E-Commerce Stimulates a Corporate Internet Spending Frenzy, According to IDC From 1999 to 2002, Spending Will More Than Double

FRAMINGHAM, Mass., Feb. 23 — Corporate Internet spending is frantic. From $85 billion in the United States alone in 1999, it will jump to surpass $203 billion by 2002, and the spending frenzy will continue well into the new millennium, according to a new report by International Data Corporation (IDC).

The spending bonanza isn't limited to certain industries either. 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 past few years have served as a testing ground for Web-based products and services. Corporations have gained confidence in the technology and are growing accustomed to its most basic applications such as e-mail 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 e-commerce revolution is a primary driver of the spending. Companies 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.

"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.

For IT vendors hoping to cash in on the spending frenzy, IDC recommends a three-step process:

1. Identify the big spenders.

2. Reconcile spenders' requirements with products/services offerings.

3. Pursue alliances or joint ventures to optimize products/services

positioning and stimulate demand.

The report, Internet Futures Spending Model 1997_2002: Business Gears Up for E-Commerce, uses IDC's Spending Model as its basis. The model provides the framework to forecast the amount of money companies will spend to develop the Web infrastructure, including money spent on external suppliers of hardware, software, and services as well as internal expenses for salaries, benefits, and overhead associated with the company's own Web development/management team.

To order a copy of Internet Futures Spending Model 1997_2002: Business Gears Up for E-Commerce (IDC #B17999), contact Sue Beauregard at 1-800-343- 4952, ext. 4774 or at sbeauregardl@idc.com.

About IDC

International Data Corporation is the information technology industry's most comprehensive resource on worldwide IT markets, trends, products, vendors, and geographies. IDC provides data, analysis, and advisory services to the world's leading IT suppliers as well as IS professionals in finance, insurance, entertainment, advertising, consumer goods, and publishing. IDC's research and opinions are based on the results of more than 300,000 end-user surveys, in-depth competitive analysis, broad technology coverage, and strategic analysis. IDC is committed to providing global research with local content through its 500 analysts in more than 40 countries worldwide. Additional information on IDC can be found on its Web site at http://www.idc.com.

IDC is a division of International Data Group , the world's leading IT media, research, and exposition company.

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