Monday - May 8, 2000
eCommerce Software Spending
to will Continue Skyrocketing
Although the US market for packaged
eCommerce software will reach $14.5 billion in 2003, user
demand will force
dramatic changes in how applications are built and purchased.
According to a new Report from Forrester Research, Inc.,
firms will supplement an application-server-based commerce
platform with complementary plug-in apps — an approach Forrester
terms "platform orchestration."
"By 2003, US consumers
and businesses will spend $2 trillion over the Net. Online
retail sales will hit $144 billion, and business-to-business
sales will reach $1.8 trillion," said Eric Schmitt,
analyst at Forrester Research. "To thrive in these
competitive arenas, firms will need the software tools
to promote brands, analyze trends, and capture market share,
as well as the support tools to retain buyers -- all of
which require a reliable, high-performance software infrastructure."
As firms build out their online
businesses, several factors will cause software spending
by US companies to grow from $3.1 billion in 1999 to $14.5
billion in 2003. eCommerce budgets will continue to rise
as companies spend 1% of total revenues on eCommerce initiatives
in 2003. Large companies will dominate the market, driving
an average of 50% of all software spending through 2003,
while smaller firms will choose to lease software from
application service providers. Finally, whether by choice
or market pressure, many firms will be forced to channel
their eCommerce through third-party intermediaries, offloading
investments in software to personalize, measure, and support
As companies increase their
commitment to packaged software, they also increase the
burden of integrating and managing multiple products. Forrester
believes that decision-makers will seek out platform products
instead of feature-rich, but proprietary, packages; platform
products allow for deep customization as well as the flexibility
to rapidly integrate new best-of-breed apps. Firms will
also align corporate IT and business strategies to avoid
duplicated efforts and incompatible systems.
Forrester believes that a single,
dominant software strategy -- platform orchestration --
will emerge as firms synchronize IT and eBusiness efforts.
Based on a core apps platform, an open and extensible standards
framework, and plug-in component apps, platform orchestration
enables firms to balance the need for constant innovation
against the benefits of site longevity.
Tension between platforms and
component apps will create friction in the packaged software
market for the next four years as core apps subsume today's
component apps. Even as consolidation narrows the field,
new component categories will appear, resulting in a healthy
ecosystem composed of a handful of dominant platform providers
and dozens of component app vendors.
For the Report "Commerce
Software Takes Off," Forrester examined the SEC filings
of 60 software companies. To supplement these figures,
Forrester also estimated the revenue of 33 of the largest
privately held software companies. Respondents reported
spending $24 million on eCommerce efforts in 1999 and expect
to increase their spending to an average of $41 million
Preparing for an IPO
The New York Law Journal has published a good article
on the law when it comes to preparing for an IPO. According
to the article:
" Young attorneys for fast-growing
e-commerce and Internet companies know that the goal of
many such businesses is to conduct an initial public offering — and
to do so as quickly as possible. An initial public offering
is an attractive option for many Internet companies because
it provides significant amounts of cash for operating purposes
and ready access to the capital markets for future rounds
In addition, if a strong after-market
develops for the company's shares, the founders and other
insiders will have a liquid market in which they can eventually
sell some or all of their shares. While the benefits of
an initial public offering are well known to the founders
and officers of e-commerce companies, the obligations and
responsibilities that go along with being publicly traded
are often overlooked.
Counsel for companies that plan
to go public must make their clients aware of the significant
responsibilities that are placed on the corporation, as
well as on individual officers, directors and shareholders.
Significant liability can be imposed for violations of
the securities laws, and such considerations must be addressed
early on to ensure that an initial public offering is the
best alternative for a particular company.
For young lawyers working for
new companies — or for other attorneys curious about what
such work entails — this article will address the primary
obligations imposed on the corporation after an initial
public offering. My next article will address the obligations
imposed on individual corporate officers and directors.
Counsel should review these obligations with any company
that is considering going public so as to ensure that the
officers and directors know just what going public entails.
A publicly traded company is
subject to various reporting, filing and disclosure requirements.
These obligations arise primarily out of the Securities
Act of 1933, the Securities Exchange Act of 1934 and the
rules and regulations promulgated under these statutes
by the U.S. Securities and Exchange Commission. Important
obligations also arise out of the contract through which
the company lists its shares for trading on a stock exchange,
including the Nasdaq system..."
here for the full article. [Link no longer active]
to May 2000 News Archive