Post-scriptum on "Yankee, analyst impartiality and circular references"

More on the ethics/conflict of interest/independence: there are two schools of thoughts here -analyst firms either do white papers or they don't.

• When they do -and we have nothing against vendors paying for white papers as long as it's done openly- it can be quite tempting to influence analysts (check this old but excellent Ben King article) or even threaten them if they're small. We've seen in the comments about "Get the facts" in our previous post that it can backfire.
• Or they don't. The point we were making here is that it is hypocritical to oppose independence to doing white papers -because the vendor influence then moves away from public scrutiny to paid for "consulting session" (that is getting x analysts in a room -Gartner charges @ $10-12k each- for what is in fact a paid briefing).

Additional note: the argument that smaller firm are less independent may be true for some, but those who compromise their business model by having short term vision don't usually last long as a reputation is quicky compromised. We also question what benefits IT vendors would get from analysts they employ that would only agree with them?

Check also this Computerworld article by Thomas Hoffmann on the same subject: Market research providers confront credibility concerns.

Finally, more circulyperlink orgy: Joe presses reporters to "ask the tough questions about research you use, or not use the research at all." in his GartnerWatch blog.
Can't agree more: D.O. Y.O.U.R. R.E.S.E.A.R.C.H.!

Yankee, analyst impartiality and circular references

Hyperlink party: David points to James who points to this :-)

It's all about Steve Hamm from BusinessWeek having a pop at Laura DiDio from Yankee for a report on Linux TCO. This subject is interesting indeed:

• Microsoft invested several millions of dollars in their "get the facts" anti-Linux campaign, with tactics ranging from roadshows (with META) to advertising complemented by an impressive reports library (mostly bespoke)
• Yet, the result is mixed after some reports by IDC, IDC again, Aberdeen and others generated a heated debate on analyst impartiality (check this InternetNews article for instance)

A situations where two vendors quoting the same Yankee report to support opposed claims begs the question of analyst relevance as trusted advisors to businesses. As the level of cynicism amongst technology users is already high (and rising), it may comfort the likes of Gartner and Ovum in their policy to not do paid-for white papers (and turn down the associated revenue)... but we doubt they would stop selling reprints and consulting days.

The issue with this model is that it implies less transparency (revenue coming from vendor engagements is not as visible as sponsored papers) and thus potentially adds more credit to the cynics' arguments.

1+1=1.2?

Is the Gartner-META merger an opportunity for smaller analyst firms? James Governor from Redmonk agrees a fellow that "Gartner's acquisition of Meta Group was a wonderful Christmas present..."

PS: Gartner will announce today their Q1 results...
PPS: ...and meanwhile David reports that Ovum is advertising their IPO

Stuck with a META contract?

We estimate that the overlap between META and Gartner IT vendors customer sets is well over 60% (more in the 90+ range in the USA). So, now that Gartner has acquired META, what should IT vendors do if they have contracts with both?

Since all the META research can be accessed by Gartner clients, there is little value in keeping RAS contracts with META. Gartner does not seem to be forthcoming with many alternatives, and we would just advise to cancel it at the first opportunity. For those who have paid upfront, the issue is to get their money back.

We would be interested in your feedback as to whether Gartner shows flexibility, for instance by giving credits, SAS vouchers, etc.... Pls feel free send your observations to ARonaut@bigfoot.com.

The final count?

Well, 20 days after the Borg officially assimilated the techno-utopians, we have been trawling the battlefield and counted the POW's, MIA and KIA.

Estimates vary, but it looks like there's a consensus that about a 60% are now off to greener pastures...

Here are our (partial) estimations:

• US META Group analysts: 26 out, 7 Gartnerised = 21% survival rate
• EMEA META Group analysts: 16 out, 7 Gartnerised = 30% survival rate
• WW, we've counted 51 META analysts MIA, that's consistent with a 30 to 50% survival rate.
• As far as MGC (META Group Consulting) is concerned, the team is pretty much decimated as stated in our previous post. So it seems Gartner is not much interested into vendor consulting, they've confirmed they still won't do white-papers (META used to). Anyway, who would want to face their so-called "vendor relations" during the review process?

So, going back to the reasons Gartner acquired META, as stated in their press release:

• they're getting "more than 100 highly-trained sales people from META"...
  As David said, "there are cheaper ways of acquiring them than buying a company - like luring them away with big salaries and bonus payments."
• "a greater presence in targeted international markets — including the UK and Germany" and in "several key industries, including energy and utilities, insurance and government and finally"
  Well, funny they've laid off so many people in those countries then!
• extra analysts to cover "roles such as enterprise architecture"
  And so many analysts!

