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 -- like 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 next year's estimates for global e-commerce spending among corporations (The current estimate is US$1.93 trillion).
"We'll see a trickle-down effect from tourism and financial services," she said, adding that industries like oil, gas, equipment and textiles will also be affected.
In addition, she said, if consumer spending decreases in areas like furniture, cars and other big-ticket items, those industries will also have less cash to spend on ambitious e-commerce projects.
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 com-pany's growing e-commerce effort would be included in the layoffs.
Dan Ackman, vice president for e-business at the National Asso-ciation 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 means requiring fast payoffs, said Marc Andreessen, the chairman of Loudcloud, which helps run the Internet operations for companies like Nike and Ford.
Andreessen, a co-founder of Netscape who is generally credited with inventing the first Internet browser, sees a new pragmatism among 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.
As for Loudcloud's business, Andreessen said he had not seen any evidence of executives balking since Sept. 11. "But that's probably because we usually get called in to reduce the cost of existing projects, not to start a new project," he said. "A lot of companies have killed their plans for new projects."
Damian Walch, senior vice president, Comdisco, a disaster recovery company, said that since the attacks, businesses have been interested in buying backup systems to keep their operations up and running in the event of a disaster.
"It's definitely a buyer's market right now," said Ackman at the National Association of Manufacturers. "The companies that push ahead have a real opportunity."
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