Forrester’s string of successes over the last financial year has been capped off nicely. GigaWorld 2005 attracted 900 participants in Dallas and almost 700 in Prague; it marked the first time Forrester events have sold out at venues of such scale.
Because of continuing demand for a ‘second voice’ of importance alongside Gartner, Forrester is a big gainer from Gartner’s acquisition of META Group. The majority of the META staff has now left the company. Many who have joined Gartner are interviewing with other analyst firms nevertheless, and a few of META’s best known analysts were at GigaWorld. Notable META alumni Pascal Matzke, Larry Velez and Peter O’Neill, who led META’s €10m vendor-consulting business in Europe, have arriving at Forrester; some Forrester clients anticipate further recruits to be announced soon.
Forrester’s success in attracting these analysts is also reflected in the growing enterprise attendance at GigaWorld, including large delegations from some of the largest European IT buyers, including Air France, BNP Paribas, DaimlerChrysler, Erste Bank, GlaxoSmithKline, Rhodia, Société Générale and UK financial services firms Prudential and Egg. The development of vendor sponsorships for GigaWorld has grown correspondingly, with many firms attending or sponsoring GigaWorld for the first time. GigaWorld seems to be attracting the right leads for vendors: One supplier left with about 75 actionable sales leads.
GigaWorld’s success is the ‘silver lining’ of the cloud that META’s acquisition has cast over the analyst industry: Some META customers have been successful in resisting Gartner’s appetite to increase subscriptions fees. It is getting harder to sell analysts’ research content as a free-standing service (we explore some of the reasons for this in section three, below). This allowed some businesses to obtain the same amount of research and advisory services for less money. As a result, spending on analysts will probably dip this year – even though business use of analysts is rising. This means that analysts’ customers have spare cash for events, consulting – or to return to their business if analysts cannot produce propositions with increasing value.
Forrester is able to capitalise on a number of mis-steps by Gartner: not only its acquisition of META (which now more resembles decimation than merger) but also continuing uncertainty about how far Gartner aims to turn into a consulting business.
Forrester’s opportunity is to focus on giving analysis and sharing insight with its enterprise and vendors clients as part of a strategy of growing core subscription revenues.
This is reflected in three ways, which we explore below:
1. The growing impact of its emphasis on data-driven analysis
2. The emphasis on business drivers rather than technology trends, both generally and at GigaWorld
3. Forrester’s intense distain for potential consulting approaches that are quite unlike its WholeView research methodology.
1. Data-driven analysis.
The development of services like the Forrester Wave exemplifies the opportunity to equip its clients with more insight to make their own decisions, rather than building dependency on its consultancy wing.
The core of the Wave is the notion of placing analysis in the business context, and rooting advice and recommendations only in the context of long-term industry and technology trends. In contrast to a consulting-driven approach, Forrester’s approach focusses on large-scale, research-driven, ‘generic’ research and, in particular, on championing one set of end-user choices that it can promote as being best practice. That is partly reflected by the greater transparency of the Waves, which are more clearly data-driven than are Gartner’s Magic Quadrants, which are often as opaque as other forms of magic. Waves are based on 45 to 200 criteria, and the inclusion criteria are also more consistent.
This transparent research approach is a marked contrast to other firms, and is a key driver of reputation. In the 2005 edition of Lighthouse’s annual survey on trends in the analyst industry, Forrester is the clear leader in a question that asked which analyst firm’s findings are most independent of its commercial relationships. Ovum and Gartner tied for second place.
2. Subordination of IT to business context
This emphasis on using data to set IT into its business context potentially widens the gap between Forrester and Gartner. Many attendees at GigaWorld stressed that it felt more like METAmorphosis than Gartner’s Symposium. Comparing it to the Symposium, some (but not all) found GigaWorld’s sessions to be higher level and less likely to deep-dive into technology.
Partly, this makes a virtue of a necessity. Forrester has fewer analysts than Gartner’s 700, but a similar breadth of concerns. Therefore, each Forrester analyst has a broader remit which allows them to develop a wider, if more shallow, domain expertise. However, it also reflects the seeds of an ideological position. In a number of discussions, Forrester analysts suggest that the role of IT is to support the business. In a keynote presentation by DaimlerChrysler to exemplify this normative position, requirements analysis is done by the business units while the role of IT is to meet business units’ requirements. This was echoed in a presentation by Forrester CEO George Colony, who likened IT to an iceberg: most of the iceberg cannot be seen above the water, and the job of the CIO is to ensure that as much as possible of the IT ‘iceberg’ is invisible. CIOs should jump on the ‘iceberg’ and press it down so more of it is submerged. This does not work with actual icebergs, but with Colony’s metaphor, simplification and standardisation is the route to make IT invisible. In Forrester’s world-view, it is business innovation that drives technology innovation – rather than the other way around.
