U.S. Industries Are Delegating More of Their IT Budgets to the Web, IDC Says

FRAMINGHAM, MA.- MAY 23, 2000 – An increasing portion of U.S. companies' IT budgets is being invested in internal and external Web initiatives. According to IDC, in 1999 just over 12% of all U.S. companies' IT spending was on Web initiatives. This percentage will more than double to 27% by 2003, when U.S. Web spending will exceed $282 billion.

"Beyond the promise of ecommerce, industries are looking to leverage Web technologies within existing internal business processes such as purchasing, procurement, and inventory management. These ebusiness initiatives, while less visible to the outside world, are critical prerequisites to outward-facing ecommerce initiatives and continue to drive much of the real investments in Web hardware, software, and network infrastructure," said Christian Silva, an analyst with IDC's Internet and eCommerce Strategies research program.

Industries are currently shifting the amounts they are spending on Web development, both internal and external. While many companies are still in the formative stages of developing an internal infrastructure for Web initiatives, others are spending to develop externally facing Web initiatives. The ratio of internal versus external spending will dictate their needs, the same needs that IT vendors need to cater to. According to IDC, Web spending, as a proportion of overall IT spending, creates a very specific set of needs.

"More important than the amount of money industries spend on the Web is the changing ratio of their Web spending to overall IT spending," Silva said. "This ratio tells how deeply Web technology is penetrating existing, inward-facing IT infrastructures as well as the industry's adoption of outward-facing ebusiness and ecommerce solutions."

The industries that currently dedicate the largest percentage of their IT budget to the Web are insurance, business services, government, and construction. The segments spending the smallest percentage of their IT budgets on the Web are health care, utilities, and resource industries.

"Many industries are entering a new period where the focus is less on experimentation and more on improved performance, better operational efficiency, and integration with existing systems," Silva said. "Conversely, there are industries that will continue to boost spending as they build a new Web presence beyond the world of consumers and into the business-to-business world."

IDC's 2000 Web Spending Model: Forecast and Analysis by Vertical Industry (IDC #B22234) was recently published. This report analyzes Web spending in the United States by vertical industry. The report discusses overall trends in U.S. Web spending and categorizes industries based on their ratio of Web spending to overall IT spending. Information in the report is based on IDC's Web Spending Model Version 2.3. This tool measures current and future Web investments of U.S-based companies across 14 vertical industries. To order the report, contact Demetra Georgakopoulos at 1-800-343-4952 extension 4496 or at dgeorgakopolous@idc.com.

About IDC

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at http://www.idc.com.

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

# # #

All product and company names may be trademarks or registered trademarks of their respective holders.