The AR grapevine is red hot today. As ARcade explains in this post, Informa has bought Datamonitor for $1 billion. Dominic says the new firm will be larger than Forrester, but smaller than Gartner and IDC.
If, like me, you're not familiar with Informa, that's probably because its an English firm that's big in telecoms and media. It seems to be a research and events business with little - if any - advisory, consulting and community services. It's like the IDC business model, but on Yankee Group's beat.
Giving the timing of the deal, most of the comment on the purchase has been made in the UK, by technobabble, Analyst Equity and the Financial Times.
We're getting a lot of email in from readers to give us their take -- please join the crowd and tell us what you think. At first glance, it's not clear to our readers that the deal is mainly, or even partly, driven by the need to challenge Gartner. Datamonitor and Informa are both broader than technology, and Informa will mainly be interested in ways it can get some quick wins by extending into non-tech market segments.
Brought together, the tech and telecoms businesses now inside the Informa group look more like a competitor to IDC than to any other firm.
Let us know what you think. As always, email comments will be kept confidential.
Monday, 14 May 2007
Will Informa compete with Gartner, or IDC?
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19 comments:
I don't think the driving force is to compete with Gartner per se, although Gartner's events business may see intensified competition. Informa covers much more diverse business areas and the Telecoms & Media part is really only quite small in the scheme of things (although bigger when you factor in DM and Ovum).
Interesting that you say they compete on Yankee Group's turf, when YG is busy rebranding itself away from telecoms.
There needs to be a fair bit more analysis of the new entity before it fits onto any of the 'industry analyst landscape' maps that AR people so love to bandy about (myself included).
You rightly point out that it's a European (UK) player - perhaps we're watching the creation of a non-US giant in the field? Now that's a cool idea.
...and the whole thing has wiped the sh@t eating grin off the dm middle management after the ovum assault.
Datamonitor was already based more on a market research/getting the MS numbers kind of firm, thus competing with IDC, so the acq by Informa appears to just further strengthen that hand. Do not see any threat to Gartner, except for maybe their Dataquest biz, same holds true for Forrester.
IDC, which honestly does not do that great a job outside market research (eg, analyst/forward thinking) is the one that has the most to worry about here.
The whole thing looks as financially weird as the Datamonibore purchase of Ovum: Informa is expecting £3m cost savings... out of an £502m purchase.
Dom - incorrect
Yankee Group is trying to focus only on telecoms and wireless networking. It dumped its IT practice and all the analysts there left or got fired.
Hi anonymous. Are we talking about the same Yankee Group? The one we subscribe to pitches itself as offering "Research and consulting services, focusing on the Internet, technology, and enterprise applications."
You're not mixing YG up with Current Analysis, are you? I would offer to call you to discuss, but hey! You're anonymous!
Agree Yankee is pure Telco and Wireless focused now - they will sell you IT analysis, but they have virtually nobody to do that work anymore...
This move definitely makes Informa a major industry analyst player.
I’m not so sure that it creates an immediate rival to Gartner - but there’s definitely potential there if Informa decides to continue investing in its tech research business.
It’ll take a few years though or some quick (and big) acquisitions - with the pain they entail.
Interesting times once more.
I work at Datamonitor and I find the comments very interesting if a little off the point.
The world does not evolve around tech and the deal isnt that simple! Of course there is benefit within the technology sector (Informa and Ovum are both strong in telecoms and that looks interesting in terms of potential and probably kicks Forrester and Gartner out of the park in that aspect) but there are many non-tech areas where DM produces data or analysis (yes we actually do more than data and do it in a variety of sectors with higher growth rates and higher profitability margins than tech!). It might even be the strengthening of healthcare where there is the biggest win for both sides (if you are cynical about that you should recall that IMS Healthcare used to own Gartner and are a lot bigger than Gartner will ever be - by the way Informa is also more than twice as big as Gartner). Consumer, Financial Services, Healthcare,Technology etc all benefit from a) a whole new channel to market through all the conferences Informa runs (opportunities for analyst exposure, names, stands, working the floor), some huge number of names in marketing databases (contacts are worth a lot if they are used correctly) and a vastly expanded footprint in terms of office locations (40 countries where DM can now expand into much more easily).
As for wiping the smile off the management team...I am sure some are worried or at least uncertain but I would say many are smiling given they will do well financially while others are definitely positive about the potential. Datamonitor management hosted a series of interesting sessions on Monday running through the deal, the fit, opportunity and differences in approach - seemed fairly balanced to me and there was even a few good laughs mixed in so no-one is too stressed over here!
