I’m sometimes asked if any competitor of Gartner could unseat it as the leading Advisory. I think not. But, could a competitor penetrate it?
Allow me to share with you accurate data from my Giga experience, based upon the huge and detailed spread sheet by month which I recently found in a closet, dating back to 10/1/2000! As you likely know, I founded Giga in late 1994 (I left Gartner in 1992 and stupidly sold most of my stock in 1993 when the firm went public for the second time). My spread sheet shows, for every month: beginning AV (Annualized Value of contracts), additions, subtractions (e.g. cancellations and discontinuances), how much is up for renewal, actual renewal data, up/down ratios, cancellation rates, renewal rates, # clients, average $/client, and ending CV (total $ value of current contracts).
Here’s our ending CV rounded to the nearest thousand for each of the first few years beginning 4/96 when we had our first client contract signed (we began investing money in building this start-up, about 15 months earlier):
1996 $9,339,000 ( We did not close any contracts until we launched 4/1/96)
1997 26,619,000
1998 43,799,000
1999 58,061,000
2000 63,169,000
(My spread sheet ends at 9/30/00, I had already retired from the CEOship as I never wished to be CEO in the first place, and then the terrible economy in 2000 hit!)
Our growth was virtually all at the expense of Gartner Inc. which of course did not appreciate my competing against it. Why did I found yet another company? I agreed to sell Gartner to Saatchi in 1989 because I’d suffered enough CEO stress, I had new ideas but frankly, Gartner was too big to change fundamentally, and I had just bought a house in Aspen where I wished to spend both summers and winters. My Saatchi commitment was supposed to be 5 years, but I negotiated that down to 2 3/4 (to the end of our fiscal year 3/92). So Saatchi bought Gartner, it soon put us on the auction block (I’ll tell that story in another blog), I decided to try and buy it back which we did, and as planned, I soon retired to Aspen CO where for some reason I hatched the Giga model to be another “game changer”. Forrester acquired Giga in 2003, and I’m told that the Giga model, which I’m sure has been altered since, drove Forrester’s growth (perhaps still, but I really don’t know for how long).
As to the question posed at the start of this blog? Your call.
Ken Smiley
on March 28, 2010
Gideon,
Whew, ok there you go my first comment on your Blog!
Interesting numbers and as I recall Giga was still in the black up until 2003 when it was purchased by Forrester. Forrester’s subsequent growth was founded upon the Giga model but Forrester couldn’t sustain it because the Giga model was foreign to Forrester. Forrester tore up the Giga model, I know, I was shredded as part of that tear up. Forrester didn’t really know what it had with Giga, I think Forrester viewed Giga as a bunch of accounts that they would acquire and magically turn into Forrester accounts, forgetting that those accounts were built on the blood, sweat and tears (ok maybe just the sweat) of the Giga employees. In my opinion Forrester should have kept Giga as a separate entity, the “Giga Service” under the Forrester umbrella and let Giga continue to operate as Giga. In the long term that would have been much more successful and quite possibly could have let Forrester challenge Gartner. Forrester wanted to be Gartner and in my opinion, again the wrong approach, Forrester should have strived to be different (and better) than Gartner. So while I agree I don’t think any competing analyst firm is going to unseat Gartner directly, I do think that if analyst firms don’t get ahead of the times they risk becoming obsolete and immaterial.
Ira Machefsky
on April 5, 2010
I was at Giga from ’96 to ’98 and could never find anyone who could tell me IN PRACTICE what the Giga model was. As far as I could tell we tended to be very technical and inquiry oriented, essentially doing in depth custom research for clients at the ring of a phone and whether they were paying or not, on top of a start-up research agenda. From a customer’s vantage point very nice. Not so much from an analyst’s vantage point. We also told ourselves that we were dispensing advice to IT users, but in the early days it was mostly IT vendors. I do remember some IT user inquiries that were along the lines of “How do I configure such and such?” I always wanted to tell them to call tech support but never did.
gideongartner
on April 5, 2010
Hi Ira,
Did you forget what the model was, or was our training and line management not sufficiently organized during our first two years selling and servicing clients, to help you? Did you ever ask David Gilmour, or any other research managers, for help? And how did you think we managed to penetrate Gartner to the extent we did, if our staff (research and sales) did not understand the model?
The 1st order elements of the model which were differentiated from Gartner included:
*one single service rather than multiple services, whereby each client had access to everything; our clients loved this, and we made our money by selling more “seats” over a contract’s life. That was a big deal;
*an expert network to supplement the analysts which no other firm had (our analysts did not like that, and we ultimately de-emphasized it;
*the GigaByte, which was typically (or was supposed to be) about 1/3-1/2 of a page long, to make it easier to read than say, a Gartner 2-page research note…the GigaByte was always supposed to be “added value”, no simple information, just “analysis”.
*a Web presence, Expernet, with functions which which no other IT research firm had yet, with many original functions! etc.
