There are few bona fide analysts of the analysts. Outsell has figured prominently in this small group for many years. What gives Outsell its chops? The company has published a landmark report on the industry analyst business for many years. The report has become a valuable resource for those in the analyst business as well as those who partner with analyst firms, purchase content from the analyst firms or manage influencer relations with the top analyst firms.
The 2012 edition of “Watching the IT Watchers” was released a few months ago. The report, authored by Perry Gartner, covers top analyst firms by revenue, highlights notable contenders and analyzes the business of the industry analysts at large, including key trends, drivers, threats and opportunities.
Give me a shout if you’ve read the report. I’ll be digging into it over the next few weeks.
Added two firms:
Aragon Research - a technology focused research and advisory firm committed to providing thought leading strategic research and trusted advisory services on all of the issues surrounding workplace technologies and people. See the listing
Desert Sky Group - Providing independent and unbiased advisory and consulting services to the energy and utility industry. See the listing
I’m pleased to introduce my new directory of analysts, here at analystdirectory.barbarafrench.net.
This is both a new home and a new version of the Tekrati Directory of Analyst Firms. Let me tell you about it.
From 2000 to noon today, the analyst firms directory was part of Tekrati and I was its managing editor. Tekrati was the online guide to the IT and telecommunications industry analysts. It included 3 directories & OPML, 2 news services & a dozen RSS feeds, a strategic consulting business, and my tips, insights and commentary on the analyst business. By 2011, Tekrati had profiled some 650 analyst firms, published over 12,000 news posts, and hosted 150K to 250K unique visitors each year.
As of today, the analyst directory is a personal curation project and part of my personal blog.
It remains a freely available information resource for anyone — technology buyers, analyst relations professionals, marketers, journalists, analysts, recruiters — looking for experts on the tech and telecoms markets.
Gradually, this new directory will include organizations that employ analysts and produce industry research, regardless of whether they are “analyst firms”. Many industry organizations and corporations produce research on a par with the analyst houses. I’ll be adding them to this directory going forward, so that it becomes a better resource for influencer relations and influencer marketing programs.
Another change: As the directory is now part of my WordPress blog, comments are turned on! Feel free to post comments to any firm listing. That includes factual corrections and informed opinions. I will delete comments that are unprofessional or otherwise downright snarky.
As always: There’s no need to register to browse. There’s no charge for listings. There’s no option to upgrade listings. And, all listings are at my discretion.
Lisa Joy Rosner at NetBase has posted a newly minted social media sentiment analysis on Gartner, Forrester Research, IDC and Alitmeter Group. For me, there’s one surprise in the results.
No surprise, Gartner and Forrester command the largest online presence and their mentions are less emotional, more informational. Social conversations tend to reference them more as institutions. This points to a phenomenon that I’ve been noticing: regardless of the social media strategies of these two firms, social channels are increasing their overall visibility. Think about the implications for offline conversations.
Also not a surprise: Altimeter Group contrasts with Gartner and Forrester in the strong emotional context of its social media mentions. This points to a different aspect of analysts on social media: those building their brands from the ground up on social media keep the conversations personal. In other words, their social media strategy is about building personal connections and loyalty first — leading corporate brand with personal brand. I expect NetBase would find similar results for RedMonk, Freeform Dynamics and newer firms like Sepharim Group.
The big surprise on the chart? IDC. IDC is very close to Altimeter on positive emotional sentiment. Clearly, something is driving this differentiation between IDC on the one extreme and Gartner and Forrester. What is it? The relationships that IDC analysts form with their clients and research targets? The topical emphasis of IDC?
Thanks to Lisa Joy for sharing!
Altimeter Group is not a traditional IT industry analyst firm. The group not only provides expertise on innovating business through disruption, but also embodies a good deal of innovation through disruption. Two years in, it’s becoming clear that even analysts inclined to push the envelop — such as Michael Gartenberg and R “Ray” Wang — find the new business model is not quite a comfortable fit. Clients, on the other hand, are finding Altimeter Group a perfect fit.
The Altimeter’s approach to innovation through disruptive technologies is hitting the right chord with clients in several markets. “This year, we’ve already touched over 125 clients,” said founding partner Charlene Li. This number will rise before the end of the year. “We’re discussing multiple new proposals every week.”
Several attributes set Altimeter Group apart from its industry analyst and consultancy roots. At the most basic level, the partnership of high profile analysts and consultants produces open research rather than syndicated research. This means no recurring revenues through syndicated research, the baseline for companies such as Gartner, Forrester Research and IDC.
