Web spending predicted to be highest on IT

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During the past year, US businesses have changed their web-spending patterns. Gone are the days of building an Internet presence, according to IDC; in their place is spending to integrate the Internet into internal and external business processes.

In other words, purchases of web-related technology are now a business imperative.

“Today, corporate Internet spending is an investment that directly impacts the strategic direction of organizations,” said Anna Giraldo Kerr, research manager for IDC’s internet and e-commerce strategies program. “The strategic impact remains, but it has shifted from reducing costs to the transformation of business models.”

While the reason for web spending is evolving, the amounts expended for IT hardware, software, and services will remain high. IDC expects web spending on IT products and services to more than double from $119.1 billion in 2000 to $282.5 billion in 2003.

This year, for the first time, US businesses will spend more on web-related IT services than hardware, and the services category will represent the largest opportunity throughout IDC’s forecast. Nevertheless, the importance of hardware should not be underestimated.

“Hardware vendors play a critical role in the ebusiness supply chain. Their products enable the interface and access of web technologies,” Kerr said. “Although it may appear that Internet-related hardware is at the bottom of the food chain, without it there would be no Internet activity.”

Internet access and web hosting will contribute to growth in the services space.

Spending on software will grow faster than any other type of web IT spending. Web software-related spending will increase at a compound annual growth rate of 43% from 1999 to 2003, compared with a CAGR of 35% for the overall market. Despite the high growth, software will remain the smallest part of the market.

* Information like the above can be found in IDC’s new report IDC’s 2000 US Web Spending Model, Version 2.3: Forecast and Analysis by IT Segment (IDC #W22495). The report details the change in web spending and reviews factors enhancing and inhibiting growth. It also forecasts web spending segmented by hardware, software, and services through 2003 and discusses opportunities and trends impacting each area.



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