In further response to your comment: Our first client “ship” was in April 1996, and through ’98 (etc.) we were growing very rapidly, leading to the expected initial operating confusion. Re your complaints: we were no more technical than Gartner or others; we focused on the key issues which clients were concerned about, but in practice, some of our research clearly strayed, as one would expect; we did very little custom research at the start, but we began to allow our analysts to do so within strict limits of time after a while; you say we serviced clients who were not paying: possibly something fell through the cracks occasionally after a client’s contract expired and before resubscribing, otherwise what you claim must have occurred due to middle-management error; our first clients were naturally the large vendors, but our research was pointed at users which is what the vendors wanted to know about, and our incremental sales rapidly shifted/towards users from mid-’97 onwards which is what caused Gartner a near-hemorrhage; I don’t understand your comment about “configuring such and such”, are you suggesting that was a typical question?…. sorry, I do not think so, and your secret wish to tell the client to call tech support does support your comment that you did not know, for some reason, what the model was.
Ira, I’m very sorry you found Giga so difficult.
Robert McNeill
on April 6, 2010
I found Giga an amazing experience. I got a real handle of how IT end users make decisions through many many inquiries and touch points. I enjoyed working with experienced individuals who knew their stuff and did not need to rely on data to understand the markets they covered or the customers they were serving. I came from an MBA to Giga in 2000 and really did a lot of end user inquiry work on services issues. I did not have a similar background to many of the other analysts, but the diversity I found to be added value. Management were good at focusing staff on areas where individually they were naturally strong. Forrester for me was a good experience. They added some more structure around revenue goals and management/ staff performance.
Nancy Shapira
on April 20, 2010
I am a huge fan of Gartner as both an AR consultant to Israeli Technology companies and as a marketing person. As I explain to my customers who want to know what the big deal is about Gartner–my answer is–that they have successfully built the best brand in the IT Analyst world and with the latest acquisitions pulled even farther away from Forrester–their closest competitor.
Gideon, if you ever come to Israel, I would love to meet you and get your autograph….you started an amazing business model for a world that I find fascinating in both its ability to survive and flourish in a world which is becoming increasingly transparent. I think that the biggest threat to Gartner is the move to transparency and open knowledge. Analyst groups like RedMonk have built their model as open source model and that is how the whole marketing world is moving…
Ira Machefsky
on April 28, 2010
Hi Gideon,
I was aware of the single service model quite well. It was all management and sales talked about. It sounded like a great idea to me. But all I can tell you is that all the sales people I ever talked to about it, and there were many, said it wasn’t the reason customers signed up. Customers really liked inquiry and direct access to analysts. We wore pagers, for Pete sakes! As I used to quip about that, “If I had wanted to wear a pager I would have been a Doctor.” So, yes, management harped on the single service model all the time. In the field it didn’t seem to play. In the field, sales people were saying you can ask any of our analysts anything at any time and they will give you an answer. And that’s pretty much how management ran the company in the early days.
The other thing that sales (and management tacitly allowed) was for anyone at a company to ask a question, even if they or their division had not been the ones to sign up for the service. That’s what I mean by “non-paying customers”. It was basically one huge all-you can eat technological smorgasbord, and the clients did stuff themselves on it.
The GigaByte – I think it should have been a TwitterByte, but that came after our time.
ExperNet – It seems to have become the model a few analyst companies today. Turns out it was a stand alone business model, but we were trying to make it mesh with a traditional IT analyst model. Just did not work at all that way.
I think Giga was successful because there were alot of very senior, very smart analysts who loved what they did and were determined to make it work anyway at any cost. The models were pretty irrelevant to the company’s ultimate success.
Regards,
Ira
gideongartner
on April 29, 2010
Ira, thanks for the further comments. I agree that the analysts were mostly smart and dedicated. I also agree that Expernet did not meet expectations, because frankly we did not have the resources to build out an automated and semi-semantic (semantics then was not what it is today) inquiry system between the client and one-to-several experts and/or analysts.
I still strongly disagree with your view that the “single service” model didn’t play in the field, which you admit was “all management and sales talked about”. How could you possibly know that’s not why customers signed up? You stress our smart analysts, but there’s no way to support the implication that they were any smarter than the Gartner analysts (on average). So how do you think the relatively inexperienced salesforce generated our significant penetration vs. Gartner (in our first four years) which always dropped its prices when we were head-to-head, but would often lose to our most attractive differentiator, which was the single service, offering all our research to each client! I had input on all new deals, and the single service was the single most important differentiator we had, by far!
The other major differentiator vs. Gartner was the GigaByte, which was “supposed” to be roughly 1/3 of a page in length, but was often quite a bit longer. Our web presence design implemented around 1998 with interesting added functions to the Gigabyte was also a differentiator, although we didn’t push it. I think our sales force management and training, not to speak of general management, left something to be desired. My role was supposed to be evolving the design elements plus guidance to the management in Massachusetts, but the revolving door at the COO and other levels was more than disappointing.
Best to you,
Gideon
Ira Machefsky
on May 2, 2010
Gideon,
I may have had a skewed view from the sales people I spoke to, obviously only the ones that I knew, and all of them in Silicon Valley. And that may have been another bias. I think most of our clients in Silicon Valley were vendors who would have had much less interest in a single service model and more of an interest in just their market segment.
As for whether we were smarter than Gartner analysts, I don’t know, but I know we worked MUCH harder than any Gartner analysts to make our clients happy. I’m sure that made a big difference.
Regards,
Ira
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