Our memorandum on Gartner

Duncan Chapple’s webinar on Gartner ended with a powerful discussion between participants on the company’s strategy. This memorandum summarises some of the comments made in the webinar presentation and discussion. Because we follow the Chatham House rule, the note doesn’t attribute particular comments to particular participants. The memorandum should not be taken as a reflection of policy.

Overview:
* In the last 6 months, Gartner’s revenue has fallen 16% and research (which is the most profitable) is down 1%.
* Gartner’s future goal is to return to 15-to-20% growth.
* In terms of geographies, Gartner remains a powerhouse in the US. Two-thirds of its business is there & its consulting revenues are lower in EMEA and APAC.
* In January 2009, Gartner made 6-to-7 % of its workforce redundant (mainly not on the analyst side but many on the consulting side)
* Gartner has currently about 1200 analysts/consultants in the US. Gartner has a total of 4198 employees and 1800 of those employees are outside of the US.

Gartner’s 2009 targets seem to have been:
– Reduce its consulting headcount – now doen 1/6th to 440 (versus 520 in 2007)
– Reduce cost of service (make it cost less to serve clients)
– Pay down debt to reduce interest costs (They have a scheme where they use the money to buy back their own shares but this has not helped their share price rise sustainably)
– Push back Gartner events further in the year. Majority of 1H events were cancelled and pushed to 2H. This resulted in the salesforce focusing on fewer events to sell. Gartner does have more early registrations for their Symposium event in Orlando this year (that approx 8,000 people attend each year). At the few events they did have in 1H, there was a 63% decline in the number of attendees.

Execution:
– To position itself so in the future it can resume growth of research sales
and to place more effort in selling to research users
– To sell into other buying centers
– To sell outside the client HQ

Salesforce:
– Gartner has taken on hundreds more sales associates since 2006. In 2008, there were 800 people in sales and now there are 930. This works out to about 4 salespeople to every 3 analysts/consultants. The benefits of this model are:

  • 1) Clients have more ease in getting a different salesperson if they don’t like the current salesperson
  • 2) there is an improvement in selling events in a more effective way for example by focusing on smaller events with niche vendors and
  • 3) The focus is on improving productivity of the existing salesforce

Research:
Gartner’s view is that there is an untapped research market that is highly scalable. Some curious people view Gartner as a billion-dollar giant in a $2.5 billion market. But Gartner thinks there is a $15 billion market.
– It is clear that role-based research increases value (In terms of research method, Forrester does this more successfully than Gartner).
– Gartner uses more reference and interactive tools to drive down interaction costs
– Gartner has 650 core research analysts (and it seems to be rising modestly)
– Limited development of new products

Fiscals & Pricing:
– In terms of research there has been a real growth in profit on modest revenue growth
– There has been an increase in contract value
– The extra sales force they took on generated results – a 12% rise in new business by some measures (300 new clients)

Summary:
Gartner’s North America business will continue to grow but for some competitors it will be easier to compete with Gartner outside of the US, especially in the events and consulting businesses. Another challenge for Gartner is delivering high value consulting to IT users. The bottom line for Gartner: to hope for growth in contract value and to drive future share up from $17.08 today versus $28.00 in August 2008

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