• Recent Posts: Influencer Relations

    Your pitch to analysts isn’t just about your solution

    Your pitch to analysts isn’t just about your solution

    In pitches to analysts, there are many conversations going on. At one level, there’s a communication about the business solution. There’s also a conversation about the wider market and about the personal credibility of the participants. Sometimes the slides used in pitches are just excuses for the interaction. The slides are used to assess both the market vision of the firm and the […]

    KPMG pushes out 451 in 2017 Strategy Analyst Firm Awards

    KPMG pushes out 451 in 2017 Strategy Analyst Firm Awards

    For the strategic heavy lifting, executives are reaching out to a very wide range of advisors. Gartner heads up the list when we look at the Analyst Value Survey data to find the analyst firms most valued by people who work on strategy. It creates almost 19% of all the value being produced by analyst services around strategy (If CEB, […]

    Save the date for our Analyst Firm Awards

    Save the date for our Analyst Firm Awards

    This year we’re publishing our analyst firm awards more or less monthly. Please put the dates in your diary. If you’re a subscriber to the Analyst Firm Awards, you can also access a webinar for each of these events, held on the final Thursday or each month. January – Global January 18 – Outstanding reports February 17 – Strategy March 15 – Internet […]

    IDC could flourish after IDG’s sale to Chinese consortium

    IDC could flourish after IDG’s sale to Chinese consortium

    As we predicted in our April Fool’s Joke last year, IDC has been sold as part of a Chinese-led purchase that leaves CEO Kirk Campbell at the helm. IDG Capital will take control of the IDG Ventures; China Oceanwide will control IDG and most of IDC, and an independent trustee will take control of IDC’s High Performance Computing (HPC) practice, […]

    Kea Company acquires UK analyst relations consultancy Active Influence

    Kea Company acquires UK analyst relations consultancy Active Influence

    Merger consolidates Kea Company’s position as world’s largest analyst relations consultancy January 19, 2017. London — Kea Company, the world’s largest analyst relations consultancy, today completed its acquisition of Active Influence. Founded in 2010, Active Influence has helped many of the world’s largest technology companies to gain measurable business benefit from their relationships with analyst firms. Founder Richard East has become […]

TowerGroup is rightsizing for a changed landscape

Logo - TowerGroupThe fact that the financial services industry is changing is on the front pages of news sites and newspapers every day. Banks being closed down by regulators or acquired by other banks are shrinking the market. Other financial institutions are slamming their checkbooks shut as they try to conserve capital. This turmoil is obviously impacting technology vendors that sell software, hardware, and outsourcing to banks, insurance companies, and other financial firms. In addition to the tech vendors, this changed landscape also impacts analyst firms, especially those that focus on the financial services vertical.

A case in point is illustrated by our post TowerGroup experiences layoffs. TowerGroup specializes in the financial services vertical market so it is not surprising the market turmoil would impact it. To get the details behind the job action, SageCircle was briefed on July 14th by Bob Egan, TowerGroup’s Global Head of Research & Chief Analyst (Twitter, bio). 

TowerGroup invested heavily in the mid-2000’s to support the rapidly growing financial services market and the tech vendors that sell into that market. This worked out well with 30% annual growth in 2006 and 2007. Even when growth tapered off in 2008 and 2009, TowerGroup was doing “ok.” However, Egan said that the anticipation of an extended recovery and a shrunken set of companies meant that TowerGroup needed to proactively rightsize its operations to reflect the changing realities of the market rather than hang onto the existing strategy too long and be forced to make more drastic cuts later.

The July layoffs were based on what research services were the most relevant to clients in the current economic environment. TowerGroup then thinned certain research teams to what was thought to be the appropriate level of coverage without cutting any complete services like other firms have (e.g., Yankee Group). The sales force is being similarly resized and realigned.

However, according to Egan, TowerGroup will continue to add resources to those services that are growing (e.g., sustainability, mobility and risk management). This continued investment reflects TowerGroup’s analysis that that there will a “flight to quality,” where it can take market share from smaller competitors. This is a common tactic in a recession by relatively stronger (e.g., financials, brand, size or go-to-market resources) companies regardless of industry. This strategy is to take advantage of smaller, weaker competition hunkering down and doing deeper cuts. The tricky part for TowerGroup will be making sure that the cuts they make do not significantly impact the ability to deliver the acceptable level of client service, that their investments truly address growing needs in prospects and clients, and that the sales force can effectively communicate the changes to reassure prospects and clients coming up for renewal. While all three of these tasks are not easy, the most difficult one will be preparing the the sales force with the messaging, training and supporting marketing content to convince prospects that TowerGroup is truly “quality” even after the cuts.

Bottom Line: During recessions, analyst firms like other companies make adjustments to their business models and staff. What occurred at TowerGroup is not atypical. Research consumers will need to review the changes at TowerGroup to determine how the changes impact how they get information from the remaining analysts. For vendor AR teams, the changes at TowerGroup should flow through their analyst lists, interactions calendars, and investment decisions.

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2 Responses

  1. […] This earnings call should be interesting in the wake of yet more analyst firm layoffs (see TowerGroup is rightsizing for a changed landscape and Listing of analyst firms who have laid off analysts […]

  2. From the analyst overview on Tower’s website I concluded that Ted Iacubuzio (payments) was also let go. I don’t see him on your list.

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