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Posts tagged ‘Constellation Research’

Same same, but different: Are Gartner and Forrester really in the same business any more?

The IT analyst business used to be pretty easy to define – we differentiated firms that influenced end-user organisations from those that worked for IT vendors, then segmented them based on technology depth, vertical markets, research offerings, geography etc. From an analyst relations perspective, we could choose how to deal with them, depending on our own objectives.

We’ve always seen analyst firms buying up others to fill out gaps in their offerings and/or broaden their reach. But after Forrester bought Giga Group and Gartner bought Meta Group several years ago, they remained the only two firms of any substance in the segment that my colleagues at Knowledge Capital Group call “Deal Makers & Breakers” – the firms which are most influential over end-user purchasing.

Then came “disruption”

Some analyst firms repositioned themselves to focus on new market opportunities, some stayed the course on their traditional IT markets while also keeping a weather eye out, and of course new players emerged targeting users and/or vendors.

It’s now four years that Forrester chairman & CEO George Colony has been talking about the “Age of the Customer” and repositioning the firm’s research away from the traditional IT organisation towards marketing and line-of-business executives, focusing on customer experience and how to use technology to deliver that.

Forrester was trying to differentiate itself from Gartner and get a head-start in tapping into the new research goldmine. Meanwhile, Gartner pretty much stuck to its guns, continuing to focus on the IT organisation (although it also has digital marketing services).

Regardless of this, Gartner and Forrester are pretty much in the same business. Their service offerings are not dissimilar, their sales models share many of the same characteristics, and their target customers have the same addresses, if not always the same business titles.

But is this really true any more?

For the past five years, I’ve been analysing the financial performances of these two IT research leaders, and a few points have always stuck out:

  • Gartner has consistently talked about its business as a business, enumerated sales metrics, how to increase sales productivity and drive out costs, while at the same time forecasting high single-digit or low double-digit revenue growth numbers – and delivered against them
  • Forrester has consistently talked about reinventing and realigning its research, reworking its sales model and changing its employee profile, but generally providing low single-digit growth forecasts – and delivered against them

When you listen to the annual earnings calls – or read the transcripts – for these firms, another thing stands out. The way that Gartner talks about business is pretty consistent with its balance sheet and the other numbers it discloses, while Forrester’s soundtrack is a little more aspirational, but not always backed up by the numbers.

In short, there are contradictions in the way that Forrester talks about its business and the way it delivers its numbers. Which is what makes me wonder about whether Forrester and Gartner are really in the same game any more…

In previous years, I’ve broken down and compared their results by attribute, but what I’d like to highlight now is the basic differences and the points that I have trouble correlating. I have a spreadsheet with lots of data comparisons, but I’m assuming that not everyone is as fascinated with this detail as I am, so I’ll keep it high-level. In any case, I’m not a stock market analyst, so the annual comparisons are more relevant from a business perspective than quarterly.

Let’s look at some points of difference:

Growth

  • Gartner’s annual revenue in 2016 grew 13% to $US2.445 billion, just a tad under its forecast from 12 months earlier, while Forrester posted a 4% revenue growth, right in the middle of its forecast
  • Gartner’s net income grew 11% to $US196 million, while Forrester’s jumped 47% to $US17.7 million, but that is still significantly lower than its most recent high of $US26 million in FY2012
  • Gartner’s revenue has grown at a CAGR of 11.1% since 2013 and 11.3% since 2010, while Forrester’s has grown 3.1% since 2013 and a slightly better 4.5% since 2010.
  • Gartner has generally forecast higher revenue numbers and hit them, while Forrester has generally been conservative, but has been variable in delivery. If Gartner analysts were as accurate as their finance department, they would be legends….

Business mix

Gartner’s research revenue – coming mostly from the IT space – has continued to grow as a percentage of its total – 75% in 2016, compared with 67% in 2010, while Forrester’s has remained pretty consistent at about 66%.

  • Gartner’s research revenue grew just under 16% in 2016, and 14% in Q4, while its five-year CAGR is more than 13%
  • Forrester’s research revenue grew just over 2% in 2016, and 1% in Q4, while its five-year CAGR is about 4.5%

While growing its consulting business, Gartner hasn’t achieved the same results as for its syndicated research. Its events business grew by a similar number – just under 7% – but the firm did highlight the fact that some of its Symposium events were selling out, so new events are likely.