On a more sophisticated level, Altimeter varies from the pack in that the focus of its work is not technology per se, but on selecting and applying technology in order to innovate a business operation, division, culture or even an entire market. In order to achieve that kind of outcome, the Altimeter partners work together to bring different perspectives to bear on any particular client issue.
“Analyst firms are organized around coverage areas. Altimeter is modeled around customer pains,” explained Li. “Our recent event, ‘The Rise of Social Commerce’, is a great example. Every partner was involved as an equal. Every partner looked at social commerce from a different point of view. No one person can cover all of this.”
In other words, clients who want to harness the potential of disruptive technologies like social commerce require input from experts in several different disciplines. With a traditional analyst firm, clients get access to a single silo of topical experts. For analysts at a traditional firm, cross-discipline collaborations on a single client issue are the exception. At Altimeter, they are the norm. This is true of all of the customer points of pain that Altimeter Group addresses.
A third attribute that sets Altimeter Group apart is partner responsibility for the success of the business. Research, ideation and consultation are key. However, so is business development and ensuring the success of the partnership at large. Business infrastructure services — including sales — are lean; overhead investments are selective. There is significant pressure for participating in marketplace conversations, events and communities.
Li understood from the outset that the Altimeter Group model would not suit many of today’s analysts and consultants. She said she wishes Wang the greatest success, acknowledging his desire to work in a more traditional analyst capacity and, as importantly, to lead his own venture.
As for Li, she too has adjusted her own role as the firm has grown. She recently named Alan Webber as managing partner to oversee day to day business. She continues leading the partnership, setting the direction as well as undertaking her own research, consulting, speaking and writing.
We all must cope with the impacts of innovation in our industries. As Altimeter Group proves, analysts have as much trouble coping with innovation as anyone else.
Reprinted from Tekrati
In the first part of this post, we challenged an urban myth that small analyst firms are threatening the Gartner and Forrester Research business models. We as yet see no compelling evidence. What we do see is many small advisory firms performing vital roles in the IT ecosystem, a few experimenting with business models, and many preferring their small businesses to the bureaucratic ways of large organizations. More than 25 analyst entrepreneurs shared insights on their businesses and philosophies, plus a handful of analyst clients shared their views — creating an unparalleled conversation! You can read the discussion here.
We’re picking up with the question, is it possible for small/new firms to shake up the Advisory industry? We think so. We’re not ready to concede the future of the advisory market to the current Gartner and Forrester business models. The question is, how?
In our view, firms wishing to disrupt the Gartner and Forrester models must have two particular attributes. First, they need a significant differentiator. It can be in specialization, the business model, service delivery or other areas. Equally importantly, they must be able to scale. That means substantial funding, an effective sales operation, well-honed M&A skills, or a combination of all three.
One of the potential differentiators getting attention lately is “open source research.” In theory, it follows the open source software model: research is developed openly and collaboratively with a marketplace and published under a Creative Commons license. Benefits include lowering research costs while driving consulting and other revenues. Challenges include quality control and the prerequisite of building a large and engaged community of collaborators that will be equally accessible to competing Advisory firms.
We see several other possible examples of disruptive behavior. In a recent conversation with Louise Garnett from Outsell, we came up with a short list of firms, past and present, innovating at least one aspect of the Advisory business model. Highlights, in no particular order:
1. Springboard Research: It claims to have a low-cost/high-quality reputation using low-cost research from China and India. Plus, Springboard built leadership in Asia Pacific markets while U.S. firms were reducing international presence. It’s a good example of specialization.
2. Altimeter Group: This small but growing top-rated analyst group seems to some as more a consultancy than an Advisory firm. Its analysts retain personal branding and independence while obtaining generous splits from their loyal clients from past relationships. The tactics are paying off, generating momentum. Founder Charlene Li’s increasing number of innovative ideas have been well recognized but to become a true disruptor to G&F the firm must (and might well) find a way to scale, and to accelerate its introduction of deliverables.
3. GigaOM Pro: Disruptors can emerge from outside the Advisory industry. Om Malik is incubating this research startup within his media network. This means ongoing exposure to 5 million unique visitors each month — far outpacing any Advisory today. It achieves low-cost/high-quality by using a network of on-demand subject matter experts (38 currently, all in emerging tech) and enforcing quality standards, from vetting experts to producing research. The experts negotiate and retain all Advisory fees resulting from participation in GigaOM Pro.
4. Giga Information Group (background): Funded as it grew, Giga’s model included innovations such as a single service priced by the seat and an expert network backing up its strong staff of analysts. It also made significant ongoing investments in building a salesforce and creating a brand. As with Altimeter and GigaOM Pro, it benefited out of the gate from the strong reputation of its founder. All of this resulted in annual revenues of over $70 million in annual contract value in less than 5 years.
