The Gartner acquisition of META Group marks the first major change in the line-up of the largest IT industry analysts since Forrester Research acquired Giga Information Group in 2003. The consolidation presents Gartner management and META Group employees, clients and competitors with immediate challenges and opportunities. It also re-opens the debate over the long-term role of the industry research houses.
Understanding the Acquisition Context
The Gartner acquisition put an end to several years of rumor-mongering that META Group was on the block. Despite the industry chatter, META Group ended 2004 with a strong international and market-specific presence, brand equity, loyal clientele and healthy revenue growth. For any other dedicated IT research house, acquiring or merging with META Group would have been a strategic move. For Gartner, the acquisition is strictly tactical. A quick look at the market numbers shows why.
According to Outsell, Inc., Gartner commanded 41% of IT research market revenues in 2003, while META Group claimed 6%.
While Outsell won’t release its 2004 analysis until the end of May, Outsell vice president Louise Garnett said that preliminary estimates put Gartner market share up a few points in 2004 and META Group down slightly, while the overall market grew approximately 5%. A best-case scenario for Gartner would be an increase of a few points in 2005 market share as a result of the acquisition.
To achieve even this, Gartner must move quickly to cut redundancies and shore up revenues and assets it wants to keep.
“It is a consolidation. It is not a situation like the Forrester-Giga merger, where the synergies of the two parties boded well for all parties — creating a win-win-win for employees, clients and shareholders,” said Garnett. “In this case, there’s a high overlap in the products.”
Chatter and Confusion
Yet, critics and some competitors have tried to set META client expectations along the Forrester-Giga model.
While SEC regs handicapped Gartner’s and META’s ability to communicate freely with their respective employees and clients, other pundits speculated that as little as 20 percent of META analysts would be offered jobs at Gartner and that META clients would suffer the most.
Confusion in the field organizations — and disenchanted analysts floating their resumes — increased the negative chatter.
Then, a mid-March lay-off executed by META Group fueled the flames. Gartner, rather than META President/COO C.D. Hobbs or Chairman Dale Kutnick, took the additional heat.
Finally free to speak, Gartner CEO Gene Hall announced on April 1st that 100 META Group sales professionals agreed to join Gartner. In addition, he revealed that Gartner retired the META Group brand and cut all but three META events planned for 2005. Sources at Gartner added that Gartner analysts and content will be incorporated into the remaining META events, and that discussions with offshore META representatives are underway.
Hall also alluded to ongoing Gartner management priorities — discussed during Gartner’s recent analyst day — that set the tone for the META consolidation. These priorities include streamlining Gartner’s bloated product lines, re-aligning staffing and skills, ramping up for strategic growth markets, and re-energizing sales of core subscription services offering higher margins.
Sources close to Gartner say that slightly more than half of META Group analysts received offer letters to make the transition. Tekrati estimates that META employed approximately 115 analysts prior to the March lay-off, which apparently targeted analysts as well as consultants. Some, such as META Group senior vice president and principal analyst Nick Gall, have accepted the offer. Most must decide within the next few weeks.
The disposition of the META consultants is less clear.
Against this backdrop, the task of mapping META clients and contracts to Gartner products, services and combined account teams is underway.