Bottom line: As we said before, this is purely a competitive take-out and we re-iterate our prediction that Gartner will increase their prices (.9 probability).

Analyst Insight blog

Another tech PR and AR blog written by David Rossiter from Sunesis, an AR/PR agency.
Contains a nice wrap-up of the Gartner acquisition of META, some other interesting stories like this one on Forrester and Ford and some news on analysts movements.
Worth a peek!

Dale and Gideon

After founding and selling META (making about $20m in the process), the rumour that Dale Kutnick is now back with Gartner is confirmed, as Senior Vice President, Director of Research in fact. And there's more: there are other (unconfirmed) rumours that Gideon Gartner himself may also be joining...
Someone within the Borg probably thought of a this as a clever strategy: hiring those who could start up a new competitor!

Tekrati on Gartner / META

Interesting analysis from Tekrati on the acquisition of META by Gartner, gives a good round-up for those who haven't been following the assimilation that closely. We are keen to reading the sequel!

Outsell on IT research market

A few good snippets from Outsell, a research firm covering the information industry started by ex. Dataquest analysts:

• According to them, the IT research market is worth about $2b. Does that give the Borg a 50% market share?
• It is also quite flat, with 5% growth. Another sign of more consolidation to come.
• Finally, good article here.

Revealed: why Gartner took over META!!!

Many have been wondering actually WHY Gartner bought META, the less to be said is that Gartner was not quite clear in its communication as per previous posts.

Here are ARmadgeddon's analysis and revelations.

On the financial side of things, the acquisition will not do much for Gartner's balance sheet: according to the latest SEC filings, they have disbursed $162m for an entity registering $141m revenues (FY04) but with 2.1m losses.
So what does 1+1 makes? Those $141m were made of 89m for advisory services and 44m of consulting. A significant proportion of user and vendor clients were subscribing to both META and Gartner advisory services. Difficult to estimate the overlap, let's guess 1/3 and 2/3 for best case and worst case. The last evidence we have gathered suggests that between 3/4 and 1/2 of the MGC consultants are not going to join Gartner. This would mean that the incremental revenue that Gartner could gain would be between 40 and 81 millions. The ROI depends on the profit margin, but META has been loosing money since 2000 and were just back in the black in 2Q and 3Q04. Gartner's profit margin is around 2-3% , the acquisition price is between 2 and 4 years of the incremental revenue, meaning that this deal is going to take quite a while to pay back. Not sure what Silver Lake Partners thinks about this?

So are there other reasons for the Borg to assimilate the techno-utopians?
A week after this acquisition, some details are emerging that reveal their true motives: apparently, the Monitor Clipper Partners made a firm offer in December ; only to be outbidden by Gartner a couple of weeks later -rushing to make a competitive takeout. IDC is also said to have been in the race at some point. With that move, Gartner prevented META from going back private -thus better able to compete on price- and are now able to increase prices.... That should content their shareholders....

Garter set to increase prices?

The rumour that Gartner is poised to increase its prices after the META acquisition leaves them in a near monopoly situation (on the advisory side at least) has been confirmed from different sources. The prices we heard were not $40k but closer to $15 for a SAS day, a 50% increase....

Any additional information welcome at the email above....

The next one?

Jupiter to be the next one? Chris Selland risks a guess on potential buyers....

April Fools Day

That's it. As of today 11 am EST, the Borg have assimilated META.

Gone is the brand, the consulting division bar the cost based benchmarking activity (.9 probability) as most MGC consultants are out and quite a few analysts. The situation in EMEA is probably not as bad as in the US -see this GartnerWatch post- but I've been confirmed that between 6 and 12 analysts are out. If you had any papers or ongoing consulting projects with META, it's about time to worry...

The Q&A contains some interesting gems:

• META clients will have access to Gartner research and vice-versa (the META research will be kindly archived on Gartner's site). Additional costs are not mentioned -nor any cashback possibility in case of duplicate subscriptions.
• "Gartner and former META Group analysts will reconcile any conflicting positions through rigorous research review processes (that exist within both Gartner and META Group today)". How they blend the METAspectrums and Magic Quadrants will be interesting....
• The question for ongoing contracts is eluded: "In a few cases, a change to a particular product or service may be necessary."
• METAmorphosis Barcelona seems to have been cancelled, probably merged into the spring Symposium also in Barcelona