The US market for eCommerce services will boom as firms grapple with complex Internet initiatives linking internal technologies and processes to suppliers and customers. According to a new Report from Forrester Research, Inc. (Nasdaq: FORR), average eCommerce help budgets will rise from $750,000 in 1999 to $1.5 million in 2001. The increased demand for eCommerce technical, strategy, marketing, and design services will contribute to a compound annual growth rate of 59%.

“Firms moving beyond basic Web storefronts will engage service providers to help them deconstruct existing business models,” said Christine Spivey Overby, associate analyst in IT Management Research. “Companies will engage eCommerce help vendors to untangle site architecture so they may provide 99.999% uptime and support multiple third parties. In addition, eBusinesses will seek assistance developing consumer-facing sites that enable them to capture and retain affluent online shoppers, who will account for 74% of online spending in 1999.”

To size the demand for eCommerce help, Forrester built a model that divides that market into four segments: technical, strategy, marketing, and design services. As Y2K and ERP work winds down, firms will spend heavily on Web-specific technical services, which will constitute 50%, or $32 billion, of the overall market in 2003. Application integration will lead the technical services market, as an $18.3 billion gold mine. Forrester expects the market for eCommerce package implementation to reach $5.1 billion in 2003. Finally, as companies retire non-Y2K-compliant legacy systems and step up their eBusiness efforts, eCommerce applications will rise from 4% of the total application portfolio today to 35% in 2003, creating a demand for custom development services that will reach $8.6 billion in 2003.

In an effort to determine the Internet’s impact on their businesses, Forrester predicts that the market for online strategy services will grow at a compound annual rate of 83% over the next four years. Firms are increasing the number of Web connections with customers and suppliers, resulting in processes that extend beyond the enterprise. Managing the cultural change, including internal politics, global versus local disputes, and cultural inertia, will increase demand for organizational consulting, creating a market of $3.3 billion in 2003.

Online marketing services, which include campaign analysis, branding strategy, and creative development, will grow from 4% to 16% of the commerce help market as firms employ eCommerce integrators to establish their presence online. By 2003, design services will also expand, with user interface (UI) activities sharing the stage with content management services as firms spend more outsourcing dollars on organizing dynamic content.

“After engaging an eCommerce integrator for projects like integrating order fulfillment across a supply network, companies will seek help managing these external technologies and processes,” added Overby. “The eBusiness services market will further expand as new outsourcing intermediaries emerge to provide unbiased assessment of service vendors. In late 1999 and 2000, the international demand for eCommerce services intensifies as leading overseas markets cross the commerce threshold — a window of opportunity in which a country’s public and private sectors must act to participate fully in eCommerce hypergrowth.”

For the Report “Sizing eCommerce Services,” Forrester interviewed 50 companies using eCommerce outsourcers and found support budgets ranging from $250,000 to $25 million. In 2001, respondents expect to allocate 28% of total eCommerce help dollars to new development or package implementation and 26% on marketing initiatives.