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E-Business Technology Budgets Predicted to Drop Slightly

  Industry Statistics published in DM Direct Special Report
April 30, 2002 Issue
  By DM Review Editorial Staff

Spending on e-business technologies will drop from an average of 3.5 percent of revenue in 2001 to three percent in 2002.

Based on a Forrester Research Inc. survey of nearly 900 high-level information technology and business decision-makers at Global 3,500 firms, average 2002 e-business technology budgets are $29 million compared with $41 million in 2001. The survey also revealed that business executives expect a more significant drop in spending than their IT colleagues do.

"Most companies will curb the number and types of technology products that they will consider buying in 2002," says Tom Pohlmann, senior analyst at Forrester. "Compared with 2001, companies are much more risk-averse when considering new technologies, opting to make do with what they have before buying more."

Compared with last year, 23 percent fewer firms will consider purchasing the nuts and bolts of server, network and storage hardware. Meanwhile, fewer than half the firms will consider purchasing enterprise application software such as CRM, ERP, supply chain and procurement in 2002.

Additional Key Findings

Sixty- one percent of Global 3,500 firms will consider purchases of hardware, software infrastructure or network bandwidth in 2002. Only 26 percent will consider purchasing enterprise apps - CRM, ERP, procurement or supply chain - which is down from 58 percent last year.

The number of firms considering purchases of technology consulting and implementation services fell 28 percent from last year, although demand remains healthy in insurance, finished goods manufacturing and utilities.

Sixty-five percent of manufacturing firms are either considering or piloting enterprise application integration (EAI) - the highest of any industry.

One in five companies named a services division of a software company as one of their preferred service partners. IBM was the runaway leader as a preferred consulting and implementation service provider.

Compared with last year, technology buyers are more likely to give business units influence over technology strategy and direction.

Mid-size firms actually lead their Global 3,500 counterparts in rollouts of voice over IP and wireless LANs, while Canadian firms lead their U.S. counterparts in adoption of PDAs, supply chain software and enterprise portal technologies.

"Our survey also found that Global 3,500 executives estimate their online- generated 2002 revenues at 7.3 percent of overall corporate revenues, compared with 5.7 percent in 2001. They also estimate that in five years, online revenue will comprise 20 percent of total corporate revenues," added Pohlmann. "Despite the economic downturn, companies still believe that technology will make a huge difference in driving business results."


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This piece has been brought to you by the DM Review Editorial staff.

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