AR Classics: What the arrival of HFS Research tells us about freemium

In September 2014 Phil Fersht at HfS Research published some charts which showed its lead position as the firm had increased the most in influence over the preceding year. That’s all the more notable an accomplishment because it’s the second year they have had that position [in the Analyst Value Survey, which in 2014 was sponsored by Kea Company]. Other firms participants said had increased in influence included Gartner, 451 Group, Forrester, Digital Clarity Group and NelsonHall.

In a comment on their post I said:

“As the researcher who led this survey, I do wonder what else the results mean. I think it’s quite appropriate to see the results of this questions as an impressive accomplishment for any firm, but especially for HfS Research which has won a reach far greater than its modest size should allow. That said, I also wonder if this doesn’t also show a degree of under-innovation in the rest of the analyst industry. There’s really only Gartner that seem to have hunger to really grow very fast.

I should also note two other things about the survey. First, this wasn’t the only question. HfS came top on this question but not on all the others. There isn’t one clear “winner” from the survey. Second, the survey isn’t a survey only of buyers but of users generally (some of whom buyers, others influence buying, and some don’t influence buying at all).”

Turning this over in my mind I have three further thoughts.

  1. First, I think these results matter. It would be easy to say that it’s not a surprise that a small firm would be one that’s growing faster but, in fact, it is. For example, looking back at the results from ten years ago, I can see the firms then said to have risen the most in influence were: Forrester Research; Gartner; Aberdeen Group; Burton Group; IDC; and AMR Research. None of those were small firms. A few years later, the risers were Gartner; Forrester Research; Current Analysis; Ovum; AMR Research; and Canalys. Again, none of them were small firms. HfS Research’s shareholders will probably be happy to see that many of those firms ended up being acquired: Burton, AMR and most recently Current Analysis.
  2. Second, these results are not [measurably] swayed in HfS’s favour by the fact that it encouraged people to take part in the survey. We’re able to track click-throughs into the survey and can compare the results from different sources. It would not, as far as I can see, have been an unreasonable concern. In fact, the main impact of additional survey participants who responded to HfS’s encouragement was that it pushed up the profile of its competitors. That is not where the leadership position comes from.
  3. Third, there’s another way in which HfS Research stands out, and that is in the ratio of subscribers to users. It seems to me that HfS is a prime example of how to use what we have called since 2011 freemium strategies. Our survey shows that for every Gartner subscriber, there is a non-subscriber using Gartner (less intensively, of course). For HfS, however, the ratio is much, much higher. There’s much more value in the free content that HfS offers (just compare, for example, the summaries of these research items mentioning Xerox from Gartner and HfS). HfS gives away as much as it can in the summary; Gartner wants to give away as little as possible. That difference, I believe, is part of what is giving HfS the edge it has.

Of course, research summaries are not the only, or even the main way, in which HfS and other freemium firms are giving away insight. But we’re now in the position where a freemium business with a small cloud infrastructure can get on the radar. Of course, we cannot imagine that all [or even most] of HfS’s readers will turn into subscribers or consulting clients. But what we can see is that other firms intelligently using freemium, and here I am especially thinking of Pierre Audoin Consultants (which has performed strongly in 2014 [and is now teknowlogy]), are able to dramatically accelerate their go to market capacities.

If you’d like to find out more about the dynamics in the analyst industry today, find out more about the Analyst Value Survey.

[As one of the most-read articles of all time on this blog, we have added it to the ‘AR Classics series. Clarifications in square brackets have been added later.]

Duncan Chapple

Duncan Chapple is the preeminent consultant on optimising international analyst relations and the value created by analyst firms. As SageCircle research director, Chapple directs programs that assess and increase the business value of relationships with industry analysts and sourcing advisors.

There are 8 comments on this post
  1. January 19, 2015, 9:41 pm

    […] HfS Research was an especially strong reputation for outsourcing and IT services strategy research, but many of its users feel that its is also very influential on buyers. Unusually, its users were split evenly between the demand and supply side. […]

  2. February 12, 2015, 4:36 pm

    […] firm on many of our analyst firm awards, came in fourth place for business growth. This shows the limitations of its freemium strategy; while the firm’s research is valued, those who are reading for free do not feel that HfS is […]

  3. April 24, 2015, 8:55 am

    […] principal analyst for IT services has moved to upstart firm HfS Research. Having already worked at IDC, NelsonHall and Gartner, Dr Tom Reuner (@tom_reuner) gave me this […]

  4. October 29, 2015, 10:38 pm

    […] HfS Research pipped IDC into third place, despite having a more uneven portfolio of services and a far smaller client base. Even so, the firm’s exceptionally wide freemium base means that it is delivering highly valuable services to a wide number of users. […]

  5. November 03, 2015, 8:34 pm

    […] position in the 2016 Telecoms Analyst Firm Awards. With Forrester Research coming third, keeping HfS Research in fourth place, the four leaders are exactly the same as last […]

  6. December 01, 2015, 9:34 pm

    […] HfS Research is getting mentioned widely by customers, clients and prospects, and seems to be influential on them according to suppliers: pushing it up into third place. […]

  7. February 04, 2016, 9:57 am

    […] HfS Research is normally highly valued for peer networking, and its events and research also valued highly. […]

  8. February 23, 2016, 12:41 pm

    […] 2014 – London, UK. Long-time industry leaders Gartner and Forrester Research have been joined by HfS Research as the top firms in Influencer Relations’ Analyst Firm Awards for 2014. The awards honour 18 […]