Forrester doesn’t break down its consulting and events numbers, but includes a single line item called “advisory” which grew just over 7% in 2016, and just under 7% in Q4, and from the soundtrack, it seemed that events was the stronger performer.

Sales

It’s no secret that Gartner invests heavily in its salesforce and in sales training, but it doesn’t tolerate under-performers. It claims to have fine-tuned hiring to minimise wastage, and continues to focus on sales productivity.

  • Average spend per account in 2016 increased 10% to $US174,000, while sales productivity increased 7% on a four-quarter rolling average
  • Gartner’s salesforce is forecast to increase 13% in 2017

Forrester brought on Michael Morhardt about four years ago as Chief Sales Officer, and has continued to refine its sales model since then, with varying degrees of success. Under the latest structure:

  • Forrester has moved to a “premier” account model for its largest customers, with three levels of engagement – a client executive, a solutions partner and a client success manager. It plans to transition to this model by end of the year in the US and Asia/Pacific, with Europe about 75% complete by then
  • Other accounts will be managed under a “core” program driven by an inside sales organisation in Nashville, with its 50+ headcount doubling in 2018. It is not clear how that will work for non-US clients

The Outlook

Gartner is once again bullish about the next year, forecasting a revenue growth of 10% to 12%, with the highest forecasts in research. That doesn’t take into account its proposed acquisition of Corporate Executive Board (more on that below) which has the potential to add about $US1 billion to its top line once it’s finalised in April.

Forrester is forecasting a revenue growth of -1% to 2% for 2017, which is its lowest outlook since a similar forecast for 2013.

The Inconsistencies

I hold no torch for Gartner, but it’s hard to poke holes in its numbers and its forecasts. Gartner consistently walks the talk and lives up to its forecasts, so if it says it’s going to do something, then you’re unlikely to see a different outcome.

Likewise, I have nothing against Forrester – I have some great mates who work there and I respect their research. But there some things that just don’t make sense:

  • Forrester’s largest research communities in 2016 were CIOs (8,232 members), application development & delivery (5,341) and analyst relations (4,744) – that’s vendor folks like me. Sure, some of these clients might be buying customer-oriented research, but it still looks like a traditional IT audience
  • While CSO Michael Morhardt and CFO Mike Doyle talked up the new sales model – and particularly the Nashville beta – their positivity doesn’t gibe with a revenue forecast that is low to negative. Normally, a new inside sales organisation would be expected to ramp quickly, driving up revenue

Inorganic Growth

Gartner has always been acquisitive, adding breadth to its portfolio. In 2015, it acquired Peer Insights, a sort-of-less-nasty TripAdvisor review site for IT user feedback, which extends its ability to get direct insight from users about IT vendor performance. Other acquisitions have extended its capabilities into technical or niche market segments, but the $US3 billion purchase of Corporate Executive Board – a peer networking platform for legal, financial and HR – pushes it out of IT and into the rest of the C-suite. That deal is expected to close in April.

Gartner wants to play across the business, and always has dozens of potential acquisitions on its radar.

Forrester wants to play that game too. On its earnings call, Forrester said that it had appointed Doug Kohen, formerly head of operations & strategy, to lead its acquisitions, with a goal of completing one deal per year.

Meanwhile, International Data Corporation is also cashed-up for acquisitions, with its new Chinese venture capital owners also placing some emphasis on inorganic growth.

So Where To Now?

Plus ca change, plus ces’t la meme chose.

Gartner remains the 800-pound gorilla, but extends its reach into other line of business segments with the CEB acquisition. According to my friends at KCG, Gartner accounted for just under 70% of end-user spending on analyst firm services in 2015, and most of that was in the IT space. With the addition of CEB and other acquisitions, that penetration will no doubt increase.

At the same time, Gartner, IDC and Forrester accounted for 56% of total analyst firm revenues, with hundreds of firms making up the balance.

More acquisitions means more consolidation in the Big Three, but there are only a handful of mid-sized firms, and they’re not all appealing. The most attractive are those outside of IT, who can add breadth to the offerings of these traditionally IT-focused firms.