This theme of simplification and standardisation also makes GigaWorld more thematic and integrated, something which is made more profound by its smaller scale. The smaller size of GigaWorld makes it less frenzied and stressful for attendees. It also makes it much easier to find time with analysts, even if some delegates find less ‘high energy’ than Symposium. Most Forrester analysts had one-to-one sessions available for booking through the conference. That is not the experience of every attendee at Gartner’s Symposium: at an event that is three or four times larger, some analysts are booked solid from the opening of the event.
GigaWorld’s scale also means that Forrester analysts have more free-flowing time to mingle with delegates and schedule one to one discussions: some firms were able to schedule eight or nine one to one discussions over the three days. Forrester has good, talented analysts who are not afraid to say what they think, in contrast to some analyst firms. Some attendees found the quality of the conversations to be at least on a par and possibly higher, than at Symposium.
However, Forrester has yet to fully reflect that theme. Some attendees saw little evidence of any real ‘subordination of IT to business context’, but simply a preference for off-the-shelf technology to home-made IT. Forrester’s agenda (both research and conference) certainly remains tech-centric, especially outside the United States. Forrester still has no Europe-based analysts covering some of the core higher level themes in business such as governance, compliance, developing talent or emerging market strategies (with the exception of a new series of country scorecards for offshoring).
It is too early to see if the addition of any META analysts or META clients will allow Forrester to complete this process. In contrast, the agenda of Gartner’s Symposium was shifted as a result of the METAmorphosis amalgamation.
Importantly, the number of vendors on each Wave is fewer than on a Magic Quadrant. While this might frustrate some suppliers, it reflects an important reality: most analysts are only able to comments comfortably on six or seven suppliers.
Note: Forrester’s new Wave
There remain some subjective elements in the re-engineered Wave: while firms with major market share are ceded a place rapidly, marginal offers can get placed, especially if they are from larger vendors that have proven ability to execute, such as IBM in the area of content management. Forrester also takes up customer references and conducts lab tests of around 10% of the suppliers’ solutions: however, inclusion in the Wave is irrespective of whether or not a vendor feels able to assist Forrester’s research. The variables are weighted for their presentation in the Wave, but the base data are supplied to clients, allowing them to be customised. The 9 to 12 month refresh rate is also more regular than many Gartner Magic Quadrants could support. The greater granularity is valuable for IT selection projects, but it also helps vendors to better understand what they need to do to meet the customer needs that Forrester’s analysts perceive. However, this granular focus on solution features makes the Wave seem very technology focussed in comparison to Gartner’s Magic Quadrant. While the MQ might now struggle to compete with the Wave as a decision-making tool, the Quadrant continues to be perceived as a better tool for taking account of less tangible, more business-linked, issues.
3. The opportunity Forrester and Gartner now disdainThe dip in research revenues which we discussed at the opening of this document is partly a reflection of the reaction to Gartner’s attempt to rack up research prices. However, there is a deeper trend. Content-based sales are being eroded by the growing supply, and quality, of free information. Google is a substitute for Gartner.
Furthermore, managers have less time to read. Especially in the United States, the time orientation of managers is deeply acute: ‘better sooner, than better’ is the watchword for some. Managers do not read research in order to understand an area: they want to discuss issues and clarify their tasks. Forrester is attempting to grapple with this reality by launching Forrester Magazine. This is written by senior journalists and established business readers rather than by analysts. With 40,000 copies distributed, it aims to diffuse the firm’s research experiences in a more easily digested format that filled the gap between academic journals and mass-circulation magazines. It reminds us of what McKinsey and Company is attempting with McKinsey on IT.
While Forrester Magazine is impressive, sharing and solving problems is done much better through conversations and coaching than through reading research notes or magazines. All of this means that analysts need to speak with and consult to their clients.
Certainly, this has a huge advantage for the analyst firms as well. It will help analysts to build customer intimacy. Many analysts prefer to speak than to write. Commercially, this movement from selling research to selling subscription which bundle together research and advisory services have been the saviour of a number of analyst houses.
However, Forrester is anxious about the logical extension of advisory services: the free-standing consulting business. Forrester Research finds that consulting is a fast growing part of our business — but it is not building a fully separate consulting practice. Forrester’s consulting business is yoked to its research engine. It continues to believe that it can deliver real value to clients by offering independent and objective advice that is based squarely on the research footprint. Consulting methodologies have to be acceptable to the researchers. Its consulting team win and manage projects, but the research side is involve in the development and execution of project methodologies. Forrester’s high ethical standards also mean that much of the consulting support which vendors request, some of which are a little grey ethically, cannot be addresses.
Despite having bought META, Gartner is also increasingly disdainful of vendor consulting, even if it wants to increase it revenue from vendors by increasing its subscription fees. Even Aberdeen wants to have cleaner hands, and has oriented towards end-users and away from vendors.
This cautiousness reflects both a right-minded concern for their own reputation, but vendors need and deserve support. That is an opportunity for other large analyst firms to exploit. Most clearly, it is an opportunity for IDC and Ovum, both of whom are hiring from META and executing plans to grow their vendor consulting business.