Gartner Closes Consulting in Australia and Hong Kong

16 May 2007

  Word has come that Gartner is closing its consulting operation in Australia and Hong Kong, confirming Duncan Chapple’s conjecture.  (Its research and events business remains unchanged.)  In the best spirit of the analyst business, let’s see what conclusions we can draw from a single data point.  Well, we actually have several data points, including Gartner’s recent earnings announcement (about which we blogged yesterday).

First, just a touch of history.  Gartner has always had a love/hate relationship with consulting.  You have to distinguish between analysts doing paid speaking engagements and one-day “consulting” gigs and the project consulting being done under the umbrella of Gartner Consulting.  It’s the latter which we talk about here.  It is important to understand that from the beginning, Gartner has positioned itself to the equity analysts as not a consulting firm.  Consulting firms suffer from low multiples because of the inherent unpredictability of their revenue streams.  By contrast, Gartner has long said you should look at it more like a publishing company, with predictable renewal rates and, in so doing, afford it a greater multiple to earnings.

Against this backdrop, Consulting was always a hedge.  However, as research revenues had gone effectively flat for large portions of the last decade, Gartner had to look at other growth opportunities and the expansion of its consulting organization was an obvious and easy decision.  Now, however, we see the apparent reinvigoration of the research opportunity as Gartner has finally hit on a product and pricing strategy that seems to be offering growth potential. In such a climate, consulting moves from being a revenue and growth driver to a supporter of the broader strategic initiative.

What does this mean for AR?

  • This only serves to further our belief that Gartner is comfortable in its ability to exercise greater market control and sustain higher prices.  (That’s not saying you’ll end up paying more to Gartner since there is more than one way to skin a cat, but maintaining the status quo will continue to get more expensive.)
  • The notion of a refocused consulting organization, targeting deeper engagement in strategic accounts, has the ability to augment Gartner’s impact in those targeted accounts.  From an AR perspective, however, this is not particularly noteworthy as the visible impact of the analysts won’t change.  The consulting organization has never felt beholden to the positions of the analysts (which has been a source of tension) as they are in a position that requires much more pragmatism, reality and political consideration.
  • The presence of Gartner Consulting in a customer account is potentially a sign of greater analyst influence in the decision-making process but there are sufficient exceptions to this conclusion that this is not a blanket observation.  As with everything AR, it’s important to close the loop with your sales force to let them know the nuances of Gartner Consulting vs. Research and what the presence of Gartner consultants means in any particular situation.

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