What Forrester Research’s acquisition of Strategic Oxygen says about Forrester

On December 1, 2009, Forrester Research announced the acquisition of Strategic Oxygen from Monitor. Strategic Oxygen provides marketing professionals with data to help target marketing campaigns more effectively. While of interest to Technology Product Management & Marketing Professionals, it will be a separately-priced offering and not included in that RoleView. 

This acquisition is of little interest to analyst relations (AR) teams as Strategic Oxygen does not track IT or telecommunications markets nor does it advise enterprise technology buyers on products from vendors like Accenture, Cisco, IBM, or SAP.

In a case of bad luck from a publicity point-of-view, Forrester announced the acquisition on the same day that Gartner acquired AMR Research. The Gartner acquisition overshadowed the Forrester announcement, but that does not mean that Forrester’s M&A move is less significant. Rather, it provides important insights into Forrester’s strategy.

The first insight is that M&A continues to be an ongoing tool for Forrester even though it has been quiet on that front since the JupiterResearch acquisition in July 2008. Forrester is sitting on approximately a quarter-billion in cash, cash equivalents, and short term investments. It also generates very good cash flow from operations so it definitely has the resources for an aggressive M&A strategy. Forrester simply takes a conservative approach to M&A to ensure a high level of success.

The second insight is that Forrester continues to look beyond the IT organization. Forrester did not have a significant presence in the IT organization prior to closing its acquisition of Giga in early 2003. The Giga acquisition gave it a substantial footprint in the IT organization, likely making it the number two end user advisory firm after Gartner. While Forrester’s end-user clients provide a steady revenue stream, it has done its recent primary investment in expanding its

Gartner and Forrester are not, repeat not, Tier 1

You read the headline correctly; Forrester and Gartner should never be considered Tier 1. Yes, yes, Gartner is the industry behemoth and Forrester is likely the number two firm for enterprise end users, but that does not make them automatically Tier 1 for the purpose of creating a ranked and tiered analyst list. 

In the analyst list methodology that SageCircle has developed, analyst firms should not be given an automatic “tier” because what should be ranked is analysts, not firms. Ranking should be done based on a set of criteria (e.g., industry visibility, research coverage, client base, and so on) related to the vendor’s and AR team’s objectives. After a ranked list is created, then AR draws lines on the list to split the list into groups (e.g., Tier 1, 2 and 3, or strategic, important, and secondary or whatever you want to call them) that will define the types the service level (e.g., 1-to-1, 1-to-many or none-to-many responses) the AR team will give each analyst on the list. Tiers and service levels are created based on AR resources (i.e., the bigger the AR team the more Tier 1 analysts can be supported). While the characteristics of the firm will contribute to the data for ranking, merely working at Forrester or Gartner should never guarantee an analyst that they will have Tier 1 status.

SageCircle strategists frequently see analyst relations (AR) teams give Tier 1 status to analysts of the Big Two, even if their true relevance should place them much farther down on the ranked list. This can lead to AR misallocating resources by putting too much emphasis on some analysts while not having sufficient resources to brief or respond to other analysts. Remember, depending on the market and the analysts, a single practitioner or boutique can have just as much influence as the Big Two.

SageCircle Technique:

• Develop

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

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

Forrester Research Q3 2009 earnings call scheduled

Forrester Research, Inc. (Nasdaq: FORR)  earnings call is 11:00 a.m. Eastern time on Thursday, October 29, 2009 . The earnings call is a webcast that you can find on Forrester’s investor relations webpage. This call is coming the day before Gartner’s earnings call.

SageCircle doesn’t listen to the Gartner and Forrester earnings calls with the same mindset as a financial analyst. What we listen for are clues to how the two publicly traded analyst firms are evolving their business models and research methodologies that might impact their clients, end user or vendor, especially when it comes to contract negotiations. I also listen to gather intelligence about their end-user client bases, which provides input into determining how their influence might be changing, which can be very useful for analyst relations teams. We will publishing summaries and analysis after each call is completed.

Forrester Research Q2 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 Forrester Research, the number two advisory analyst firm, as well as communications and IT vendor analyst relations (AR) teams. 

Forrester Research (NASDAQ: FORR) reported its Q2 2009 earnings on July 30, 2009. See the end of the blog entry for a summary and link to the press release. 

This post is part one of two parts when it comes to an analysis of the Forrester Q2 earnings. This is because the 10-Q, which comes out within two weeks of the earnings call, has more detail than the currently available 8-K and the earnings call.

Forrester’s acquisition of JupiterResearch was made in Q3 2008 which makes Q2 year-over-year comparisons not entirely relevant for our purposes. As a consequence, we will be checking sequential quarter comparisons because they will show the trends in this downturn and be more informative for AR and research clients.

Q2 revenues were down 3% year-over-year to $61.6m, about what guidance predicted. Cash and short term investments were $239.4m, up approximately $26m year-over-year and $13.6m over Q1.

As expected, consulting (called Advisory by Forrester for financial reports) and events revenues were down which is typical during a recession. Consulting was down 8%. Forrester did not give numbers, but said Events did meet the reduced expectations in terms of revenue, overall was profitable and even saw one event, Customer Experience Forum 2009, sell out.

There was a decrease of 92 total clients from Q1 to 2,493 (150 total decline since year end 2008). Forrester stated these were mostly

Forrester Research, Inc. Q4 and FY08 earnings call is scheduled – Acquisitions? Layoffs? Something out the ordinary?

This earnings call should be much more interesting than recent quarters in the wake of the recent layoffs of analysts at five firms and the cancellation of Gartner’s  Spring Symposium. So far, Forrester has not announced any layoffs, but sometimes companies regardless of size or market will announce job actions during an earnings call to show Wall Street analysts that management is taking the recession seriously. In addition, Forrester could announce an acquisition like it did at the 2Q FY08 call with the purchase of JupiterResearch.

Forrester’s earnings call is on February 11th at 8:00 a.m. PT. The earnings call is a webcast that you can find on Forrester’s investor relations webpage. This call is coming one week after Gartner’s earnings call.

I don’t listen to the Gartner and Forrester earnings calls with the same mindset as a financial analyst. What I listen for are clues to how the two publicly traded analyst firms are