Mixed news from economic downturn

While one in two business owners saw a bright future for e-commerce in July 2000, that optimism has declined noticeably as the IT industry and other economic sectors try to weather the current economic slowdown.

A new study released in April suggests that, now, just one in four business people are "very optimistic" about the future of e-commerce. Even Internet companies have seen a decline in enthusiasm to 59 per cent, compared to 89 per cent in July 2000, according to the report by Grant Thornton LLP, a US accounting, tax and management consulting firm.

The days of companies and executives expressing a great sense of urgency for developing an e-commerce strategy and throwing large sums of money at such efforts are over, said Andre Schnabl, a Grant Thornton partner.

"Eighteen months ago, there was an absolute feeding frenzy . almost a panic [for companies to develop an e-commerce strategy]," Schnabl said. "The mood has changed drastically. It's a more sobering mood. It's far more rational."

The need to be a "first mover" was a classic cliche in the development of a e-commerce strategy a year ago, Schnabl said. There were some companies that were quick out of the gate and succeeded with an online strategy, but some were dismal failures, he said. Now, he said, such development is much more disciplined and conservative.

On the other hand, the current economic downturn will give some companies a 'boot up the bottom line', forcing them to address an e-commerce strategy seriously, claimed Fujitsu Australia CEO Phil Kerrigan at a recent Australian Internet Industry Association event.

Suffering some short-term pain, he said, may actually accelerate the uptake of e-commerce.

According to Kerrigan, companies will budget for technology that reduces costs instead of going for the same old solutions. "While Australian businesses may cut back on IT spending for new business initiatives, they will still budget for technology that reduces cost."

Kerrigan isn't the only one to sound a positive note. According to Jon Gantz, chief research officer with IDC, the IT industry has seen it all before with the creation of each new era of computing - and has lived to tell the tale.

"We're looking at strong opportunity going ahead," Gantz said at a presentation earlier this year. There are 10 million Web sites on the Internet today; by 2004, there will be 24 million, he said. Furthermore, 50 per cent of those will be outsourced to a hosting provider, creating another big market.

There were an estimated 400 million Internet users worldwide in 2000; that figure will increase to 900 million by 2004, he said. More than half of those will be mobile users, with 80 per cent accessing the Internet from multiple locations.

"Mobile services alone will be a $US44 billion market in 2004, and that's up from about nothing today," the analyst said.

"We're in the middle of the transition to the real new economy, and we have four times as much opportunity ahead as we had before."

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James Evans

PC World
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