Gartner and AMR: Shrinking Demand for IT Advisory Services

After I get a question for the third time, I usually try to write about it in my blog. I’ve had more than three inquiries from TSIA partners asking my thoughts on the continued consolidation among IT advisory firms as Gartner announced last week they were acquiring AMR, so here goes.

As a former analyst from one of the big IT advisory firms, I certainly have a perspective on this.  And here it is:  the demand for IT advisory services has been shrinking as:

  • Large IT outsourcing projects means fewer companies are making IT decisions internally.
  • Cloud computing/OnDemand/SaaS minimizes demand for IT as well as minimizes IT’s role in a larger percentage of corporate infrastructure.
  • Business users become driving force behind product purchases as OnDemand and Web services put end users in the drivers seat.

Add to that the economy and tighter budgets, and there simply weren’t enough IT budget dollars to keep Gartner, Forrester, AMR, Meta Group and Jupiter Research (et al) afloat. Consolidation is the logical step.

I made the move in 2006 from IT research to business user focused research, and in hindsight, my timing was pretty good.  Business users continue to gain more clout (particularly in services, with our climbing revenues and strong margins), and personally, I find working closely with business users on functionality to meet unique business problems much more rewarding than discussing Linux versions with IT admins.

I do worry about the impact on IT, with fewer voices analyzing the market and giving advice, particularly when the focus from the largest analyst firms is always the big companies. Fewer voices talking about niche areas–like AMR’s expertise in supply chain–means less coverage for smaller and more innovative solutions, fewer options, and no alternative views to the bully pulpit sermons. But that just allows business users to assume even more control–they can look to industry groups such as TSIA for highly tailored advice based on the success (or lack of success) of peer companies.

The big losers are ‘best of breed’ and smaller vendors, who have to compete with Oracle, SAP, IBM and HP for analyst time and mind share. I’ve had complaints from partners for years now that they can’t even get a briefing with the big name analysts unless consulting dollars are attached, and the cost to buy your way in for inclusion in a Magic Quadrant or Wave is too high, with too much risk:  the small companies don’t have the lobby power the big companies do to influence findings or ask for edits.

And that’s my 2 cents! I hope there is a smooth transition for some excellent AMR analysts, like my friend Noha Tohamy. Thanks for reading!

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4 Comments on “Gartner and AMR: Shrinking Demand for IT Advisory Services”

  1. Erin Kinikin Says:

    Nicely done and well argued! It also doesn’t help that (despite all the talk about new architectures) we haven’t had a lot of visible innovation in the last 5 years. People are most willing to pay for advice when the difference between solutions is significant and the cost of picking the wrong solution is high (most likely because your competitor is doing it or has already done it). Risk averse, cost-centric companies and a choice between minnows or elephants means stay with what you know — with the help of a brand-name analyst willing to validate the obvious (CYA). (IMO)

    • jragsdale Says:

      Thanks for chiming in Erin. Excellent point on innovation. 24% of my inquiries over the last year were about CRM (incident management, entitlement, integrations to KM, etc.), and it is increasingly difficult to pick a ‘best fit’ vendor when products are so similar. Even the UIs are becoming indistinguishable.

  2. Allen Bonde Says:

    This is a really interesting topic, and one I’ve been thinking about for a number of years after leaving Yankee back in (yikes!) 1997 – glad you started this thread John!

    In addition to the reasons listed for the decline in demand for IT advisory services from the “big boys,” let me add 2 more:

    1) the impact of the Web, blogging and other user-generated content. Back in the day, analyst firms held most of the data on vendors, spending etc. You paid not only for advice but for access to this research. Now, with the Web, research from trade pubs and groups like TSIA, etc, there are many more choices – some of them free!

    2) lack of agility, and missing the boat on “new” topics. The “big boys” have a mixed track record spotting trends that are not mainstream and quickly shifting resources to cover these areas. This was absolutely the case when the Internet hit, and Gartner et al were slow to add coverage, and groups like Jupiter, Zona, Extraprise filled the gap.

    There is also the shift from research to consulting in the large firms – a necessity to make up for shrinking sales of subscriptions, but also a shift that put analysts in competition with a broader range of consulting firms.

    I think both of the factors above are apparent today with the coverage of social media. Yes, some large firms get it, but look at all the bloggers, spin-off/specialty firms (like Altimeter), other alternative channels etc. that are taking the lead in covering this topic.

    Of course with the Web, social networking, mobile computing etc, the “virtual” analyst or consulting firm can be just as connected and can still own topics like the big guys, with more flexibility and less overhead vs. traditional firms. I’m banking on this as I spin up Evoke CRM!

    Would love your thoughts!

    Allen
    http://www.twitter.com/abonde

  3. abhishek Says:

    I got placed into advisory team of Ernst and young, do you think that it does’n have much scope in the present times,please throw some light on the job profile of people who work in IT advisory??

    PS: i am an engg. grad


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