E-Business Investments Leaping

E-business is becoming more critical to the overall success of U.S.-based companies, according to a recent report that says some firms are investing as much as 20 percent of their total IT spending on Internet-based services, product-oriented solutions, and personnel.

According to Cahners In-Stat, market researchers in Scottsdale, Ariz, about 70 percent of American workers have access to the Web at work in 2000, an increase of seven percent from 1999. By 2004, Cahners estimates that 85 percent of U.S. employees will have access to the Internet at work.

The report notes that during the last two years, U.S. businesses have been "diligently" preparing for e-business, using Y2K as an opportunity to begin transitioning from traditional offline business practices to those that leverage the Web.

"Though this transition is certainly not complete in the year 2000, it won't be long before all business is e-business, which should steadily drive IT spending upwards," said Kneko Burney, director of e-business Infrastructure and Services research for In-Stat.

Burney said the inherent multimedia nature of online business sets up a raft of sales, marketing, and CRM (customer relationship management) opportunities, as well as a way to markedly streamline existing business procedures.

But to realize these advantages will require significant financial investment in integrating sometimes-complex sets of services and solutions.

"As a result, IT spending by U.S. firms has increased over the past five years, with the most dramatic increases taking place in the last two," Burney said.

Other finds from the survey include the following:

-- U.S. companies with 1,000 or more full-time employees primarily use the Internet as a communications tool to tie together employees, partners, and suppliers. At the same time, these companies are improving their online commerce abilities with virtual supply-chain integration.

-- Companies with 100 to 999 employees continue to struggle with fragmentation as they deal with connecting a growing number of remote sites and employees to centralized resources.

-- Internet penetration for small companies with 100 employees or fewer is now past 80 percent, suggesting that these companies should have little problem successfully competing online against their larger competitors. These companies will invest $7 billion alone in application services by 2004.

Users who are interested in purchasing the report, titled "Building for eBusiness," or who need more information on this topic can go to www.instat.com/catalog/cat-ms-ebusiness.htm. The report costs $3,995.

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