Report: E-Commerce Fuels $200 Billion Spending Frenzy

Media giant IDC released a new report this week indicating that corporate spending on Internet-related technology has now reached “frantic” levels, with U.S. sales expected to top $85 billion in 1999, and $203 billion by 2002. According to the IDC report, the spending frenzy is being fueled by the widespread move toward e-commerce, and will continue “well into the new millennium.”

The spending bonanza is not expected to be limited to certain industries either. In the year ahead, IDC forecasts that financial services companies will spend $16.6 billion on Internet technology. Manufacturing companies will spend $24 billion. Retail businesses will invest $6.2 billion, and online media and communications companies will spend $10.7 billion.

Why the Hoopla

The report attributes the rapid spending on Internet technology to increased corporate confidence in e-commerce as a viable business strategy. At the same time, companies are also realizing the benefits and gaining confidence in other forms of Internet technology (e-mail, groupware, etc.).

“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 E-Commerce Strategies Group.

According to IDC’s report, companies realize that e-commerce and e-business offer the opportunity to establish new competitive standards by expanding distribution channels, integrating internal and external processes, and offering a cost-effective method to provide products and services.

How to Cash In

“The good news [for] 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 e-commerce-fueled Internet spending frenzy, IDC recommends a three-step process:

Identify the big spenders. Reconcile their requirements with your company’s own products or service offerings. Pursue alliances or joint ventures to optimize positioning of your products or services and stimulate demand. The full report, titled “Business Gears Up for E-Commerce” is available for sale through IDC.

Corporate Info

International Data Corporation (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 a division of International Data Group.

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