A.T. Kearney: Spending on e-business

Companies are now spending 20.3% of their IT budgets on e-business initiatives, with the biggest chunk of the spending being allocated to networking and infrastructure investments. The study, which is based on a survey of 150 IT executives at companies with more than $250 million in annual revenue, reveals that companies are each spending an average of $16.4 million this year on e-business networking and infrastructure enhancements. Meanwhile, an average of $15.2 million is being earmarked for e-business applications such as ERP and CRM systems, while another $11 million is being set aside for e-business tools.

Despite the hype surrounding mobile applications and Web services, traditional e-business applications continue to garner the bulk of expenditures. ERP spending this year ranks first among the companies surveyed, with $3.2 million in spending planned for 2003. Planned investments in portals ranked second at $2.7 million, with spending on supply chain management systems and CRM systems close behind at $2.5 million each.

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

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 $1 billion to $5 billion or more. Companies represented in the survey have an average of 190 business units and an average annual IT budget of $201 million.