Barbara French and Gideon Gartner recently started a discussion about the future of the IT advisory industry. The two part discussion can be found at Advisory Industry Competition: Pushing Past ‘Business as Usual’ (part 1) and Advisory Industry Competition: Pushing Past ‘Business as Usual’ (part 2)
As background, Gideon is a pioneer of the IT advisory industry having founded Gartner Inc in 1979 and GIGa Group in 1995 (acquired by Forrester in 2000). By many measures Gartner and Forrester are (today) the dominate forces in their industry.
Barbara is a highly regarded thought leader, advisor and consultant to the IT vendor community helping analyst and influencer relations professionals adapt to changing landscape and market influence of analysts and other influencers types.
The discussion that Barbara and Gideon started is based on the observation that the IT advisory industry is going through a new and important phase in its maturity. In essence, the question they pose is to what extent will smaller research and advisory firms and the growing rank of independent analysts disrupt the business models that the current dominate players have been founded on?
The discussion has generated a good deal of attention and commentary among industry observers and professionals in the IT analyst and vendor community.
In many ways, the established players in the IT advisory industry are facing issues similar to companies in other mature industries: disruption from agile and smaller competitors with an ability to innovate (faster) based on new business and ‘value delivery’ models; AND managing the adverse affects of social media on business.
- The traditional advisory business model has seen little innovation over the last two decades. The model (in large part) is very restrictive and is measured/limited by subscription (primarily). Many firms have certainly developed a number of unique and customized service offerings over the years (to sell more) but the model is still tied to subscription which inherently limits the ability to dramatically grow and scale. In a services industry where the core assets are research, education, and advice…this is a challenge.
- Access to information as a result of all things social (social media, social networks and social influence) has given IT and business decision makers instant access to increasingly high quality information, best practices and insight on a global basis. This has and will continue to change how decision makers account for and assess the quality/value offered through restrictive subscription-based models (that many advisory firms employ).
- Our research (at SAP) has shown that above all else ‘peer influence’ has the highest impact or level of influence on the decision to purchase business software (our core market). Where a decision maker does not have experience, they seek out and are heavily influenced by the experience of others. As a result, we are seeing an increasing number of very high quality peer networks (by role, industry, geography, and vendor affiliation - such as user groups) and social media peer groups form to offer great depth in facilitating exchange of insight, best practice and peer advice.
In fact, our research shows that peer or ‘social influence’ has significantly increased over the last four years (reliance/trust/value) at nearly all stages of the decision process - from awareness of industry trends, short listing of vendors, and vendor selection. The areas where social influence does not factor high is in contract negotiation and implementation services (where services/advisory firms still add greatest value).
The social influence model increasingly allows ‘end-users’ of IT to be better informed, connected and quite frankly more advanced in thought and experience than they were several years ago. This challenges the traditional advisory firm business model which was created during a time of information sacristy (to support informed IT decision making).
- An advantage that many small boutique firms or independent analysts have in this scenario is flexibility of their business model that is much less restrictive to information access. In many ways, boutique firms and independent analysts are able to offer analysis, high-level insight or ’sense making’ as a free resource - syndicated via blogs, Twitter, webinars, etc. The social web gives the independents and boutique firms an instant global publishing and syndication platform with infinite reach. This is a threat to the constraint-based model that many larger firms rely on via subscriptions.
- The explosion of business and need for IT insight on a global level is amazing - in all market segments and geographies. There are an estimated 50m+ small business, 1.5m+ mid-sized companies and 90k+ large companies around the world. Many of these companies are ripe to realize value from business and/or IT services. This is a huge opportunity for any advisory firm, individual, or boutique to make a very good living if the value they offer is solid and flexible.
How many customers do Gartner, Forrester and IDC (as an example) have combined? Less that 35k is my guess. Millions of companies around the world are getting their insight and advice from somewhere. Where?
Will large firms become irrelevant? It is to be determined. The larger firms certainly need to re-evaluate their business models; understand how decisions in IT and business are being made and influenced (in this new era of social business); redesign the services and value delivery system; adjust metrics to support a new value delivery model; etc. There is definitely room to grow. Small firms and independents have enormous opportunity to do well for themselves - just the same. The ocean of opportunity for all is VERY big.