Study: E-biz spending exceeds 20 percent of IT budgets

Companies are now spending 20.3 percent of their IT budgets on e-business initiatives, with the biggest chunk of the spending being allocated to networking and infrastructure investments, according to a new report being released today by Los Angeles-based Line 56 Media and A.T. Kearney Inc., the consulting division of Plano, Texas-based Electronic Data Systems Corp.

The study, which is based on a survey of 150 IT executives at companies with more than US$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 percent in 2004, and companies that are allocating more than 20 percent of their annual IT budgets on e-business spending are anticipating even higher growth. In 2001, companies spent 17.5 percent of their IT budgets on e-business activities; that figure rose to 19.3 percent 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.

Respondents to the Line 56/A.T. Kearney survey outsource an average of 23 percent of their IT activities.

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