5. Spiceworks: Another disruptor from outside the Advisory industry, Spiceworks is a systems and network management software vendor with an active community of 1 million users, all in IT management jobs in small- and medium-sized businesses. Spiceworks gives away its software to qualified users in exchange for real-time insights into their product deployments and participation in the online community. Sponsoring vendors conduct research and communicate directly with the community. Currently, its equivalent of “Advisory” is a simple question/answer service leveraging peer-to-peer and vendor evangelist interactions.
Firms that want to catapult to the top need to use innovation to their best advantage. Say for example, a smaller Advisory wants to specialize and provide research advice which exceeds Forrester’s in quality. The firm needs to find a way to actually demonstrate that it has a higher ratio or a larger magnitude of knowledge/information in at least one very specific market segment in order to improve its market share in the appropriate space. Invoking the idea that it exceeds Forrester in its specialty areas is one thing, but proving such specialization is something else again.
One example of a way to develop and demonstrate the above thesis qualitatively might be to assume the number of Forrester analysts (excluding consultants, juniors, management, etc.) and remind the reader of some claims that the old 80/20 rule still prevails (80% of analysts providing 20% of the value), perhaps reducing the ratio to 75/25. There’s no reason small competitors cannot focus on recruiting more senior and recently specialized people-power to build a claimable ratio of 70/30 or even 60/40.
Scale is perhaps the greatest challenge facing would-be disruptors. Sound growth strategies and financial management are vital. M&A can play a key role, as proven by Gartner and Forrester. Recent activity among smaller firms runs the gamut, from iSuppli acquiring Screen Digest to Datamonitor expanding its portfolio.
Bottom line however is that incremental change might be “too little too late”. What’s required to succeed (and arguably needed by the industry) is use of an old trick: taking a large clean sheet of paper, and imagining an Advisory model which will clearly represent a breakthrough that will attract investors (because significant capital will likely be required to realistically challenge the current status).
A conceivable alternative might be to consolidate a significant number of strong analysts and/or small firms, with a management team working together to implement what was suggested in the paragraph above. And then the outcome will still hang on the solidity of the financials.
Small firms and new entrants can disrupt the Advisory industry. Note that IBM once virtually controlled the entire computer hardware market, until innovative firms around the edges changed the ground rules, which challenged customer reliance upon Big Blue. But these outlying firms succeeded mainly via new functions and better price/performance ratios. So while there are various degrees of freedom in structuring a hypothetical Advisory firm such that an opportunity arises to emulate what once occurred in IT hardware, this would take imagination, time, and perhaps most important, money. It can be done: Giga Information Group showed that the industry leaders were in fact vulnerable and grew from $zero to $70M contract value (not including consulting and events) in less than 5 years.
Finally, more input from Louise (Outsell): Every segment of the information industry looks the same. In each segment, a few big players represent at least 50% of revenues. Smaller companies make up the rest, carving out various niches. The IT research market follows the norm: it covers many segments, with a few firms dominating each segment and holding those positions for years on end. Successful contenders will understand this market structure before attacking it.
Editor’s Note: This has been cross-posted at Gideon’s blog, www.gideongartner.com. We’ll cross-posts your comments to both blogs.
If you missed today’s fast-paced webinar, here’s the audio replay. However our recorded conversation is just part of the discussion that took place. Check out the real-time reactions and side conversations at Twitter — hashtag #socialanalyst. Thanks to everyone who participated!
As Jeremiah said in his closing comments, we want to continue this conversation. Are you in? Please check back for links to the Twitter transcript. Also, trackback or comment here if you publish on the impact of social technologies on the industry analysts, their advisory clients and their analyst relations communities.
Special gratitude to our pilots at the Hangar – Christine Tan and Julie Viola — and to co-panelists Jeremiah Owyang, Carter Lusher and Jonny Bentwood.
- Summing up webinar highlights - Jeremiah, Jonny
- The brainstorm behind this event at Jeremiah’s blog
- Leading up to the webinar - personal point of view at Jonny’s blog
- Leading up to the webinar - more stage-setting at Carter’s blog and here at Sway
Social technologies are disrupting traditional business models, and the tech industry analyst business is no exception. Or is it? How is social truly changing the day to day work of the tech watchers? their advisory clients? their relations with tech providers? Tune in tomorrow as I exchange views on this important topic with fellow thought leaders Jeremiah Owyang, Jonny Bentwood and Carter Lusher. You can ask questions and more during the live webinar using the Twitter hashtag #socialanalyst. This virtual event is free. Register now so you can listen and participate tomorrow!
