Questions from the SageCircle webinar on Gartner’s acquisition of AMR Research

There were many excellent questions asked at SageCircle’s webinar where we analyzed Gartner’s acquisition of AMR (click here for our original blog post). Here are a few of the questions and our answers:

 Question: Do you think that there will be an examination of this M&A event based on anti-trust considerations?

 Answer: SageCircle strategists are not lawyers so we cannot discuss the legal aspects of this particular event. It is true that Gartner is without a doubt the dominate enterprise advisory analyst firm so even the acquisition of a relatively tiny competitor – AMR is about 3% the size of Gartner – does raise questions about competition in the marketplace, pricing power, and so on.  However, even though this is a big deal in the analyst ecosystem, overall it is very small and not likely to get the attention of regulators, either in the US or Europe. Of course, some large company or coalition of companies could hire some high-powered law firm to “encourage” the anti-trust regulators to examine the deal, which has happened in other anti-trust cases in the technology marketplace. But who would lead and fund such an effort? Forrester? Unlikely as even CEO George Colony describes his firm’s relationship with Gartner as a duopoly which confers significant advantages to both firms. Maybe a firm like Datamonitor-Ovum might be interested in doing so. A vendor? Most vendors would not want to take up this task for fear of reprisal. Maybe Oracle would because Larry Ellison has gone after Gartner and specific analysts in the press in the past. So while it is not impossible for this M&A event to get the attention of regulators, we do not give it high probability that it will.

Question: Do you believe there will be healthy collaboration between Gartner and AMR analysts? Given that Gartner plans to keep the two teams separate, do you anticipate more of the silo approach as currently exists within Gartner?

Answer: It is very unlikely that there will be collaboration between the various analyst teams at Gartner and AMR. Gartner does not have a history or culture of collaboration, nor has it invested in a knowledge management and collaboration infrastructure. In addition, Gartner analysts are scattered all around the globe with many working out of their homes.  This limits the chances for “water cooler” discussions. Finally, there is the point Continue reading

Gartner Acquiries AMR Research for $64m

12/1/09 7:01 am PT – Initial post. Analysis to follow.

12/1/09 11:38 am PT – Analysis added

12/2/09 7:00 am PT – Free SageCircle webinar on acquisition

Replay of the webinar “SageCircle Analysis of Gartner’s acquisition of AMR Research” is now available. To receive a link and password to watch a streaming version of the webinar please email “info [at] sagecircle [dot] com”. Please include your job title and company name

Gartner’s acquisition of AMR Research for $64m, approximately 1.5x revenues, is interesting in that it does not seem to fit neatly into any one of these rationales: 

  1. Additive to expand research coverage, consulting, events and other services
  2. Acquire client base
  3. Acquire sales representatives
  4. Take out direct competition to improve pricing power
  5. Prevent competition from grabbing an asset that would be used against Gartner

First:

Approximately 75% of AMR’s enterprise clients were in manufacturing/supply chain which is not consistent with Gartner’s core CIO organization. Gartner CEO Gene Hall has doubled down on IT since taking over in 2004 and eliminated non-IT focused business such as Vision Events. So does this represent a change in strategy? Perhaps the Datamonitor-Ovum strategy of going after both business and IT leaders has caused Hall to modify his approach?

AMR is primarily focused on ERP/enterprise applications, manufacturing, supply chain, retail, and sourcing. While Gartner does have some overlap, it is very uneven from one area to another. While Gartner does have a manufacturing vertical, the number of analysts is small, only seven. Furthermore, Gartner does not have brand equity in the manufacturing space so acquiring AMR manufacturing assets makes sense. Gartner’s retail analysts number just six so combining those with AMR’s analysts also makes sense. However, AMR has lost one of its top retail analysts, Janet Sherlock, just this week. Sourcing is an area that is one of Gartner’s strengths with 40 analysts listed in that space. AMR’s sourcing research took a huge blow when Phil Fersht left in late September so that particular area might not be of interest to Gartner. ERP and supply chain are grouped together at Gartner with 27 analysts. While Gartner has a strong reputation in enterprise applications, including ERP, it has less of a brand in supply chain so combining AMR supply research would be logical.

AMR’s event business is tiny in comparison to Gartner’s with only two or three targeted events per year with approximately 500 to 700 attendees each. Even if Gartner wanted to expand into other types of enterprise clients, it would not have to buy AMR to launch these types of events.

