How Small Project-Based Businesses Use Technology Across the Project Lifecycle

Overcoming the Technology Gap

Small businesses are the backbone of the American economy. They make up over 99% of all firms and employ nearly half the workforce. Yet, historically software and technology to run businesses (like Project Accounting or Project Financial Systems) has not been built for small business-specific needs or price point, resulting in hesitancy toward tech that would otherwise be beneficial for their growth.

Small project-based businesses —such as professional services, consultants and government contractors — stand to benefit the most from digital transformation, especially as hybrid work becomes standard. Their revenue depends on the consistent, timely completion of high-quality work, which requires frequent collaboration and communication on evolving projects.

In recent years, a rise in purpose-built tools has enabled small businesses to accelerate their project management. But we wanted to know, are small businesses really using these tools and getting value? If not, what’s holding businesses back and how are they executing tasks throughout the project lifecycle?

Opportunities Uncovered

To better understand the technology practices and pain points of small project-based businesses (250 employees or less), we surveyed 360 employees in three industries: (1.) government contracting, (2.) architecture, engineering, and construction firms (AEC), and (3.) advertising and marketing agencies. Our results show there’s an opportunity for these small businesses to improve collaboration and the employee experience by standardizing and upgrading their toolkit. Here’s what we found: 

1. Inconsistent tools, poor integrations and insufficient BYO-tech policies are holding small businesses back

While the vast majority (79%) of small project-based business employees surveyed indicated they’re satisfied with their companies’ project management lifecycle tools, only 39% said they’re “extremely satisfied” with these tools.

This conditional satisfaction is due to employee concerns around inconsistent tech use (32%) and insufficient integrations between tools (33%). Collaboration, communication and task completion become more difficult when teammates use different solutions or tools that aren’t interoperable. This can result in redundant administrative duties and hinder timely project completion.

These concerns are particularly notable given that only 40% of the businesses we surveyed provide their employees with all the tools/technologies used in daily work. In fact, nearly two-thirds (62%) of small project-based businesses actively encourage employees to use their own preferred tools/tech and only 6% expressly forbid it. While a BYO-tech environment is helpful for innovation and productivity, small project-based businesses may not be creating the framework to support it.

2. Micro small businesses are stuck on email — and missing an opportunity in  Modern CRM and ERP

Of the small businesses we surveyed, those that are micro (1-10 employees) report notably higher use of email, and notably lower use of CRM & ERP tools than their larger SMB counterparts when it comes to the execution of projects.

Considering that micro small business employees are less likely (72%) to report overall satisfaction with their companies’ project management tools than larger small businesses (81%), increased use of ERP and CRM technology could help drive more efficient projects and improve the employee experience.

Additionally, micro small businesses reported lower rates of technology adoption (47%) due to the pandemic, compared to larger small businesses (68%), which suggests that this technology gap may continue to grow if uninterrupted.

3. Half of small government contractors operate in a completely siloed environment

Exactly half of the small government contractors we surveyed said their organizations function in a “completely siloed” environment in which there’s neither collaboration or communication between departments nor any visibility into cross-departmental activities.

Siloed operations restrict information flow, which causes duplicate work, inefficient operations, employee dissatisfaction and lack of trust between colleagues. Seventy-eight percent of all small government contractors are operating in an environment with at least some level of siloed operations, significantly higher than the average small project-based business (67%).

And small government contractors are aware of the challenge this poses to effective collaboration. Those with siloed operations (either completely or somewhat) are more likely than small government contractors with integrated operations (either completely or somewhat) to cite communication and collaboration as a major hurdle over the next five years.

4. Small advertising and marketing agencies are bouncing back, but a lack of collaboration threatens success

Across the three industry subsets we surveyed, both government contractors and AEC firms pointed to financial recovery from COVID-19 as their biggest challenge over the next five years. By contrast, small advertisers and marketers cited attracting new business as their top priority.

Advertisers and marketers took a major hit at the outset of the pandemic, and the fact they are more focused on attracting new business than COVID-19 recovery suggests a return to business as usual. But as these small agencies bounce back, their second largest self-reported five-year challenge will be collaboration and communication.

As many advertising and marketing agencies adjust to a more hybrid working future, they’ll need project tools that facilitate a geographically distanced mode of working. Right now there’s a clear opportunity for small advertising and marketing agencies to expand their use of collaboration-dedicated tools, especially considering their use of SaaS is currently lagging compared to the other industry subsets.

Empowering Small Businesses

The pandemic accelerated technology adoption across industries — but are the gains predominantly going to larger businesses? As small businesses adjust to a new mode of work, insufficient tools and tech policies may hold them back from a full recovery and further growth. Collaboration and communication, which are necessary for project completion and innovation, are at the top of their list of challenges.

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