Tuesday, 7 February 2006

Gartner should invest more in research, say former Gartnerians

The Internet Research Group in its InternetAcceleration newsletter had this interesting article:

X-Gartner Woes -- We've received another e-mail from a disgruntled X-Gartner employee complaining (again) about his former management's lack of ability to adequately fund his group. Unfortunately, this complaint by X-Gartner-ites is all too common. (Gartner has seen its share of red ink, its largest shareholder is a hedge fund that's mostly interested in quickly making money and its upper management team has been playing musical chairs.) It's our opinion that the large research firms can provide tremendous value to IT organization decision making. A dollar spent on research should yield fifty times that in terms of bottom line profits that result from improved IT strategies. But from where we sit, the state of things today doesn't seem to be so clear cut. Maybe it's time that Gartner should start taking the advice of its former employees (hey, you'd think that this would be a pretty good form of free advice from some people that were, how should we say this, Gartner analysts). The advice that we hear these former employees give is -- SPEND MORE, NOT LESS, ON RESEARCH. We've been in this business long enough to know that it's a simple correlation -- the more time you put into researching the topics that you're covering, the better your fact base and the greater the chance that you'll provide better advice. Pretty simple, huh? Why do we care? It's our trickle down theory. If Gartner can actually help IT organizations to improve their decision making they'll start improving their technology decision making, their companies will perform better and they'll be in a position to spend even more money expanding (including buying more IT stuff). Not only that, quite quickly, these companies will value research more and will start spending even more on research. So it gets down to this -- if Gartner really believes in the value of research, then it needs to change its direction. Even though it is losing money, now is the time to invest in the fundamentals of the business. If you'd like, perhaps we can whip up a Magic Quadrant covering large research companies to help illustrate our point.

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Comment on IRG's article:

Unfortunately, Gartner CEO Gene Hall seems way more focused on expanding the Gartner Sales force than investing in research. In 2005 Hall bought META Group to eliminate a competitor and to get the sales force (he crowed in the Q3FY05 earnings call about the 84 sales reps he picked up). With new hires, Hall expanded Gartner sales headcount by more than 100 in 2005 -- but did not make a similar investment in analysts and research. In this morning's Q4FY05 earnings call, Hall again talked about adding sales headcount -- between 80 and 120 incremental new reps -- to go after $1bn+ corporations with mentioning an investment in research.

1 comment:

Dennis Howlett said...

Doh - haven't you read their accounts? If you did then you'd know why the shorts are in there. That's a reason why they need to sell, sell, sell. There are others of course but that would require an entry all of its own.