E-business investment continues to grow

The USA may be choking over spending on PCs, but there is no loss of appetite to invest in Internet technology according to two new reports.

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By  Rob Corder Published  January 30, 2001

Companies will continue to invest money in Internet technologies in 2001, but IT managers are expected to prioritise Internet projects that show profitable returns. Internet technologies are still considered part of the long-term corporate strategy.

According to Internet Week, 77% of the 250 IT and ebusiness executives surveyed said they would increase their Internet spending in 2001. Just 4% said they would actually cut Internet spending, while 19% said they’d spend the same amount on ebusiness in 2001 as they did in 2000.

Companies that are cutting Internet spending are most likely to do so in the following areas: ebusiness application development, desktop hardware and software, ISP, ASP and other Internet outsourcing activities, online procurement software, and wireless technology services.

A similar Gartner Group study found that e-business will also constitute a greater proportion of IT budgets, up from 12.7% in 2000 to 15.5% in 2001. A further increase will be seen in 2005 when the proportion of Internet spending jumps from 30 to 50% of IT budgets.

In 2001, businesses must restrict the amount of cash that was previously thrown at ebusiness projects—return on investment (ROI) is now the key issue for companies and the ebusiness projects will be under increasing pressure to show profits.

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