NEW YORK — While the overwhelming majority of companies plan to launch new Internet business projects in 2002, top brass wants nothing to do with initiatives that will “transform” their companies or industries, according to research by management consulting firm A.T. Kearney and business-to-business publisher Line56.
Instead, CEOs want measurable value and return on investment in new Internet initiatives, the survey of 259 e-business executives determined.
Eighty-three percent of respondents said they plan new e-business initiatives in 2002. Of those, 71 percent said they will launch one to five; 17 percent plan six to 15; 7 percent plan more than 15 and 5 percent didn't know.
The survey also concluded that competition for budget dollars has grown fierce.
“I think CEOs are feeling a little burned,” Alayne Gyetvai, managing director, CTO, Cargill eVentures, said in a panel discussion on the findings yesterday at the Line56Live! conference. “They're looking at IT and saying, 'What the heck have you been doing?'”
The days of so-called big ideas that require companies to change their whole processes are over, she said.
“You've got to have a value proposition that is so obvious to me,” she said.
The business technology-spending climate is similar to that of 1991 and 1992, said Tim McAdam, a partner with venture capital firm Trinity Ventures, Menlo Park, CA.
“People have spent a lot of money, and they have not achieved the ROI they expected,” he said. “We're in this digestion phase. Every IT penny is being scrutinized.”
He said his firm is investing in companies whose offerings “make existing processes better.”
Those vying for pieces of companies' budgets must be able to articulate a clear return on investment in 12 months, and preferably six to nine, he said.
This is especially important in a time when budgets have become more fluid and are being revised quarterly, the panelists said.
“There doesn't seem to be a budget cycle anymore,” said Dominick Cortellessa, vice president, e-solutions, financial institutions, Citicorp North America Inc., Stamford, CT. “It seems like you're financial planning every single day of the week.”
Respondents to the study said catalogs and customer relationship management initiatives are top priorities for 2002. Also, e-business spending will account for 18.2 percent of global IT budgets in 2002, and overall e-business spending will outgrow overall IT spending 10.6 percent to 4.4 percent, the study concluded.
All the panelists were optimistic about the future of e-business.
“It is a competitive imperative for most organizations,” said Steve Garone, senior strategist and evangelist, Sun Microsystems.
“There's no way to capture relationships the way you can on the Web,” said Michael Levin, chairman/CEO, NewView Technologies, New York.
However, McAdam said he is bearish on the business technology-spending outlook for the next two years.
“I am a firm believer that IT budgets are going nowhere but flat to down for the next two years,” he said.
The Line56Live! conference runs through today at the Sheraton New York Hotel & Towers.
Line56 was reportedly named after the number of the line in act three, scene one of Shakespeare's “Hamlet,” where Hamlet says, “To be or not to be.”