Constellation Research is a wise move, but not a disruptive one

The analyst industry always benefits from choice, so everyone welcomes the launch of Constellation Research – even the founder’s previous firm, Altimeter. However, Jonny’s claim that it’s automatically a tier one firm has to be taken with more than a grain of salt. Ray Wang’s departure follows that of Martin Gartenberg, so it seems reasonable to muse that Altimeter is not attracting enough interesting and lucrative clients to retain such big-ticket names. Superstars do not spontaneously generate super-sized revenue.

Constellation is a group of ten independent analysts using a broker: a common go-to-market brand. That’s a good strategy, since analysts often don’t sell well. Using a common sales process, a broker such as Constellation or Valley View Ventures (which represents Altimeter) can win extra profile and extra sales.

However, the participating analysts remain affiliated with their individual firms. Broker organisations are often not the analysts’ main concern. While analysts will invest time into specific new business opportunities, it seems unlike that Constellation will do what a real analyst firm would do:  allocate clearly defined focus areas (eliminate areas of overlap and thus expand the scope of topics on which the firm can deliver research and guidance) open and close focus areas (reallocate analysts, against their will if needed, between areas of falling and rising demand) and develop consistent methods (research methodologies, base data and deliverable formats). Instead, Constellation’s analysts overlap in multiple areas, such as innovation, 2.0 technologies, social business, and ERP.

If Jonny thinks that Constellation is a tier-one firm, then Valley View Ventures must be tier-zero and Gartner must be tier-square-root-of-minus-one.

That said, there is some reason in what what Jonny is saying. Constellation will be quite unlike Valley View Ventures in so far as it blurs the line: it presents itself as a research firm rather than a broker. It will also provide syndicated research, so you can (I imagine) subscribe to one content management system and access the research of all the analysts. That will be valuable research and if they are able to invest and grow their sales campaigns then they will be much more successful together than these analysts are currently apart. However the narrow scope of the analysts’ research areas and the notable overlaps means that they are not a substitute for the real tier one firms, which have the full-time energies of several hundreds or thousands of employees, rather than the spare-time support of ten people working in other firms.

P.S. For an alternative viewpoint, look at Barbara’s comments. She quotes Altimeter’s Charline Li as saying that the firm has “touched 125 clients” this year. While I’m not sure that’s the same as 125 invoices, Barbara’s suggestion is that analysts who have left Altimeter do so because they prefer syndicated research to consulting.

Duncan Chapple

Duncan Chapple is the preeminent consultant on optimising international analyst relations and the value created by analyst firms. As the head of CCgroup's analyst relations team, Chapple directs programs that increase the value of relationships with industry analysts and sourcing advisors.

There are 4 comments on this post
  1. November 15, 2010, 12:21 pm

    […] KCG AR blog, 10 Nov 2010 • Ray Wang departs Altimeter Group, Altimeter Group, 9 Nov 2010 • Constellation Research is a wise move, but not a disruptive one, Analyst Equity (Lighthouse AR), 11 Nov 2010 • Altimeter Group Reveals Challenges of Disrupting […]

  2. March 15, 2012, 11:12 pm

    […] The London meeting, organised by Simon Levin in the plush Bell Pottinger, HQ heard a pointed discussion on the development of new value propositions in the analyst industry, reflected by the successful growth of Constellation, which only launched in 2010. […]

  3. August 28, 2014, 11:33 am

    […] Great insights and good analysts are not enough to build momentum. A great example of that is Constellation, a firm that’s passionate about disruptive technology with a futurologist and macro-level bent […]

  4. October 29, 2015, 10:41 pm

    […] The most striking trend is the growth of the market, especially on the end-user side. Much of this growth is squeezing traditional analysts firms, which face not only freemium upstarts like HfS and 451, but also business consultancies like KPMG (which bought EquaTerra) and Deloitte (which owns Bersin). Both of those firms are being used much more widely, and we’re interested to see what will happen with Prophet’s Altimeter. […]