It’s hard to ignore the economy when it comes up and slaps you hard across the face. Take General Motors. Its sales of cars and trucks slipped 9% last month on top of a 5% drop in January and a rough fourth quarter last year. Now the company is cutting costs across the board—even shaving 10% off the budget at e-GM, its e-commerce unit that generates 1,000 sales leads per week for its dealers and incorporates Web technology in its cars. Its president, Mark Hogan, says the corporate parent remains a big believer in how the Internet will reshape the way it will do business, but those changes will happen more slowly. "We’re pushing out some future stuff that we would have liked to have done quicker," says Hogan.

With the economy stalling, expect GM’s brand of reluctant pragmatism to rule the day. The companies that have begun remaking their businesses by shifting operations onto the Internet still see the financial benefits in doing so. But the economic malaise is delaying their efforts. New tech orders slipped to $33.1 billion in January, down from $34 billion in November, according to the commerce department. And in a February survey of 150 corporate chief information officers by Morgan Stanley, 11% said they plan on spending less on technology because of the slowing economy.

Another 27% said they’re evaluating whether to cut back or delay purchases. Not everyone, however. For companies that have tasted the early results of the Internet, there’s a strong will to stay the course.

According to interviews with dozens of corporations and surveys of hundreds more, many of the e-business pioneers are forging ahead even as the economy falters and dot-coms implode. From conglomerate General Electric to office-products retailer Staples, they’re determined to get the most they can out of the Internet. And they warn others to back off at their own peril. When the stock-market bubble burst for Net companies, "it was like the pressure was off. I think that’s going to lead to a significant reduction in efforts," says Jeffrey Skilling, chief executive of energy supplier Enron. "We think that’s a huge mistake. Incumbent companies have got to come to grips with this new technology because it is very, very powerful."

Selling stuff online is the least of it. What Skilling and others are doing is integrating the Internet into every nook and cranny of their businesses. Call it managing by web. They’re using the Net for everything from filing expense reports and calculating daily sales tallies to sharing employees’ intellectual capital and communicating instantaneously with suppliers. The web, for example, lets Cisco Systems connect directly with its suppliers so that when the maker of networking equipment gets an order, suppliers can start making parts right away. That puts inventories on a bread-and-water diet. The Net also can automate interactions with customers: About 40 of Dow Chemical customers reorder chemicals without human intervention when sensors in their storage tanks signal they’re running dry.

Corporate transformations like those being undertaken at Cisco and Dow Chemical represent the real potential of the Internet. Even considering the slowdown, market researcher Gartner Group expects business-to-business e-commerce to reach $3.6 trillion in 2003, compared with just $107 billion in consumer transactions. With a lure like that, companies that are holding off buying traditional computing gear are focusing their tech dollars on e-business. But not all e-business. Companies are focusing on areas that give the quickest results. According to a January survey of corporate executives by AMR Research, 87% will either sustain or increase their spending on Internet initiatives for sales growth and customer management, and 84% will hold firm or increase their budgets for taking purchasing online.

By Steve Hamm, Faith Keenan and Peter Engardio in New York, David Welch in Detroit, Wendy Zellner in Dallas in BusinessWeek. Copyright 2001 by The McGraw-Hill Companies, Inc