Announcing the SageCircle free webinar on Gartner’s acquisition of AMR Research

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Replay of this webinar 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. Agenda:

• Basics of the deal
• SageCircle Analysis of AMR’s and Gartner’s Motivation
• Highlights from Gartner AR Community Call
• Commentary on Points from Gartner AR Community Call
• Recommendations for Research Clients
  • Enterprise
  • Vendors
• Recommendations for Vendor AR Teams

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Gartner’s acquisition of AMR Research is very interesting for a number of reasons, but it also raises a number of critical questions. To complement our blog post (click here) on the acquisition, SageCircle is offering a free webinar to expand our analysis as well as suggestions for how clients of either firm as well as vendor AR teams should respond.  Following our short presentation we will have ample time for questions. 

Our webinar is at 10 am US PT on Thursday, December 3^rd (click here to register). Please feel free to forward this invitation to your colleagues.

Not by coincidence, we scheduled our webinar after Gartner’s AR Community Call, which is this Thursday, the 3^rd, at 7:30 am US PT. You can register here, which we recommend you do.

This means during our webinar we will also discuss what Gartner said in its AR Community Call and how it might differ from our analysis.

SageCircle Advisory clients are encouraged to

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

Analyst Ecosystem Update

General News

Analyst Twitter Directory – On November 5 and 7, SageCircle added a total 70 analysts to the directory and changed the entries of seven.

Forrester Research has released its 10Q for 3rd Quarter 2009. There will be an analysis by SageCircle on Monday, November 9th.

People on the Move

CMS Watch – Apoorv Durga (Twitter, blog) joined covering portals and content management.

Forrester – Natalie Lambert (Twitter) departs to

HENRY Corporation launches – Represents former senior IDC EMEA analysts

Here is an interesting announcement concerning the launch of a new ICT market research and marketing services firm that brings together former senior IDC analysts who were caught in IDG’s right-sizing exercise. A few points about the HENRY Corporation:

• Each analyst is also an independent practitioner, some with a firm name and some under their name
• With the exception of Martin Hingley (Twitter,  blog), most of the Fellows are not active users of social media
• With the exception of Simone de Bruin’s LinkedResearch website and to a lesser extent Hingley’s blog, none of the other Fellows have a formal web presence

SageCircle’s initial impression is that HENRY Corporation will be the marketing function as well as sales organization for this group of former IDC senior analysts. As such it will be somewhat more involved with its portfolio of analysts than Valley View Ventures, which acts simply as a sales agent for its associated analysts and boutiques.

Below is a blog post by Hingley on the launch, followed by the official announcement.

Overview from Martin Hingley, one of the original HENRY Fellows:

The Henry Corporation Brings Familiar Experts Back To Support The ITC Industry

What happens when a major market research organization off-loads most of its senior analysts in EMEA? I’m sure it does its best to run its services with newer researchers. However many industry execs will miss the quality of support, ideas and advice that they once had. In the case of my old company some familiar faces, now independent, are also as eager as ever to

Gartner Q3 2009 earnings

This analysis does not look at areas of interest to investors, but seeks to pull out insights that are relevant to clients and prospects of the “Big Two” advisory analyst firms as well as communications and IT vendor analyst relations (AR) teams.  

Gartner, Inc. (NYSE:IT) announced its Q3 2009 earnings on October 30, 2009. See the end of this blog post for a summary and link to the press release.

In general Gartner’s results were much as expected at this point in a recession. All the key statistics were down year-over-year, but improved (i.e., less bad) quarter-to-quarter sequentially. All statistics are year-over-year and are FX neutral unless noted.

• Overall revenues: $267.5m, down 7%.
• Research: $187.7m, down 4%.
• Events: $16m, down 6%.
• Consulting: $65.7m, down 16%.

Demonstrating that a well-managed advisory analyst firm can be a cash machine, Gartner generated $55.1m in cash in Q3, only a half-million below Q3 2008. For the full year, Gartner raised its guidance on cash flow to $125m to $135m. Cash and equivalents at the end Q3 2009 was $113m, down from $141m at the end of Q3 2008. During the first nine months of 2009, Gartner primarily used cash to repay $151m in debt. Gartner retains $250m in available credit, which with the $113m in cash should give it the necessary resources to maintain its business as well as conduct M&A activity. On the M&A front, CEO Hall maintained the position that M&A opportunities are being constantly evaluated, but unlike Forrester, who mentioned it was actively evaluating potential deals, he provided no color to that remark.

Pricing

In his remarks CEO Gene Hall mentioned that Gartner’s most recent price increase was holding. Hall also said that Gartner was implementing a price increase on November 1, 2009. Yes, Gartner has been and continues to raise prices even in a recession. This can be attributed to

Forrester Research Q3 2009 earnings call

This analysis does not look at areas of interest to investors, but seeks to pull out insights that are relevant to clients and prospects of Forrester Research, the number two advisory analyst firm, as well as communications and IT vendor analyst relations (AR) teams. 

This post is part one of two parts when it comes to an analysis of the Forrester Q3 earnings. This is because the 10-Q, which will come out within two weeks of the earnings call, has more detail than the currently available 8-K and the earnings call.  We will review that document when it is available. 

The key take away from Forrester’s Q3 2009 earnings announcement is that Forrester is weathering this economic downturn much better than the last recession. In that recession, Forrester saw revenues plunge ~34% and experienced a broad and deep reduction in staff. After three quarters in 2009, overall revenue is only down 3% with research revenues actually up 2%. Headcount is 960, down 8% from 2008 year end, but still 23% higher than YE2007. In addition, Forrester currently has 16 sales and 4 research openings so it is not simply reducing headcount, but selectively filling positions as well. Furthermore, CEO George Colony told the Wall Street analysts on today’s call that he plans on adding 10 to 20 sales headcount in the 4^th quarter (it is not clear if this expansion includes or is incremental to the current sales job openings on the website). This contrasts with the 51% reduction in staff from YE2000 to YE2002. Finally, at the end of Q3 2009 Forrester is sitting on $280m in cash and short term investments.

Why should this matter to enterprise clients and vendor analyst relations (AR) staff? Because Forrester is not in survival mode it has not had to slash sales or research headcount. Rather it has continued to keep the client–facing staff at a level that makes retaining existing and adding new enterprise clients relatively straightforward. This means that Forrester’s ability to maintain its research agenda and marketplace influence are not being seriously imperiled as 2009 comes to a close.

For AR teams this means that there is unlikely to be disruptive analyst turnover that would negatively impact analyst lists and interactions plans. Unfortunately, there is still the likelihood that sales representatives and analysts will be hitting the vendor community hard for incremental consulting/service units engagements and Roleview seats. Vendors should realize that not buying

Lack of hands-on testing for products by industry analysts [AR Practitioner Question]

QUESTION:  It disturbs me that analysts don’t have hands-on experience with the products they advise their clients about.  How are can they be credible?

ANSWER: Analysts, especially at the larger end-user centric firms like Gartner and Forrester, have access to what they would claim is the world’s largest testing lab – their clients. Analysts covering hot product areas, both software and hardware, are hearing from scores of clients every month who are evaluating products or using them in production. As a consequence, the analyst firms claim that they can develop a series of data points that quite accurately portray the quality of a vendor’s products. 

Note: This is a classic SageCircle article from our pre-blogging newsletter. This particular article appeared in March 2001. It is being brought into the blogging era because ZL Technologies in its lawsuit against Gartner criticizes Gartner because it does not do “a single minute of independent testing of the products it purports to evaluate” (page 9 of the original court filing).

SageCircle Technique:

• Vendors can help themselves by ensuring that their product evaluation programs for prospects are