Internet burnout hasn’t spread to big business yet

A study released on Tuesday shows that although investors, the media and the public at large might have had their fill of the Internet, the technology that powers the Web has taken root in big business.

Seventy per cent of the 150 executives surveyed for the study said they believe the Internet is either essential or important to their success.

“There has been a lot of negative hype about e-business, the Internet, what-have-you,” said Kent Morris, a principal at DiamondCluster International Inc. who also headed the study. “But the majority of the companies we talked to were happy with their e-business initiatives.”

Morris said the executives had realistic expectations of the Internet and what it could do for their businesses and recognize that the payoffs will come further down the road.

DiamondCluster, the Wharton School of Business and Context magazine, a publication on new-economy business strategy, conducted a survey of 150 executives from a variety of companies with annual revenues of more than a billion dollars. The study, titled “Digital Strategies Survey 2001” takes a look at how Internet technology and innovation fit into the strategies of these large corporations.

The report finds that most companies are using Internet technology for customer-facing applications and to bring efficiency to their supply chain. Morris believes that it is the immediate return on investment that drives companies to keep up with technology in those areas.

Executives expect that the importance of the Internet to their business will increase during the next two years. Thirty per cent see e-business initiatives as having a large impact on customer acquisition, and 46 per cent think they will greatly influence customer service.

Respondents also believe that about 12 per cent of their sales will come via the Internet by 2003, about double current totals.

Additionally, the survey found that 87 per cent of respondents see innovation as one of their top five priorities for success.

“Dot-coms and entrepreneurial startups will always have a place,” said Morris. “You need a forum for innovation, and that forum is often the startup.”

However, some IT vendors’ outlooks on IT spending are not as rosy. Hewlett-Packard Co. warned Wednesday that it’s becoming “more cautious” about the revenue outlook during its current fiscal quarter, saying a slowdown in IT spending appears to be spreading to other parts of the world beyond the United States and Europe [see story –

HP warns of widening slowdown in IT spending


HP reported that purchases by corporate users and consumers were soft last month in all geographic regions. As a result Carly Fiorina, HP’s chairman, president and CEO, said that she and other executives are taking an increasingly cautious view of projections calling for revenue during the fiscal third quarter to range from being flat with the second-quarter level of US$11.6 billion to falling as much as five per cent.

“While it is still early in the quarter, May was softer than expected, and we are now addressing what is clearly becoming a global [IT spending] slowdown,” Fiorina said Wednesday. “We are taking additional steps to generate revenues and reduce costs, while continuing to implement our long-term growth strategy.”