What you need to know:
- Register now: “The Impact of Social on the Analyst Industry: A Roundtable with Jonny Bentwood, Barbara French, Carter Lusher, and Jeremiah Owyang“
- Speakers: Barbara French of Tekrati (that’s me!), Jeremiah Owyang of Altimeter Group, Jonny Bentwood of Edelman, and Carter Lusher of SageCircle
- When: Wed, Jul 21, 2010 from 9:00 AM - 10:00 AM Pacific
- Twitter hashtag #socialanalyst
Special thanks to Jeremiah for organizing and producing this event!
There’s a good deal of speculation on whether the research and advisory business is entering a new phase — one in which small Advisory firms may be thriving at the expense of the large firms. David Hatch summed up this point of view in a comment to “Advisory Industry, a future redesign: the ‘Payment’ Model”:
“Independents are growing in number while research firm-employed analysts are shrinking… This shift is likely going to be the genesis of the new business model…”.
Is there in fact a groundswell favoring the smaller firms? Cutting to the chase, we beg to disagree, but we should be able to find hard evidence as well as qualitative assumptions and begin to see possible implications for the analyst business at large.
As David implies, counting heads is one way to measure sea change. But even when cutting its claimed analyst force down, Gartner generally has had a greater than 50:1 edge in research personnel vs. the any of the small Advisories. What is not clear is whether manpower size alone is more important than some combination of factors such as:
- Depth of coverage in specific areas
- Average analyst quality
- Breadth of deliverables (content types, events, etc.)
- Frequency, depth and and quality of personal interactions
- Length of contract “lock-in” ( Gartner has been pushing 2- and 3-year contracts)
- Broad spread of client seats (difficult to displace)
- Clients being change-averse to replacing Advisories of long standing
- Selling to multiple constituencies rather than to vendors only (which improves an Advisory’s understanding of the overall territory)
- Cornering the CIOs and other senior positions when selling to large non-vendor enterprises
Quantity does not equal quality. Yet, there is no realistic method to measure the average quality of different Advisory firms in their sphere of activity, and it must be acknowledged that G&F both score relatively high on most of the 10 points above.
What about the David vs. Goliath buzz? Private conversations with appropriate contacts follow the usual recessionary story-lines and seem to favor the small firms:
- Vendors and their analyst relations (AR) departments are doing new advisory deals with small firms and even with individual analysts laid off by IDC, Forrester and Gartner. Those are generally recognized for unique skills and the stand-alone analysts are expected to continue in this role. Even as vendors allocate budget to smaller firms, they are invariably renewing Forrester and Gartner contracts, as usual.
- Other analysts who have stayed put during the recession may be heard murmuring that they’re ready to jump to something new, indicating they see opportunity in the wings.
- Several small firms and solo advisors are compensating for the poor economy by doing an excellent job of public relations, thus garnering disproportionate attention and hopefully monetizing their efforts through social media.
There may be some truth above, but insufficient to prove material penetration of the small firms’ client bases. Other initiatives exist, but none seem to offer evidence on the extent to which relative market shares might evolve during the next few years. Only the two large leaders provide solid financials and shareholder discussions, therefore we know that Gartner and Forrester enjoyed good quarters recently which were however influenced by both their publicly divulged future 5%-7% annual price increases (regardless of the economy) and with no more price negotiating going forward. If such reported pricing inflexibility by G&F can be maintained, that might help the strongest of the small competitors to slowly penetrate the fortresses. Then again, G&F’s CEOs are committed to win and if necessary may reverse field on their pricing strategies and hold their own.
Mathematically, even with accelerating business volumes, we’d bet that it would take small Advisories ages to make significant inroads on G&F. Outsell’s Louise Garnett estimates average growth in the overall information industry at around 10% per year. That means small firms need to grow faster than the industry average for 15 to 30 years to reach the size of an AMR Research or Burton Group! Do today’s young analyst companies have to face that long a runway before reaching what might be called “critical mass”? Or are these firms satisfied — even desirous — in remaining small and independent, without needing to worry about large staffs and investors? Either way, G&F likely do not have much to worry about.
That’s not to say that there will be zero competitive inroads against G&F. Opportunities exist to mount significant competitive inroads. We think the most important could emerge from meaningful innovations, preferably true game-changers requiring specific assets which the established competitors have been unable to muster thus far.
We’ll discuss some noteworthy innovators and our ideas on seizing the competitive opportunity in the Advisory Industry in Part 2.
Editor’s Note: This has been cross-posted at Gideon’s blog, www.gideongartner.com. Comments are welcome at both.