This is a good time to stop and have a look at those two firms.
Founded in 2010 by Ray Wang (@rwang0, LinkedIn), after leaving Forrester and a stint at Charlene Li’s Altimeter. At the start, Constellation focussed on end-user advisory but quickly expanded its portfolio to RAS (research and advisory services) and events. The pricing and consumption models are flexible, based on pre-paid units. The revenue split is in majority towards syndicated research, events being in the norm (about ⅕) and consulting (end consulting and vendor) making up the rest.
Constellation now claims to have 170+ clients with a 60/40 end users / vendor ratio in numbers, revenues between both segments being at parity -which is not a meagre achievement. It seems the firm has put in place a robust support infrastructure, an investment many start-up balk at, with 5 full time sales staff in addition to a “network of resellers.”
Finally, going down in the boiler room the firm has now 10 analysts -most on the associate model (see below).
Constellation, along with some other “disrupters” are pioneering an interesting new approach to the thorny connondrum of the analysis firms business model (see Analyst firms: rock star bands or record label dinosaurs?). It is inspired from ‘The future of work’ principles as a reaction to firms such as Forrester, IDC and Gartner. One of the most diverging traits is the deliberate play to capitalise on “Star Analysts.”
In passing and IMHO, this is one of the key differences between Gartner and Forrester -the latter nurturing its engine from graduates up and the former hiring seasoned industry professionals.
In this model, each associate is an integral part of the venture, just like a franchisee. It’s not for everyone and several new recruits such as Barry Wilderman (LinkedIn, @BarryWilderman), Alea Fairchild (LinkedIn, @AFairch) and Paul Papadimitriou (LinkedIn, @papadimitriou), have left recently. It’s worth noting at this point that by large, Constellation is a virtual organisation as none of those associate analysts are on the payroll.
However, it has the potential to disrupt the industry where other associations of firms (European in particular) have not succeeded in the past.
ITR started its existence back in 1994 as the Gartner local representative, a model still in place today in South Africa and Russia for instance. In 1997 it started developing their own research services, partnered with META Group in 1998 (acquired by Gartner in 2005), then with Forrester from 2005 to 2012 and now with Constellation.
ITR is an interesting firm because it has always operated as a buy-side advisory firm in a market where external advice is not always valued. It has a comparatively small roster of analysts (relative to Gartner & IDC in Japan), but they are generally considered knowledgeable, experienced & solid. Its penetration of end-user accounts is pretty much blue-chip in Japanese terms, and preceded Gartner’s more recent deeper engagement outside the technology manufacturing sector in Japan.
- At this stage, it’s difficult to see what both partner gains, other than some Constellation research being shared with ITR clients -Ray is coy about future plans.
- Potentially, it could be a mutually beneficial channel to cross-sell in each country.
Advice for AR practitioners
- ITR is the key end-user focussed firm in Japan
- Constellation, being well versed in SocMed and communications generally, enjoys a SOV much larger than its size.
- AR pros should definitely place the duo on their briefing list, if they haven’t done so already -but with different and specific objectives in mind.