April 10, 2002, 12:00 AM

Web site investments turn inward to back-end functionality, says Jupiter

62% of web site owners are shifting development toward internal improvements--intranets, interactive publishing tools and site management and reporting capabilities--setting them up to compete better in customer-focused areas next year, Jupiter says.


The majority of web site operators are putting their technology investments into back-end operational functionality this year so they will have flawless operations before turning to customer-related projects next year, says a new study from researchers Jupiter Media Metrix. They believe that will allow them to compete better on the customer front next year, Jupiter says.

Jupiter says 62% of web site owners are shifting development priorities toward internal improvements, such as intranets, interactive publishing tools and site management and reporting capabilities. Jupiter expects this trend to continue through this year before site operators turn their attention to customer-oriented functionality.

Jupiter today also released its first market forecast for spending on web site analytics, software or services designed to collect, transform, process and report on data derived from web site traffic, projecting that annual spending will climb from $497 million in 2001 to $1 billion by 2006 - with 29% allocated to ASP-based (application service provider) services.

"Our research shows that while companies with high-end, high complexity web sites continue to spend millions of dollars annually on site operating expenses, they are aggressively redirecting their spending efforts toward internal improvements," said Matthew Berk, Jupiter analyst. "We are in a period of technology consolidation and optimization. With over 60% of development spending being devoted to internal initiatives, web sites that have their house in order have a unique opportunity to outpace their competitors in late 2002 by rolling out differentiating features to their customers."

In a new Jupiter Research Report, Jupiter analysts forecast that spending on site analytics will rise to $1 billion by 2006. Between 2001 and 2006, ASP-based revenues are expected to grow by 79%, while sales of software-based solutions can be expected to increase by a modest 10%. Furthermore, by 2006, solutions delivered as an ASP offering will account for just under one-third of annual spending on site analytics, up from a mere 4% last year.


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