Bond, here's another interesting article...
$1 million is average cost to build e-commerce site
By David Legard
InfoWorld Electric
Posted at 7:33 AM PT, May 28, 1999
The average cost of developing and launching an enterprise Web electronic-commerce site is $1 million, market research company Gartner Group has concluded in a new research study released Thursday.
The report, called "Survey Results: The Real Cost of E-Commerce Sites," estimates that 79 percent of the total development cost is labor-related, while 10 percent is spent on software and 11 percent on hardware. The report also says that the cost will rise by 25 percent annually.
Survey participants discovered that everything -- from organizing time and money to the hiring of professional service companies -- was more involved than expected, Gartner said. While some survey participants spent less than $350,000 on their Web sites, others spent more than $2 million. Regardless of cost, no survey participants claimed to be on budget for their projects, the report said.
According to the report, the average time to complete an e-commerce site was five months, although some took up to a year to launch on the Web. The goal for some enterprises was to create a Web e-commerce presence quickly and inexpensively, while others built Web sites that create market differentiation.
These Web sites built by the survey participants fell into three cost categories based on function:
$300,000 to $1 million to "Get on the Map." This site is adequate but it is functionally behind most industry participants.
$1 million to $5 million to "Run with the Pack." This site is functionally equivalent to most industry participants.
$5 million to $20 million to achieve "Market Differentiator." This site raises the industry competitive bar and changes the nature of online competition.
The report said the biggest surprise to survey participants was that they did not get "almost everything they needed" from their e-commerce application vendor. On average, most corporations used two or more external companies, usually including a nationally recognized media firm as well as local systems integrators to help control costs.
According to the report, "a great deal of effort was needed to build the front and back ends of the e-commerce sites," which resulted in various delays and additional costs.
Gartner Group Inc., based in Stamford, Conn., can be reached at www.gartner.com.
DavidLegard is a correspondent in the Singapore bureau of the IDG News Service, an InfoWorld affiliate. |
