Posted by: Robert Westervelt
security analyst firms
Independent analysis thrives in face of consolidation of large analyst firms.
Stamford, Conn.-based Gartner Inc. announced the acquisition of rival analyst firm Midvale, Utah-based Burton Group today, acquiring the research firm for $56 million. The Burton Group has 41 analysts that cover security, identity and access management, virtualization and cloud computing. It also has about 40 sales and support staff.
The acquisition makes Gartner an even larger market analysis giant, bolstering its presence against Framingham, Mass.-based IDC, a firm that conducts broad industry market analysis.
Gartner CEO Gene Hall summed up the acquisition in the official announcement:
“Gartner has traditionally focused on providing strategic insight to CIOs and senior IT executives, while Burton Group has built a leading niche providing practical, how-to advice to front-line IT professionals. Thus, Burton Group is a great strategic fit for Gartner and should enable us to offer a more complete solution to every level and functional expert within an IT organization. By leveraging our scale and worldwide distribution capabilities, we expect to significantly grow Burton Group’s business over time.”
It’s the third large acquisition made by Gartner in recent years and one that consolidates the market into only a handful of large analyst firms. Only a few weeks ago, Gartner acquired AMR Research, a Boston-based firm that focused on enterprise software research and analysis. That sale was for $64 million. The Meta Group, a research firm with a consultancy practice, was acquired in 2004 for $162 million.
Other firms include Cambridge, Mass.-based Forrester Research Inc., which provides analysis of nearly all parts of the IT landscape and the Yankee Group Inc., which focuses on networking and mobile communication technologies. Forrester has also been busy, acquiring JupiterResearch LLC in 2008 for $23 million. It acquired Giga Information Group in 2003 for $60 million. Giga also focused on enterprise software and brought with it hundreds of customers. Today Giga been completely integrated into Forrester; most of its analysts either joined Forrester, left to create their own independent research firms or consultancies or joined other remaining analyst firms.
The Yankee Group was acquired in 2005 by a private equity firm, Alta Communications. The 451 Group also continues to thrive, providing industry research in the areas of virtualization, storage and enterprise security.
Despite the market consolidation, a number of former analysts are doing well independently, providing research and consulting services. Former Gartner analyst Rich Mogull runs Securosis with security expert Adrian Lane. The firm announced the addition of industry veteran analyst Mike Rothman to its team this week.
What impact will the array of acquisitions have on the bigger picture of IT buying strategies? Michael Coté of Red Monk offers up some analysis of the Gartner acquisition, but essentially says it’s unclear to tell if it will have any impact.
“Individual voices” matter because of the past cycles of Big Bang IT, where large firms like Gartner thrive with with their categorization and ranking models (which application server will solve my problem?), have been steadily chipped away by consumer and “bottoms up” technology innovation.
Alex Williams, a writer for ReadWriteWeb, said the acquisition further transforms the analyst industry into a kind-of hybrid model in which traditional analyst firms balance out analysis offered by smaller independent firms including RedMonk and the Altimeter Group as well as industry expert bloggers and consultants.
The purchase is another example of how the analyst community is becoming increasingly homogeneous, dominated by a handful of firms such as Forrester and IDC. And it points to a growing debate about the value that companies can receive from analyst firms when there is little diversification in the market.