It was the best of Gartner; it was the worst of Gartner. It was the AR Forum of wisdom; it was the AR Forum of foolishness. Analyst Relations managers crowded into the Boardwalk on October 20 for Gartner’s annual session for the AR community. It’s a valuable session, and much of the slideware will be online. But the lasting impression I’m left with was the contrast between comments by Mark McDonald, the GVP for Gartner Executive Programs, and the firm’s CEO Gene Hall.
Dr McDonald’s presentation at the forum was a powerful warning to vendors. He showed that preliminary results from Gartner’s CIO survey suggest that substantial changes are unfolding in the attitudes of CIOs. The things rising up in CIOs agendas are perhaps unsurprising: improve processes; reduce costs; improve workforce effectiveness; improved reporting; targetting of customers; and manage change. However there are still a few vendors talking about the things that are falling in priority – even if they are important in the medium term: how to win clients; innovate solutions; grow client relationships; and expand into new markets.
But the brunt of McDonald’s bad news for vendors was this simple message: CIOs are really unhappy with the vendor community. In a year when IT budgets are set to be cut 4.7%, some vendors are not trying to help their clients. Instead, they are trying to help themselves with increase maintenance fee and other costs. CIOs dislike that, and will punish vendors for it.
As Peregrine Worsthorne wrote, the ‘willingness to tell the truth to power’ is ‘indispensable’. But McDonald’s comments might have seemed ironic coming from Gartner, which is seen by some vendors to be increasing is its prices in exchange for little extra. In the AR Forum, one attendee asked Gartner CEO Gene Hall to ‘Talk about the price increase’. Hall responded to say that Gartner is always evaluating its prices in the light of competitive pricing; the firm’s cost structure; and market trends. It was a generic statement, which could have felt evasive to some. Hall did not reply to explain price increases in the context of client needs and the value customers obtain from Gartner.
A glance at Gartner’s price sheet shows that while it is certainly not the most expensive analyst firms on a per-‘power user’ basis, current pricing is much higher than the former Core Research pirce model. Indeed, since the pound’s rise this summer from $1.41 to $1.65, perhaps the highest price per seat award now goes to Ovum. Huge price differentials have always been part of the reality of the analyst industry. While we are not hearing much about price increases from Gartner clients, we certainly do see that the firm is holding firm on pricing at a time when clients’ budgets are under pressure.
At a time when Gartner is warning vendors that they are storing up client grudges for the future by maintaining and increasing prices, it’s ironic that Gartner’s executive team is relying on inelastic demand for its services to boost the company’s profitability.