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The other area of Internet's phenomenal success is business-to-business ecommerce. This may seem a strange statement, given absolute crash of dot com world and beating taken by virtually every public tech company. Mention word e-marketplace and people snicker. Companies like Ariba, Ventro and VerticalNet were considered giants just a few months go. There companies were going to be next generation's GMs and GEs. Now they very well may be moving along same sorry path as WebVan.
But something very big is happening within companies, and it is going on very quietly. Ten years ago, companies allocated about 10 percent of their capital spending to information technology (IT). IT these days is virtually synonymous with Internet technology. This year, IT spending constitutes more than 50 percent of all corporate capital spending. And even while corporations are laying people off and cutting spending on everything from new facilities to professional education, Gartner just reported that 53 percent of Fortune 1000 companies have increased their IT budgets by more than 20 percent this year.
Why are companies increasing their spending on Internet technology when those dollars could be spent on retaining employees or could be passed down to shareholders to bolster stock prices? There is one simple answer to question. The dollars spent on Internet technology deliver a return-on-investment so quickly, companies get their cost back out of investment within weeks. Many CEOs now turn to their technology and information executives, saying, "Can't we do this faster?"
Large corporations are spending millions upon millions creating private networks to connect out to suppliers and customers. Cisco Systems has reportedly spent $300 million building its network. And these companies are also getting their millions back in efficiency savings. Who says Internet is a bust?
P.S. Wonder why Ariba, Ventro and VerticalNet are doing so poorly if companies are spending so much on technology? It's because tech dollars are now going to companies like Oracle, Microsoft and IBM, companies that have become ecommerce giants.
Rob Spiegel is the author of Net Strategy (Dearborn) and The Shoestring Entrepreneur's Guide to the Best Home-Based Businesses (St. Martin's Press). You can reach Rob at email@example.com