Expect more e-business envy

Having worked with a Web venture in the past, I’ve seen (and felt) firsthand the animosity that can arise as resources are hived off from parts of a company to fund online projects.

If it’s not managed well, the process can foster long-term feelings of ill-will and jealousy between departments.

A first glance at a series of new reports had me strolling down memory lane, cringing as I remembered my own experiences on the “”Web team””.

Though predictions of a continuing IT spending malaise are hardly news, it also appears as if e-business and Web-based efforts will be spared most of the bloodletting. The spending slump numbers come from Forrester Research, which predicts large companies’ IT budgets will shrink by 14 per cent this year, from 3.5 to 3 per cent of revenues, compared with 2001.

That means fewer servers and less network hardware, as well as a decline in enterprise app purchases (by over 50 per cent from last year), and seeing fewer enterprise resource planning (ERP), customer resource management (CRM), supply chain and other packages rolled out.

But according to a study from Jupiter Media Metrix, Web site managers’ budgets for 2002 will stay within 10 per cent of their 2001 levels. That’s right, those dot-com dreams that helped bring about the industry’s current state of affairs with overvalued companies and overblown promises are apparently going to avoid the axe, at least for the near future.

It should be noted, however, that Web projects aren’t the industry darlings they once were, despite the continuing budget bias. Nowadays, Web projects have been focused inward, as companies look to get their own houses in order before taking on the world.

At least, that’s what Jupiter claims. According to the same report, companies are pursuing “”internal initiatives,”” such as intranets, as well as a range of Web reporting, publishing and management projects. As things improve, organizations will again focus outward on e-customers, Jupiter says.

It makes sense to me. Rather than rush out with half-baked and under-tested e-commerce applications, firms should try things out in-house first and see what works best. And while Web projects will by and large be spared the brunt of the cuts, they’ll hardly be raking in the dough. If anything, their managers and staff will be under even greater pressure to get things right the second time around.

In March, Gartner Group released some interesting findings on how corporate technology budgets were spent. It turns out that 20 per cent of IT spending worldwide in 2001 was “”wasted.”” That comes to more than half a trillion dollars. The reason? Unnecessary software purchases and poor licensing control, “”over specified”” hardware, and failed projects, “”especially true during the e-business hype.””

The bloom isn’t necessarily off the e-business rose. Assuming companies can live with lower expectations for the time being and develop much more realistic strategies, the next few years could see significant growth in e-commerce. Forrester predicts that by 2007, online transactions will make up 20 per cent of total corporate revenues.

With that kind of potential, lowly Web masters may one day regain their lost status.

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Jim Love, Chief Content Officer, IT World Canada

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