450 analyst firms get less than half their revenue from vendors

Our post on growth opportunities for competitors to Forrester and Gartner has triggered some discussion, both in our monthly ‘Advisor Spotlight’ webinar, another blog and on our Boardroom. In particular, there’s a real discussion about how far other analyst firms have a toehold in the end-user market from which they can grow.

In the Boardroom discussion, a number of participants discussed frustrations with Gartner. Going around the table, it seemed that the more you spend with Gartner, the more frustrated you feel. The stories are generally familiar: rising contract prices, higher prices for fewer seats, increased pressure on internal market intelligence teams, and a feeling that the role-based research is less able to meet vendors’ needs for research that is defined by integrated solutions, horizontal technologies or, in particular, vertical markets. Initially, the quality of role-based research is uneven as analysts without deep domain knowledge (Dataquest analysts get mentioned here) develop a role-based understanding. It was a powerful discussion, which we’ll run again in six months.

In the Boardroom there was a lot of agreement about the opportunities for other firms and in particular for IDC and other firms with bases outside the English-speaking markets. In the blogosphere, however, there is some dissent.

Some observers discount the influence on technology buyers of IDC and NelsonHall. NelsonHall clearly has a major service buyers’ service. Financial Insights, a long-established business, clearly has a well-established base but, as it was a pre-exisiting business bought by IDC, we cannot assume that the other Insights businesses are as well rooted. However, IDC’s influence on buyers is not only through the Insights businesses. It has tens of thousands of end-user attendees at its events. Its research is widely circulated. It is the major provider of analyst firm consulting outside the English-speaking world. Even its tracker service is used by buyers: at IDC’s recent Forum in Berlin I had dinner with one of the equipment buyers for a $20 billion manufacturing multinational. He told me they use IDC’s data to better negotiate with competing suppliers, and to understand the components and functions of differing systems.

Many AR professionals, in an attempt to simplify the problem, like to pretend that only one, two or three analyst firms get most of their revenue from end-user organisations, and the rest get most of their revenue from vendors. That’s not the case: we track around 750 analyst organisations, and over 450 analyst firms get less than half of their revenue from vendors. There are 270 firms that get less than 20% of their revenue from vendors. Of course, that leaves a similar number of firms that are largely dependent on vendors. However, it would be quite mistaken to think that other firms don’t have a beachhead in the end-user community from which some can grow rapidly.