The 451 Group stepped up to a new level in Europe with its 2013 HCTS Europe conference, attended by around 380 people at the upscale Landmark in central London. 451 Research is known for its focus on emergent and disruptive technologies partly because of its long relationships with the investment community: early stage businesses are of great interest to 451 Research. Having acquired  both Yankee Group and events specialist Tech Touchstone, the 451 Group businesses are in a strong position to make a powerful synergy between 451’s growing base of analysts (451 Research now has 65 analysts), growing content stream (4,500+ reports a year) and the hunger of its enterprise audience (5,300+ attendees annually) for bottom-up insight.

Driving much of the firm’s success over the last years has been the growth of cloud solutions, and demand for cloud providers, from both customers and investors. One of the most compelling sessions for me involved Kelly Morgan, Ralph Choufani, Alexander Luycx and Doug Webster. M&A deal volume  has been high over the last year: Cisco bought Virtuata; Colt bought ThinkGrid; Dell and several other vendors are paying higher valuations for IAAS and PAAS solutions because there are fewer targets for acquisition for increasing numbers of investors and acquirers. The non-SAAS cloud is very attractive, and there’s a 70% CAGR in non-hosting cloud applications.

In 2008-2010 there was a lot of  private equity investment in the US, especially in product development and co-location providers. Those assets (some of them quite critical) will be coming to market soon, in a rather distracted market playing a wait-and-see game. Hosting is turning into a scale game. There’s a slow and steady growth. The European market is fragmented, with great possibilities for consolidation. But the strategic fits and synergies needs to be looked at carefully.

Fundamentally, the market is marking a very close look at the contracts, making a careful inspection of recurrent revenues and the quality of the revenue growth. Only then can the potentials, for cash conversion, scale, customer-ownership and profitability, be understood.

Investors are eager to understand the rapidly-developing security and governance requirements for successful cloud businesses. The dynamics of SoHo solutions just cannot scale for the enterprise, so 451’s investor audience is very attentive to the sorts of discussions unfolding at its events.

Listening to the sessions and questions here, I feel that 451 has grown into the space created by Gartner’s increasing focus on larger firms that often tend to be in the late majority. Its audience is very interested in a bottom-up understanding of technical complexities. Gartner’s revenue thresholds and lessened appetite for hearing from non-client start-ups might have aided its salesforce, but they have also created a space for 451 to grow. Given the firm’s profitability in a market where many analysts firms are struggling to reward shareholders, I expect to see more growth at 451 – including acquisitions of analyst firms.