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E-Business Proves A Worthy Investment


By Helen D'Antoni
InformationWeek
January 14, 2002 12:00 AM (From the January 14, 2002 issue)

Internet users in the United States rang up $13.8 billion in online sales during the eight holiday-season shopping weeks in November and December. During the last two weeks of November and the first two weeks in December, online purchases by Americans made up 65% of the season's total, signifying more than $9 billion in revenue, according to a report released by Goldman Sachs, Harris Interactive, and Nielsen/Net Ratings. That's good news for online retailers looking to push their E-business operations out of the red.

Proving ProfitableAt a time when return on investment is crucial, is E-business proving to be a lucrative strategy? The answer is yes for a majority of the nearly 200 business-technology executives employed at companies with E-business operations in InformationWeek Research's Outlook for 2002 report. This is true more for managers at larger companies than for those at midsize and small businesses.

Three in five survey respondents at companies with annual revenue of $1 billion or more say their E-business operations are, or will be, profitable; 56% of participants employed by businesses with annual revenue between $100 million and $1 billion claim the same. Among smaller companies--sites with annual revenue of less than $100 million--49% have either achieved E-business profitability or have a time frame when profitability will be realized.

Despite pressure from the slowing U.S. economy that has caused many companies to re-evaluate even key business priorities, InformationWeek Research finds that companies remain reluctant to trim their E-business spending. Of the full 300 business-technology executives interviewed in the Outlook for 2002 report, half at large companies expect E-business investment to increase this year. This is substantially more than at smaller companies: 34% and 26% at small and midsize companies, respectively, anticipate a jump in E-business spending in the next 12 months.

What role will E-business play in your company's plans this year? Let us know at the address below.

Helen D'Antoni
Research Manager
hdantoni@cmp.com

Investment ContinuesHolding Steady
Although a majority of companies with E-business operations either have achieved E-business profitability or have a time frame for when they'll reach profitability, not all sites are willing to increase their spending in this area. Instead, most are keeping their spending commitment the same as in 2001.

Two in three business-technology executives at small and midsize companies interviewed by InformationWeek Research in December report that their companies' E-business investments will remain unchanged year over year. And almost half of managers at large companies will keep E-business spending steady compared with last year. Seven percent of executives at small companies and 4% at large expect E-business spending will be scaled back in 2002. Among midsize businesses, this number jumps to 11%.


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