In Europe, Yankee has never really offered services outside of telecoms (fixed and wireless)
The Datamonitor person above makes a good point - that there is a world beyond tech.
From what he is suggesting the model sounds a little more like Forresters than Gartner - focusing in on the verticals. Probably a good move.
The price paid though is high, with a substantial premium. Even though I have seen others suggest there is little slack to cut, that price has to suggest somebody at Informa has identified overlap that can be cut, likely in the management tier, but also potentially in consolidating the brands (Ovum, DM, Butler etc) ??
"no-one is too stressed over here!"
You're right. After takeovers people very rarely lose jobs due to cost cutting and overlaps are often happily overlooked. And Datamonitor is such a great brand its worth being nurtured in the long run.
Datamonitor analysis, on the ball as always.
Re: last comment. Not sure why you are so bitter but its really not healthy for you. Appreciate the concern for our jobs though - most kind! However, £3m of cost cutting as part of a 500m deal isnt too threatening though and if you look at the financials of the deal there will definitely be a lot of pressure but mostly on growth because they can't cost cut savings enough to pay off the cost of capital. Many of us here do feel Datamonitor is a great brand but dont take my word for it look at the B2B listings http://www.superbrands.uk.com/pdfs/BSB%20official%20top%20500.pdf (and have a look at the quality of businesses that rank beneath us). Anyway I'd say you could argue Informa just validated that by paying $1bn.... the current assets aren't worth that so must be belief in the business and the brand potential.
My view is slightly more long term. If you consider what the key elements are of a successful analyst business model are, and then apply them to the Informa Group you can see that they 'potentially' fare very well.
1) Research (Informa and Datamonitor have great scale here)
2) Events (Informa and to a lesser extent Butler have expertise here)
3) Advisory (Ovum, Butler and [a few Datamonitor analysts] are great here)
4) Market (Ovum have positioned themselves superbly within the Telco space, DM within Healthcare)
Obviously success is not guaranteed. Informa must retain the key analysts as well as ensure that they don’t change what works well at Ovum and DM (ie Consulting and Reports). Where does this leave us? I still believe that handled correctly the sheer scale and size of Informa enables them to be a credible competitor to Gartner. In a world where I am regularly hearing the demand to speak to someone else beside Gartner this is a welcome move.
My post backs up this point.
Apparently IDC laid off 37 people from their Framingham MA HQ yesterday. Does anyone have more details?
"However, £3m of cost cutting as part of a 500m deal isnt too threatening though and if you look at the financials of the deal there will definitely be a lot of pressure but mostly on growth because they can't cost cut savings enough to pay off the cost of capital"
Phew, pressure is only on growth. Thats' ok then. So how is Informa going to accelerate growth given that NO additional investment is going to come in, but cost savings are expected? And 3m IS big for a company which only generates 20m in cash... you HAVE actually looked at the financials, right? Right?
Glad we talked this through, my estimation of Datamonitor analysts has gone up enormously. NOT.
Informa's move should put a nice squeeze on Forrester and IDC to get their act together. IDC needs to get some thought leadership together. Forrester's wasting their time with roles and VP/RD title rationalization which will only cause more of the expert ex-Giga people to leave. In fact, talking to a few of the ex-Giga people, and some old time Forresterites, they are waiting to leave but can't b/c of the self-imposed stock scandal that keeps them from selling their last vested stock.
Meanwhile, the morale at IDC is only getting worse as management continues to lack thought leadership. On the other front, AMR's in trouble as they hired a bunch of ex-Borg masters who are now trying to Gartnerize the place and pissing off the old timers like Shep in the process.
Informa looks like a very good bet right now. Maybe IDC should buy out Forrester, keep the ex Giga Folks and Forrester Stars, and kick out the current ineffectual IDC and Forrester management teams. Better yet, Informa should just hire out the Forrester and IDC stars and let the rest of the company rot with the young college grads and inexperienced IDC quant jocks. The Data Monitor people are really much better at this stuff.
Is the real issue Gartner or is it the dirth of quality analysts in general that can work with each other and band together. There's room for a new firm but that firm better be big enough to at least stake out a market bigger than Yankee or comparable to Forrester.
With so many upset analysts who feel like sausage factory workers, I'm sure there will be a time and place for a new challenger. But it looks like Informa may be the way for ex analysts to go.
I would expect Forrester to make some moves this year. They dream of becoming the next Corporate Executive Board, but don't have the leadership quality (and their Leadership Boards have been a big disappointment). Expect them to acquire a consulting organization...
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