Going into September, senior managers were already less than enthusiastic about big corporate Internet initiatives. Given the tightening economy and the slowness with which many business-to-business e-commerce projects pay for themselves, such efforts were quickly losing ground on corporations' priority lists.
Now, in the wake of Sept. 11, senior managers are even more fixated on prompt payoffs from any investments they make. Corporate managers seem poised to spend more on a small handful of areas -- including Internet security, technology recovery systems and telecommuting gear -- and that should mean more business for companies with those specialties. Companies that focus on more basic products -- such as e-commerce software -- could face much more difficult times in the coming months, though.
"Overall, the pie of B-to-B transactions will shrink, because the attacks have really pushed us over the edge into a recession, which will cause a global recession," said Lauren Shu, a research director with GartnerG2, the business strategy division of the Gartner consulting and research firm. As a result, she said, her firm will probably reduce its 2002 estimates for global e-commerce spending among corporations. (The current estimate is US$1.93 trillion.)
In the short term, Shu said, companies in the industries most directly affected by the terrorist attacks will scale back their e-commerce spending. ``We'll see a trickle-down effect from tourism and financial services,'' she said, adding that industries like oil, gas, industrial equipment and textiles will also be affected.
In addition, she said, if consumer spending decreases in areas such as furniture, cars and other big-ticket items, those industries will also have less cash to spend on ambitious e-commerce projects.
Airlines suppliers
Indeed, the economic repercussions of the attacks continued to spread last week. As companies that supply the beleaguered airline industry began discussing cuts of their own. General Electric Aircraft Engines, for one, announced plans to lay off 4,000 of its 30,000 workers. Rick Kennedy, a spokesman for GE Aircraft Engines, said he did yet not know whether employees devoted to the company's growing e-commerce effort would be included in the layoffs. "But we expect everybody's going to be hit by this," he said.
And Russ Mayer, vice president for e-business at GE Aircraft Engines, said spending on new e-commerce projects would be cut by 25 to 30 percent.
Dan Ackman, vice president for e-business at the National Association of Manufacturers, said members of his organization would curtail their e-commerce spending. "My gut is that one-third of the companies will stay with their plans, a third will spend less, and a third will take a wait-and-see approach," Ackman said.
"That last group will lean toward staying the course," he added. "But one thing that will not change is that CEO's will continue to only do stuff with high priority."
That means requiring fast payoffs, said Marc Andreessen, the chairman of Loudcloud, which helps run the Internet operations for companies like Nike and Ford Motor.
Andreessen, a co-founder of Netscape who is generally credited with inventing the first Internet browser, sees a new pragmatism among corporate technology customers. "The way to sell a year and a half ago was to talk about getting a return on your investment after 12 months or 18 months," he said. "Nowadays, the arguments have to do with cost reduction in the first month."
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