The great analyst roll-up is on... who'll step into the void?

So the "great analyst roll-up" is in full swing, with Gartner's announcement today to acquire another competitor, this time the Burton Group, for 56 big ones.  This comes hot on the heels of my former firm, AMR Research, also being acquired by Gartner.  I won't go into the details of the mechanics of these mergers, as you can read exhaustive commentary, debate and analysis over at Carter Lusher's blog.  However, I did want to discuss what this means to our sourcing industry.

Limited choice for alternative opinions.  As most of Gartner's competitors couldn't really compete on brand, they've had to differentiate themselves to survive, and that meant finding areas of coverage that Gartner didn't do (or do well), and having analysts on staff who weren't afraid to rock the apple-cart with edgy, sometimes controversial, opinion and research.  While Big G has picked up some superlative minds from its latest acquisitions, its new challenge is going to be maintaining those edgy opinions, and not having them toned down under the glossy corporate veneer of the billion-dollar brand.  Whichever way you look at this scenario, we simply have to have more than two analyst voices dominating the opinion and insight of our $850 billion sourcing industry.  Why?

Why we need more than two "big" analyst brands.  You have to hand it to the Big G.  It has dominated the industry for the past two decades, has a great brand, and its "Magic Quadrant" is the envy of all Gartner's competitors.  Even if you don't agree with all the placement and positioning, buyers make decisions off that thing, consultants use it to justify their recommendations, and vendors spend a fortune attempting to "influence" their analysts (or at least they like to think they do...).  I, personally, have developed much of my career as a competitor of Gartner, working for smaller analyst houses such as IDC and AMR.  Most of my clients were also clients of Gartner, and I found they liked to have that extra opinion / validation, and were usually happy to pay for it.  They didn't want all their eggs in one basket.  I found the analyst industry worked well with several smaller analyst firms operating in competitive harmony with the Big G. 

Now, with many of these firms are continually being absorbed under the one common brand, many of these customers are going to look further afield for alternative opinion.  They're buying and selling professional services to bring major change to their IT provision and business operations.  Sourcing decisions are among the hardest companies will ever have to make, with careers on the line and competitive survival at stake.  Having the right validation, advice and opinion has to come from more than one entity.

The new void is created, now who's going to fill it?  While Gartner's getting bigger and broader with even greather depth and coverage, the industry needs alternative voices to challenge the industry, to voice public opinion, to "out" poor practices and highlight best practices, warn unsuspecting customers, provide alternative vendor ratings and offer that extra layer of opinion.  Forrester's been their natural "big" competitor for sometime now, but the new void is where the edgy little upstarts used to be. 

Several of the sourcing advisors have been lending their own weight to generating opinions and some research (for example, Alsbridge, Equaterra, Everest and TPI).  They've all, to varying extents, found their voice in the sourcing ecosystem, with some unafraid to challenge the status quo, others preferring more staid, traditional research.  There are also other traditional research boutiques that have been around for a while, such as NelsonHall and Ovum (Datamonitor), which also have a unique opportunity to extend themselves into this void.  And there are some new-age analyst boutiques embracing blogs and social media, such as Altimeter Group, which could venture into the sourcing sphere to add their tuppence...

One thing's for sure, 2010 will be a pivotal year to see which of these firms will seize the moment and step into the void.  We'll just have to see who's going to up the ante...

Comments

[Matthew]

This seems to go in cycles for large firms eating up the smaller ones. We have been seeing this same issue for many years in the IT Infrastructure Assessment world. We got tired of the same old manual, analyst biased, "gut feel" assessments the traditional market gave at massive price points.

So there are some small firms out there. We, for example, created the only (as far as we can see) fully automated benchmarking tool that generates results at the level we do. Covering 10 quantitative towers and 2 qualitative towers with over 2700 metrics at about 1/4 the traditional cost - finally - small companies can do assessments as well.

If interested, we can be found at www.ithc.com.

[Susan Scrupski]

It's cool to pop in here in the old neighborhood (outsourcing) and see the discussion on the street corner is 100% aligned to my new sector. The age of the all-powerful analyst firm is in decline. The power has shifted to the buyer and disintermediation never felt so good (especially to vendors). It's a good thing to live in interesting times.

[Jonathan Yarmis]

I was on an IIAR webinar yesterday and Naomi Higgins, head of Microsoft EMEA AR, said something along the lines of Forrester needs to wake up or be acquired. A variety of SIs have long looked at entree into the analyst world via acquisition or organic creation. Could you see this happening now? Or would that destroy their ability to opine on this space?

And yes, I am spending my every waking moment (except when drinking with you) trying to make sure that Ovum/Datamonitor capitalizes on the great opportunities in front of us, to offer not just a second opinion but a clearly differentiated voice and focus.

[Mark Stelzner]

Welcome to the "Magic Quandary" as I heard one senior executive buyer describe the situation at hand. I think Bruce and Stan make excellent points. My own experience tells me that selective advice from targeted and narrow firms will fill this void.

[the doctor]

Spend Matters, of course! What else could
http://www.spendmatters.com/index.cfm/2009/12/18/Friday-Rant-Doubling-Down-on-Spend-Matters-Part-2
and
http://www.spendmatters.com/index.cfm/2009/12/11/Friday-Rant-Doubling-Down-on-Spend-Matters-Part-1
be leading up to?

The only question is, will Supply Chain Matters follow suit? It's already ranked in the top 100 analyst blogs
http://www.theferrarigroup.com/blog1/?p=1575
and Bob's recent perspectives post seems to be leaning heavily toward an analyst bent ...
http://www.theferrarigroup.com/blog1/?p=1562
...

[Jason Busch]

Not sure this is so much a great roll-up as a ...

http://www.mediabistro.com/fishbowlny/original/1213rollups.jpg

[Bruce McCracken]

I tend to think that over time the pendulum will swing swing back and smaller analyst firms, even individuals, will fill voids in in specific areas of focus. An example, Saugatuck zeros in on cloud. Instead of the be all end all for all, these boutique niche analysts will focus on one thing and doing the one thing well.

[Lepeak]

Phil, your departure to the sell side (at least for the time being) was the quintesenntial bellwether moment for the demise of the IT analyst industry coverage of services as we've known it. Gartner mopping up flagging firms unable to remain solvent and relevant during a slump and in the age of extensive free "research" is an additional manifestation of that demise.