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Study: E-commerce sites pricey to build

E-commerce Web sites are harder than expected to build, and that task costs $1 million on average, according to a survey conducted by information technology research firm Gartner Group.

E-commerce Web sites are harder than expected to build, and that task costs $1 million on average, according to a survey conducted by information technology research firm Gartner Group.

Stamford, Connecticut-based Gartner Group today said it found that survey participants, which included 20 medium-size to large-size corporations that were launching a first phase e-commerce site, said the biggest surprise to them was that they did not get "almost everything they needed" from their e-commerce application vendor, according to the survey. On average, most companies used two or more services firms or local systems integrators to help construct sites.

"Across the board, we found that quite a few of the survey participants were using external firms," Gartner analyst Alyse Terhune told CNET News.com. Terhune added, "One [external firm] can't deliver everything. Our clients' need to use two or more firms is a clear indication that the one vendor fits all, one service provider provides all is simply not the case...It's not the reality."

Gartner said that its research found that the average $1 million in costs to build an e-commerce site will increase by 25 percent annually during the next two years.

The survey concluded that 79 percent of the total cost of building an e-commerce site is labor-related while 10 percent is spent on software and 11 percent on hardware.

Consulting is also a major expense. Top professional services and consulting firms, such as IBM Global Services, EDS, and Cambridge Technology Partners all offer e-commerce related consulting services to help companies build their own e-commerce sites.

Although the study shines some negative light on service firms, Turhune said that service firms are key right now because companies still really lack the expertise in house and what was founded in the survey won't deter companies from using external firms. Turhune added that in house information technology has been focused very much on Y2K-related issues and the implement of enterprise resource planning, or ERP, making it difficult for most companies to keep up with the changing technologies involved in building an e-commerce site. They need the outside help.

More specifically, Turhune said that survey participants found that back end integration--just getting it to work with their existing system--represented more effort than they expected. The labor to software ratio was 30 to one, she said.

Gartner also found that more work and effort was involved in building the front and back ends of e-commerce sites, resulting in various delays and additional costs.

Building an e-commerce site is a requirement for any medium to large business that intends to remain competitive during the next two to five years, Gartner said. One of the bigger challenges is that today's e-commerce site will become outdated in just a few months depending on how well vendors can keep up with the pace of new technologies, Gartner research director Roy Satterthwaite said in a statement.

Turhune echoes that requirement. "I don't think there's any question that having an e-commerce site is essential to a company," she said. "E-commerce as a business initiative will only gain prominence, budgets will only get bigger. It has become imperative."