It seems Gene took Gartner‘s shopping trolley on a jumbo to Oz this week and a page from George‘s book: the research firm just announced it was buying Ideas International [ASX:IDE] was established in 1981 as a consultancy service and since 1986 has provided its special brand of research to IT users and vendors. This acquisition is still subject to regulatory and other approvals.
This move has a strong reminiscence from Forrester’s purchase of Springboard last year (read our post:Forrester joins the feeding frenzy, buys Springboard)
Who is Ideas?
They’re a 40-strong company with 12 lead analysts with a strong brand name in the hardware space, providing benchmarking, very detailed detailed comparisons and competitive profiles of hardware and data-centre vendors. For instance their RPE2 methodology allows to compare data centres.
They sell both to vendors and “increasingly to end-users” according to our sources, though our assessment is that the end-user proportion is quite small.
According to their last annual report they’re highly profitable with AUD1.9m profits from an AUD8.7m income, quite a nice ratio. They have good leveage too, closer from IDC than Forrester with USD224k per employee, compared to Gartner who claims USD419k per billable employee (see their fact sheet) while Forrester’s revenues per employees stand at USD194k (source: company fact sheet). IDC is privately owned by IDG and doesn’t publish numbers but they’re in the $300m range for about 1200 staff.
It seems that the Burton Group acquisition was successful enough for Gartner to repeat the operation with IDEAS. The feedback we gathered from various sources was that Gartner was surprised by the quality of the research (detailed stuff) and how much it was appreciated in IT mid-management circles, at the time they were striving to go up and appeal more to the C-suite.
Ideas is the same play: take some good techie content and give it a better reach through their excellent sales coverage. Gartner has more sales reps (usually of the aggressive type) than analysts and knows what good execution is about.
Gartner closed their consulting division in Australia in 2007 but grew their events and research there, and in other APAC countries (specifically India, China, etc). So this acquisition is not only complementary from a product coverage standpoint but also geographically. Crucially for Gartner, it should give them a better access to the fast growing APAC countries.
That’s a glimmer of hope for the support and management staff, usually the ones bearing the brunt of M&A’s (Gartner states they will “virtually retain” everyone, maybe they’s stick a hypervisor layer on top of them?).
As usual, it’s not clear if IDEAS will remain as separate product line within Gartner. Our prognosis would be that it will not be merged with Burton into that separate GFTP end-user service but rather in the “Don’t Call Me Dataquest” (HTTP or GFIL or whatever it’s called now). The IDEA brand will probably disappear, just like Dataquest, AMR, Burton, META, and most of the now 33 acquisitions they made since IPO’ing back in 1993.
Bottom line and takeways
It seems Gartner, the industry 800 pounds gorilla, is learning how to better execute for acquisitions. The META takeover did not go well at all, with over 2/3 of brains drained out of the company even if it was probably a good competitive move. This is to be contrasted with AMR (where the founders cashed in but the other analysts had been offered jobs and issued new laptops very swiftly) and Burton which went quite smoothly too.
- Other analyst firms will probably read this tale of consolidation with great chagrin, in particular Forrester and IDC who see Gartner pulling away even farther and quicker.
- In particular, this has implications for
CanalysCurrent Analysis (read Ideas International and Current Analysis Ink Distribution Agreement)
- AR pros should do their due diligence as usual
- Check who are the analysts impacted on both side , the relationship status, any WIP, etc
- Decide a new action course where they used IDEAS as a second source
- It’s likely Gartner will stop white papers and things like that, look for other suppliers if you had something in mind
Read our 42 other posts about Gartnerand their previous acquisitions.
- Breaking AR news – Gartner buys Burton Group
- Gartner buys AMR -what’s the impact for AR Managers and competitors?