Datamonitor’s technology analysts in London have moved into spare space at Cardinal Tower, which also houses Ovum. While this will cut traveling times for vendors on tour, it’s still business as usual at both those analyst firms.
This year Datamonitor’s managers are placing their emphasis on client retention, aiming to keep it at over 90 percent. The purchse of Ovum is leading to only the most subtle of synergies. Already there have been millions dollars of savings made by removing duplicated back-office functions from Ovum’s HR, finance and IT operations. This work has moved largely over to the same teams in Datamonitor.
On the research side, we don’t expect to see the same thinning out. Datamonitor’s Tech business is primarily vendor-oriented. Butler, also owned by Datamonitor, is more enterprised-focussed (other than its events business which, like IDC’s, is growing from vendors-sponsorship).
It will be more interesting to see what happens at Ovum’s overseas offices. They will be maintained. In the past, Datamonitor has been has been more hub and spoke: it will be interesting to see how far it can or will use Ovum’s infrastructure to expand its international tech business.
The general approach, of separate go-to-market analysts brands with one line of back-office management, conceals some future opportunities for synergy. Datamonitors’ bottom-up view of market demand allows enterprises to better understand trends in consumer markets and the supply chain. This insight into enterprise and vertical market trends gives them deep insight and influence over the issues facing line, and business, managers in enterprises. Datamonitor certainly feels it has a unique insight that could help improve Ovum’s guidance to ICT service providers, investors and solution vendors. This co-housing deal therefore potentially unites both a supply and demand view; both market and industry.
However, Datamonitor’s cautious approach means that we will not see integrated products or teams until 2008 at the earliest. It is maintaining completely separate brands and sales teams. The purpose of moving the London tech teams to the same building is to get a bit more knowledge sharing and collaboration going between the research organisations during 2007.
What does this mean for Lighthouse’s clients? We have had several Lighthouse clients who hoped that Datamonitor will roll all of Ovum into Butler and Datamonitor Tech or vice versa, as was the case with META. Some hope to spend 1.5 to get 2 – but so far it seems they are disappointed. Certainly, there is nothing built in to the acquisition pricing that assumes that Datamonitor will discount prices to clients: The Datamonitor group’s brands do different things for different buyer groups and they will aim to reflect that in their pricing strategies.
As we understand it, there are a series of major strategy projects underway to look at different buyer groups and what the longer term evolution of offerings should be. These focus on the telco industry, general end-user space and ICT vendors. However, we don’t expect to see many changes this year. From the AR point of view, that means Datamonitor is only now looking at how its brands can be easier to brief and do business with as a group.
Datamonitor’s shareholders will have been pleased with the potential fit with Ovum. Happily, its prior acquisition assumptions seem to be similar to its post acquisition understanding. So far it clearly is not cross-selling, cross-managing or combining the research/advisory brands. However, we are seeing some clients try to discuss combined teams on consulting projects, which is an easier service through which Datamonitor and Ovum can combine expertise.
Of course, this emphasis on stability reflects Datamonitor’s go-slow integration of its past purchases. This cautious pace has helped it avoid some of the organisational frictions that were seen in the rapid melting into air of the META and Giga brands. However, unlocking the value in Ovum will involve at least partial integration in the research process, especially in terms of common bases of market data and shared taxonomies and market definitions, as well as looking at opportunities to generate different deliverables, to be sold through different brands, through more aligned research work. 2008, therefore, will be the key year for Ovum.