IT Investments in E-commerce Are Thriving

The dot-com era may be dead, but IT spending on e-commerce is alive and well, and expected to have a steady pulse over the next five years. New research from Forrester Research estimates that e-commerce budgets will outpace the rest of IT budgets through 2008. At a time when IT spending is tight, 75 percent of the companies surveyed say they have plans to maintain or increase investments in e-commerce initiatives. Meredith Child, an associate analyst at Forrester and author of the study, attributes the increase to a rise in customer confidence and comfort ability with the Internet. "When e-commerce came out people had high hopes and there was lots of hype," Child says. "Now, as the years have moved on e-commerce is tried and tested, and our research seems to validate that." The study includes a survey of 212 e-commerce decision-makers showing that spending on sell-side (customer-facing) e-commerce initiatives will grow by 4.8 percent. Buy-side (supplier-facing) spending will be more in line with overall IT budgets, growing at 1.9 percent, according to the research. That translates to 40 percent of those using customer-facing technology saying they have plans to increase spending, while 28 percent of companies will increase their spending in supplier-facing initiatives, according to Forrester. Child also says that 39 percent of respondents say they plan to use consulting. The research also concluded that the bulk of the spending increases are slated for Web-based applications. And 36 percent stated plans to increase full-time development staff. Those developers will have an eye towards improving user experience through better usability, enhanced self-service, and giving customers more online channels. Security also topped the list of what IT groups plan to spend for e-commerce activities. E-commerce consulting and implementation services are also expected to grow, unlike other IT consulting services. That surprised Child: "We fielded another big IT study in October and consistently the consulting and implementation spending was down. There was just not a lot of demand for it," she says. "But in the e-commerce realm there is a huge demand for third-party service."