Ovum-Datamonitor Restructuring: Sufficient Critical Mass to Take on the “Big Two”?

On August 11th Datamonitor announced a major restructuring of its various analyst brands into a cleaner, more focused framework.

 First a quick recap – Early in 2005 Datamonitor acquired the Butler Group. In parallel, Ovum had started on the M&A path with the acquisition of RHK in mid-2005 followed by Summit Strategies and Orbys after its early 2006 IPO. Then Datamonitor acquired Ovum in December 2006. That was followed by Informa acquiring Datamonitor in May 2007. Informa itself was the target of a failed, hostile takeover by UBM in June 2008. Finally, Datamonitor acquired the Brown-Wilson Group in April 2009. Complex enough for you?

 Datamonitor and Ovum kept all the acquired brands pretty much untouched for the last two and a half years with research overlap, separate sales force, unfocused marketing, and so on. This created a jumble of brands that that did not seem to have any synergy or heft to compete effectively with Forrester and Gartner. In contrast, Forrester (Giga, JupiterResearch) and Gartner (META Group) both absorbed their major acquisitions of this decade relatively quickly and effectively.

 SageCircle was given a background briefing in mid-June by the Datamonitor CEO and Ovum Managing Director Mark Meek and this week by David Mitchell, Ovum’s SVP, IT Research. While still a bit of a work in progress, the reorganization shows real promise to shake up the analyst market.

 The new lineup is going to have three brands – Datamonitor, Ovum and Orbys. Each will have a much more focused client base and research portfolio. Datamonitor will focus on business information, Ovum on enterprise IT and telecommunications, and Orbys on sourcing. This will permit each of the new units to develop sufficient critical mass to be more competitive and attractive to potential clients whether enterprises or vendors. The Butler Group brand will continue for a short period in association with certain conferences much as GigaWorld continued after Forrester retired the Giga brand.

Sales & Marketing

However, it is not just bringing the analysts together and rationalizing the research ownership that makes this an interesting move. Part of the problem Datamonitor, Ovum, and the other brands have had in the last four plus years is that the fragmented sales efforts and uncertain brand awareness hampered growth. Contrast that drift with Forrester and Gartner each doubling the size of the sales forces while sharpening their brands. For example, Gartner sold or spun off business units that did not fit its core brand. 

To address these issues they have taken an important step in consolidating the sales forces and increasing resources through new hires.  We expect continued expansion of the Ovum sales force with new hires along with a marketing campaign to build brand strength.  If the new Ovum executes well on the sales and marketing fronts then it has a chance to challenge Forrester for the number two end-user advisory firm.

Orbys is already a serious player in the sourcing advisory market along with EquaTerra, Everest and TPI. This restructuring will give them the core offering of the Brown-Wilson Group – notably the Black Book of Outsourcing – as well as other assets and position Orbys with an opportunity to take a leadership position.

Expansion: Organic and M&A

While this restructuring has been necessary, it is not sufficient to ensure that Ovum can effectively challenge Forrester and Gartner. It still requires additional analysts and sales staff to fill in gaps and give it more heft. Because we are in the middle of a recession and a number of firms and vendors have had layoffs of sales and analysts, this is a good time for Ovum to grow organically by picking up available solid talent quickly and cheaply.

More intriguing would be for Ovum to use the financial resources of Datamonitor and Informa to continue on an acquisition path. Appropriate acquisitions could quickly fill in gaps in its research coverage, increase its client base, broaden its geographic reach, and acquire sales talent and connections. Rolling up multiple boutiques or even a few mid-sized firms could quickly give Ovum the credibility to compete with Forrester and Gartner in most sales situations.

SageCircle Technique:

• Vendor and enterprise research and advisory buyers should put the new Ovum and Orbys on their short lists
• AR teams need to step back and incorporate this event into their strategic and tactical plans
• Once the dust settles and details become clear, AR teams will need to do a complete refresh of their analyst lists because this restructuring could positively impact the rankings for Ovum and Orbys analysts

SageCircle clients will be receiving a SageInsight with more detail about the restructuring and an in-depth set of recommendations. In addition, Advisory clients are encouraged to schedule inquiries to discuss how to apply the recommendations in the SageInsight to their specific situation.

Bottom Line: SageCircle thinks this restructuring, if executed well, is a very positive turn of events for the analyst ecosystem. Having what is effectively a duopoly between Forrester and Gartner since the demise of Giga and META has been problematic for the analyst market. A strong third firm, which can potentially take the number two spot, puts pressure on the Big Two to strengthen research coverage and be more price competitive. As a consequence, the Datamonitor-Orbys-Ovum restructuring and expansion is a net plus for vendors and end users alike and the new firms deserve serious consideration as strategic supplies of information and advice.

Question: AR – What is your opinion of the Ovum and Orbys brands? What steps do you think these two firms have to take in order to change the Big Two into the Big Three?

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