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.

Spending Power of Kids and Teens in US

According to the latest report from Harris Interactive’s YouthPulse service, young people in the US, ages eight to 21, have annual incomes totaling $211 billion as of June 2003, representing an annual spending power of $172 billion.

Harris also finds that 15% of young people’s spending is done online. Specifically, young people between the ages of 13 and 19 spend at the greatest rate of any other age group in what Harris refers to as “Generation Y,” with a rate of $94.7 billion annually.