Thursday, 9 February 2006

Has Forrester missed a golden opportunity?

META Group had over 2,600 clients at the time that the acquisition by Gartner was announced. Gartner CEO Gene Hall in the earnings calls since the deal closed has consistently said that Gartner was retaining about 55% of the META clients. So roughly 1,170 META clients have been in play for the taking by Forrester, IDC, Ovum, et al.

You would expect that Forrester as the nearest competitor in terms of product offerings and size would be the prime beneficiary of all these former META clients floating around. Well, you would be wrong.

CEO George Forrester Colony responding to a financial analyst question during the February 1st earnings announcement said this:

“And I would say that [the META campaign] was successful but not wildly successful. I think that we definitely got a general boost from Gartner-META coming together in 2005, and, you know, I would say it was -- we probably gained 10 to 12 accounts in Q4, somewhere in that range. You know, I think it was in the 10 to 12 range.”

Not wildly successful? The Forrester ''Miss META? Find Forrester'' campaign was a complete bust. Looking at the earnings calls for 2005, George said that Forrester picked up about 28 former META clients all year. Only 28 out of 1,170 possible clients or about 2.4% of the potential opportunity. Even if one was to be kind and say that only half those META clients were really up for grabs, Forrester’s performance is still very pathetic.

Forrester had a historic opportunity to dramatically expand its client base and become a much stronger competitor to Gartner. Unfortunately, George Colony was content to sit back and passively wait for a fraction of the opportunities to fall into his lap. With Gartner aggressively ramping up its sales force, the opportunity for Forrester is past and Colony will find his company increasingly considered a niche player in the analyst industry.

2 comments:

former AR guy said...

You have to look at the motivation here.

Colony is already rich and running a company where many others are doing well also.

He is probably more focused on profitability and being conservative (that post-tech boom massive drop in revenues probably scared him). He also likes to be the visionary more than the business leader. I've actually spent a little time with him and he doesn't strike me as a business leader who wants to dominate an industry.

A second point is that I would be suspicious of the Gartner/Meta numbers. They might mean 55% of the revenues, Forrester might mean net new clients, there's a lot of ways to look at this.

Duncan Chapple said...

Indeed, these customer number don't really tell you anything. For example, Forrester probably already had contracts with META clients and could have expanded its relationships. Not all of those clients will have been major clients, or even profitable to service. Generally, the research market is pretty flat. Forrester will find it hard to grow that way. The lesson that Gartner teaches is not only that growth comes the cross-selling and through aquisition, but also that sometimes it's better to be smaller if that makes your financial ratios better: hence the sale of custom research and the possible sale of custom consulting.