Enhancing Gartner’s advisory/consulting assets might be a possible motivation. As published research becomes more and more commoditized, enterprise clients turn to analyst firms for personalized advice and targeted consulting. Gartner has kept its analyst team relatively constant at 650 even as it has more than doubled the sales force to 952 since late 2004 (according to Continue reading

Analyst Ecosystem News – People on the Move

Icon - newsTip o’ the hat to many tipsters who provide us with the following tips. Alas, they are all shy so they requested that their names not be used. 

Arrivals:

  • Forrester – Nigel Fenwick (Twitter, personal blog) covering CIO issues
  • Forrester – Augie “August” Ray (Twitter, personal blog) covering social computing
  • SynergyACG – Eve Griliches (Twitter) covering telecommunications equipment. Prior to SynergyACG Eve was a Director at IDC.

Departures:

People on the Move in the Analyst Ecosystem – Reyne Quackenbush joins Tech Mahindra

Reyne Quackenbush (Twitter handle) has joined the growing Analyst & Advisory Relations team at Tech Mahindra (website).  Reyne will lead the Analyst & Advisory Relations practice in North America. She will collaborate with Tech Mahindra’s Leader of the Global Analyst & Advisory Relations program, Rahul Basarkar, who is based in India as well as her counterpart, Ed Gyurko, who is based in the UK.  Tech Mahindra is a global systems integrator and business transformation consulting firm focused on the Telcom industry. For over two decades, Tech Mahindra has been the chosen transformation partner for wireline, wireless and broadband operators in Europe, Asia-Pacific and North America. Majority owned by Mahindra & Mahindra, one of the Top 10 industrial houses in India, in partnership with British Telecommunications plc (BT), world’s leading communications service provider, Tech Mahindra has grown rapidly to become the 5th largest software exporter in India (NASSCOM 2009) and the first largest telecom software provider from India (Voice & Data 2009).

Please join us in congratulating Reyne and wishing her great success in her new position.

Tech Mahindra

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Are you or someone you know on the move? Please let us know Continue reading

Analyst Ecosystem News

Logo - Altimeter GroupAltimeter Group hires a head of Sales – David Stanley joins Altimeter Group as VP of Business Development and Sales.  David was formerly with ARinsights, Inc., makers of the ARchitect AR management application.  How Altimeter addressed the selling function was one of the “Keys for Success” that SageCircle listed in the [SageFlash] Expanded Altimeter Group is neither revolutionary nor evolutionary, but very interesting because it could build a strong end user base sent to Advisory clients. If Altimeter wants to expanded beyond the vendor community, the primary client market for most analyst boutiques, then it has to invest in sales in order to close enterprise business.

Logo - Henry CorporationHENRY Corporation expands beyond former IDCers – The HENRY Corporation announced that it will be representing Quocirca, the UK-based research and analysis firm.

 

Panelists at the Ovum-Datamonitor Launch Event

From left to right,

  • Jonathan Yarmis, Research Fellow, Datamonitor-Ovum
  • Gideon Gartner, CEO-founder, Gartner Group and Giga Information Systems
  • Carter Lusher, Strategist, SageCircle

The panel was on the future of the analyst industry. It was an honor for Carter to be included on such an august panel. The event was the formal launch of the new Datamonitor-Ovum.

Forrester 3Q 09 earnings part 2 – Client Group breakdown from 10-Q

logo-forrester.gifVendor AR teams find it useful to understand the size and nature of an analyst firm’s clients when they are trying to decide if that firm has direct influence on their sales. Analyst firms whose clients are primarily vendors have little direct impact on sales deals because they are not advising IT managers and other technology buyers. Those firms with a significant contract value with enterprises can have a dramatic impact on sales especially through ad hoc, phone-based inquiry (see Don’t discount the business value of analysts’ 350,000+ phone-based inquiries with end-user clients) and signature product or market research (e.g., Magic Quadrant and Wave).

In its SEC Form 10-Q, Forrester Research provided some details into its client base. While not perfectly transparent, it does provide interesting insights. The filing reports the revenue breakdown by the three Client Groups, which have their own dedicated sales and analyst teams. There is also an “Other” category which consists “primarily of sponsorships and event tickets.” The “Other” category makes the percentages fluxuate quarter-to-quarter depending on the number of events that occur in the quarter.

Table - Forr Client Breakdown Q3 2009

As the table illustrates, roughly 40% of its revenues in the first three quarters came from its IT Client Group, which SageCircle interprets as “end users” at enterprises. This is a critical community for many technology and telecommunications vendors as these are often the primary buyers of Continue reading

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