Saving money on contracts with the Forrester / Gartner duopoly is not simple

icon-budget-cuts-105w.jpgA common client inquiry we receive is in the context of someone negotiating with Gartner. Our clients want to know why in the midst of a terrible economic downturn, when vendors are cutting budgets left and right, that Gartner does not exhibit greater flexibility (i.e., cut prices) when it comes to contract negotiations. The short answer is that due to its end-user advisory market dominance – we estimate that Gartner has ~70% of the end user contracts – it does not have to be flexible. 

However, this issue is a little more complex than slapping a “monopolist” tag on folks over on Top Gallant Road. The reality is that there is an effective duopoly with tacit partner Forrester which gives them both the flexibility to be inflexible with it comes to negotiations. The last time this market saw pricing and packaging that in anyway favored the buyer was the mid-90’s when Giga and later META used significantly lower prices and “all you can eat” research seats to take market share from Gartner and Forrester. Alas, today there are no such firms that can play that role to counter Gartner and Forrester. As a consequence, the Big Two’s CEOs habitually inform Wall Street that they are maintaining their pricing and discounting discipline.

However, it is possible to reduce spending – notice we did not say “save money” – with the Forrester / Gartner duopoly without damaging the ability to access analysts for influencing purposes. However, it is not as simple as trying to wrangle a better discount from the sales rep. Rather it takes:

  • Knowledge about the firms’ business models
  • Knowledge about the firms’ research methodology and analyst culture
  • Knowledge about the true business value of Forrester’s and Gartner’s service offerings
  • Insights from tracking all the interactions the firms’ have with Wall Street and investors (e.g., earnings calls, investor days and participation in financial analyst conferences)
  • Intelligence from AR managers around the industry
  • Experience as contract negotiators
  • The right attitude (i.e., all business is personal, but don’t take it personally)

SageCircle has all of the above bullets covered, which is why how to go about negotiating with Forrester and Gartner is such a common inquiry from our clients. SageCircle has developed a flexible – and currently unique – packaging and payment framework that permits vendors and IT managers to acquire the services that makes sense for their particular situation. As a consequence, buyers of Forrester and Gartner services (e.g., analyst relations, market researchers, procurement managers, corporate librarians and IT managers) can purchase as little as two hours of Advisory time to obtain insights and advice that will help them maximize analyst contracts while minimizing expense. Click on SageCircle advisory options to learn more about how SageCircle can help you reduce your analyst contract spend.

SageCircle Advisory and Online SageContent Library clients have received a SageInsight with practical and actionable recommendations for negotiating with the Forrester and Gartner duopoly.

Bottom Line: It is possible to reduce the spending with Forrester and Gartner, but traditional negotiating techniques are not effective. Rather, negotiators need to take into account changes in the marketplace and deep insights into the analyst firms’ business models to prevent wasting money on contracts with the Big Two duopoly.

Question: End user and vendor clients of Forrester and Gartner – Have either firm exhibited recent flexibility in pricing and packaging during contract negotiations?

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7 Responses

  1. While IDC is smaller than Gartner and Forrester, their flexibility and responsiveness presents a challenge to the Forrester/Gartner “duopoly,” as you term it. And there’s a plethora of small, influential firms and sole practitioners. I don’t think it’s a two horse race.

    More importantly, the macro environment is evolving. While the Big 2 (I generally refer to the Big 3 and include IDC) may hold the upper hand, particularly with vendor clients, the times they are a changing.

    A few points:
    • Disintermediation created by social marketing will forever change traditional analyst firms as it did the media. More than ever, the market can communicate and influence one another directly.
    • In a market that values immediacy, analyst firms needs to use more timely methods of direct communication. Annual (or less frequent) Magic Quadrants and Waves are no longer as important as they had been.
    • Prices need to come down. Few companies have the budget or see the value in $50,000+ white papers and $65,000 webinars, even if they do come with decent video. ;)
    • Vendors will want more frequent and substantive access at analysts.
    • Demand generation activities are top priority for vendors. Some analyst firms are culturally more inclined to help on this front, meaning that there’s a partnership attitude toward vendors manifest in flexibility in types of programs, service offerings, and yes, pricing. Others are exceedingly brittle; it’s their way or the highway. Vendors should demand ROI from their analyst firm investments as they would any expenditure.

  2. I haven’t seen any flexibility forthcoming from either firms – we actually found that very surprising. From your post it becomes clearer about them not really needing to be flexible but I still wonder if it’s a wise decision?

  3. There are alternatives with smaller firms that provide “all you can eat” for the enterprise for a fraction of the cost while coming from the perspective of a practitioner rather then an analyst. I would rather get information from people in the field doing the work rather then from an analyst that gets their info from vendor briefings/demos.

  4. [...] on The Top 5: Worst Practices for…Subbaraman Iyer on AR Contractors DirectoryRob on Saving money on contracts with…john simonds on The Top 5: Worst Practices for…martinhingley on IDC [...]

  5. [...] Bottom Line: It is possible to reduce the spending with Forrester and Gartner, but not by starting with last year’s contract.  AR team, market research managers, and other analyst contract managers need to scrutinize every service purchased in the last year to see if true business value was obtained and then ruthlessly cut unproductive spending. This is one of the techniques to prevent wasting money on contracts with the Big Two duopoly. [...]

  6. [...] SageCircle first mentioned this duopoly in a July 2008 post and then reiterated our opinion in a March 2009 post. This is an important point because it shows that Forrester has internalized this status, leading [...]

  7. [...] even in a recession. This can be attributed to its position as the dominate player (an effective duopoly with Forrester being the junior partner) in the end-user advisory market, its premium brand value, a large and [...]

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