E-business spending exceeds 20% of IT budgets

US companies are now spending 20.3% of their IT budgets on e-business initiatives, with most being spent on networking and...

US companies are now spending 20.3% of their IT budgets on e-business initiatives, with most being spent on networking and infrastructure investments, according to a report by Line 56 Media and AT Kearney, the consulting division of EDS.

The study, which is based on a survey of 150 IT executives at US companies with more than $250m (£155m) in annual revenue, revealed that companies are each spending an average of $16.4m (£10.2m) this year on e-business networking and infrastructure enhancements.

Meanwhile, an average of $15.2m (£9.4m) is being earmarked for e-business applications such as ERP and CRM systems, while another $11m (£6.8m) is being set aside for e-business tools.

Traditional e-business applications continue to garner the bulk of expenditures. ERP spending this year ranks first among the companies surveyed, with $3.2m (£2m) in spending planned for 2003.

Planned investments in portals ranked second at $2.7m (£1.7m), with spending on supply chain management systems and CRM systems close behind at $2.5m each.

The bulk of spending on e-business networking and infrastructure is being directed at e-business server hardware at $3.3m and software at $2.3m.

E-business spending is expected to grow by 2.5% in 2004, and companies that are allocating more than 20% of their annual IT budgets on e-business spending are anticipating even higher growth.

In 2001, companies spent 17.5% of their IT budgets on e-business activities, that figure rose to 19.3% last year.

Eighty percent of the survey respondents work at companies with revenues of $1bn to $5bn or more. Companies represented in the survey have an average of 190 business units and an average annual IT budget of $201m.

Respondents to the Line 56/AT Kearney survey outsource an average of 23% of their IT activities.

Thomas Hoffman writes for Computerworld

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