Gartner is moving into a premium niche

The discussion in last week’s webinar focussed on the idea that Gartner’s response to the temporary decline in its market has been to cut costs and to focus on the most profitable customers. That’s no surprise, of course. The firm has seen a 13% decline in its revenues in the first half of the year, resulting from a reduction in a number of events (and a two-thirds fall in the resulting number of attendees) and from reductions in contract values and consulting opportunities. Gartner Consulting continues to shrink, especially outside the United States, and much of its work is now in off-the-shelf consulting solutions, like its bid support service.

While Gartner has won new clients, some of these might be new clients inside old client organisations. The firm’s higher pricing, associated with Gartner for IT Leaders,is an obstacle to acquiring new clients who – if they blanched at $11K a seat – are certainly even more cautious at $23K a seat.

The firm’s general experience is that growth in profitability is expected to some from the sale of research into organisations that Gartner already has a relationship with, and from reduced costs. Those reduction in costs include increased pressures on analysts’ time: reflected, for example, in the reduced effort expended on researching some vendors who are, perhaps, less forthcoming in response to Gartner analysts requests for information.

However, if the firm continues to produce equal or lower value for higher fees, then that is a niche strategy – and one which rests on the firm’s past reputation. That could leave the firm open to competition outside its core market, which seems increasingly North American and focussed on the largest firms.

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