There are a number of reasons for the growing popularity of cloud-based tools, but perhaps most important is that the rise of cloud-based PM tools mirrors the rise of flexible work arrangements (FWAs).

For example, nearly 70% of businesses offer telecommuting on an ad hoc basis in 2019, compared to 56% in 2015, according to the Society for Human Resource Management (SHRM) in its 2019 Employee Benefits report.

Cloud-based PM tools act as a centralized workspace for teams, providing access to information and updates in real-time, across all devices. As telecommuting becomes the new norm, employers are investing in these tools because they increase transparency for all stakeholders and facilitate collaboration for remote and co-located employees alike.

Another key reason for the rise in cloud-based PM tools is that they offer easy integration with other business software. This is especially important as businesses are increasingly investing in a variety of specialized tools rather than one all-inclusive system to support the needs of teams and/or departments. For example, a help-desk team might use one tool for chat, another for task management, and a third for ticketing; however, they need data to flow seamlessly between all three systems.

Who's Using Cloud-Based PM Tools

Small businesses (i.e., those with $50 million or less in annual revenue) make up 61% of respondents using PM software, and 64% of those using cloud-based PM software specifically.

Cloud-based tools are more affordable for small businesses as they require a lower upfront investment and fewer on-site IT resources dedicated to maintenance and support. While midsize and enterprise organizations are also investing in cloud-based tools, they face greater costs associated with data storage.

We also see a higher concentration of cloud-based PM software users in services (IT, software, consulting), marketing/advertising, and accounting, compared to PM software users as a whole.

These are fields in which telecommuting is common, so it makes sense that they're leveraging cloud-based PM tools as part of their FWA policies.

How Teams Are Using Cloud-Based PM Tools

The most-used features cited by cloud-based PM software users are:

■ Collaboration

■ Task management

■ File storage/document management

■ Reporting and analytics

This finding tells us two things. First, it aligns with the position that businesses are investing in cloud-based PM tools to support FWA policies (as cloud-based PM tools act as a centralized workspace for remote and co-located employees to collaborate, manage tasks, and capture work execution).

Secondly, it reflects another industry phenomenon where the lines between work management and project management are becoming blurred.

While the term "project" will always be used by project managers and technical business users to refer to a specific type of work effort (i.e., one that is time-bound, produces a unique output/deliverable, and is executed under agreed-upon constraints of scope, timeline, and budget/resources), it's also now being used by non-technical business users to describe a wide variety of work efforts.

This has led vendors to market everything from task management to portfolio management tools as "project management software," which makes it that much harder for businesses to find the right tools for their needs. This means that businesses often pay for features they don't use.

This is why it's more critical than ever for prospective PM software buyers to demo a handful of tools before they make a purchase decision.

What the Rise in Cloud-Based PM Tools Means for the Future of Work

A benefit of investing in cloud-based PM tools is that users can immediately take advantage of product updates and new features as cloud-based software updates automatically. This is particularly relevant as vendors are starting to incorporate artificial intelligence (AI) capabilities into their software.

The most common AI functionality available now right now is assistance through machine learning, i.e., where the tool makes suggestions based on historical project data. For example, if it observes that a task is consistently underestimated, it will prompt you to add more time/effort to that task moving forward.

In this example alone, using project management software with AI capabilities results in reduced risk, increased speed/efficiency, and a better user experience.

As businesses double-down on efforts to increase employee productivity and team effectiveness in 2020, the ability to leverage AI to make data-driven decisions will define their success.

Eileen O'Loughlin is a Senior Project Management Analyst for Capterra
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