Corporations Spending More on Internet

Corporate spending on the Internet will reach $85 billion in the US alone in 1999, and will surpass $203 billion by 2002, according to a report by International Data Corporation (IDC). The trend will continue well into the next millennium, the report says.

The Internet spending bonanza will take place across all industries, according to IDC’s report “Internet Futures Spending Model 1997-2002: Business Gears Up for E-Commerce.” Financial services will spend $16.6 billion in 1999. Manufacturing will spend $24 billion. Retail will invest $6.2 billion, and online media and communications will dole out $10.7 billion.

“Corporate Internet spending is being driven by the ongoing quest to sustain competitive advantage. Corporations need to be innovative, efficient, and ultimately profitable in order to remain competitive, and Internet technologies enable businesses to do so,” said Anna Giraldo, senior analyst with IDC’s Internet and eCommerce Strategies Group.

The report says that the past few years have proved to be a testing ground for may Internet technologies. Corporations have now gained confidence in the technology and are growing accustomed to its most basic applications such as email and groupware.This increased confidence is gradually preparing corporations to fully embrace Internet-centric technologies and leverage their capabilities.

“Businesses are investing in Web-based technologies to maximize operational efficiencies, expand their marketing and sales efforts, improve customer service, and strengthen their partnerships,” Giraldo said.

The report also identifies the e-commerce revolution as a primary driver of the spending. Companies are beginning to realize that e-commerce offers the opportunity to establish new competitive standards by expanding distribution channels, integrating internal and external processes, and offering a cost-effective method to provide superior products and services, according to the report.

All this spending also comes as good news for IT vendors, according to Giraldo.

“The good news to IT vendors wanting to capitalize on the Internet revolution is that there is a considerable opportunity out there. The challenge is to be able to recognize how and where the spending occurs and why,” Giraldo said.