From an AR perspective, the new Gartner is a lot more complex. AR pros are already wrestling with how Peer Insights will impact existing engagement programs, while at the same time figuring out how to deal with CEB, whose people act more like advisors than analysts. It seems that the bigger Gartner gets, the harder it is to navigate.

Forrester, meanwhile, seems to be under attack from some of the ATGs (Alternatives to Garter) which have narrower focus, particularly around digital marketing. These firms are driving revenue out of lines of business rather than IT and generally have been established by Gartner and Forrester alumni – Constellation Research and Altimeter are probably the most visible examples, but there are others, and while generally smaller, they are becoming more important.

In the medium to long term, the analyst firms we know and love won’t look anything like those we deal with today. That will change how customers buy from them, how they influence customers, and how vendors try to influence the analysts.

But in the short term, the analyst business remains pretty much the same. And for AR folks, the strategy remains the same – focus on the analysts who really influence your customers and prospects, but keep one eye open for influencers who have – and will – come out of left field. It’s probably also worthwhile giving serious consideration to the length of future analyst firm contract commitments.

As always, I’d love to hear your thoughts.

Cheers,

Dave

  • Thanks to Seeking Alpha for the earnings call transcripts, which compensate for my inadequate note-taking, and also to my mate Bill Hopkins at KCG, who did a stellar job of peer reviewing my draft.

Japan’s technology analyst business turns the corner

The technology analyst business in Japan – long constrained by weak economic & IT spending growth as well as some cultural challenges related to the use of external advisors – appears to be enjoying its most positive period in several years.

During a visit to Tokyo last month, I met with senior executives from the major global IT analyst firms, Gartner and IDC, as well as local advisory firm ITR, and found them all positive about business growth as the economy continues its recovery, although sentiment did vary from bullish to cautiously optimistic.

This is in stark contrast to previous visits over the past couple of decades, when the analyst business seemed weighed down by the weak performance of the Japanese economy and the challenges of adapting a “western” concept of external advisory to a culture much more reliant on peer networks & hierarchies.

Situation analysis

Japan is, was & always will be a complex technology market. It is huge – only last year surpassed as the second largest country market by a fast-growing China, according to IDC – and has a strong cohort of domestic technology vendors which have tended to dictate technology adoption much more than the large group of global multinationals which have operated in Japan for decades.

Native language support, the ability to innovate to meet the needs of the Japanese business & consumer markets, and tight relationships between local suppliers and end-user organisations have all shaped technology adoption & behaviour in Japan, and impacted on how analyst firms with “western” business models have engaged with Japanese clients, whether they are vendors or users.

Notwithstanding their enthusiastic reliance on technology, Japanese companies have not tended to see IT as strategic, or to elevate its role as a business driver or differentiator. According to analysts I spoke to recently and over previous years, no more than 20 to 30 per cent of Japanese enterprises employ a CIO, and very few of those have an IT background, coming mostly from HR and finance, so they tend to be heavily influenced by their suppliers, including the local SIs.

And while Japanese IT vendors have a voracious appetite for data – market size, market share & forecasts, not to mention any number of segmentations – Japanese market taxonomies don’t always map neatly to those defined by the global players such as IDC & Gartner, so this has represented a barrier to penetration of those accounts – in some cases requiring duplicate products to meet local & global requirements.

For their part, most analyst firms in Japan have maintained their investment in the market and are starting to see the dividends. IDC Japan is the oldest player, established in 1975, while Gartner ended its agency representation to establish a subsidiary in the late 1990s. That agency – ITR – has had information-sharing arrangements with Meta, Forrester and Constellation Research since, but has mostly relied on its local services to drive its business.

There are other local players, most of which are focused on providing local market share data to Japanese vendors. Some are technology specific, such as MIC Research, MM Research & Techno Systems Research while others are generic market research firms which cover technology segments along with other vertical markets, such as Fuji Chimera, Mitsubishi Research & Yano Research.

Forrester has maintained a sales office in Japan for many years, but has had no resident analysts in the country since the departure of its one representative earlier this year, while Frost & Sullivan has a good presence in some vertical markets, but a relatively low focus on IT.

But there are many signs that things are changing. Following is a snapshot of the state of play, based on my recent discussions.

Gartner Japan

Gartner has been investing steadily in the Japan business for the past few years with the addition of significant sales & support resources, evolving it from a sell-side market sizing organisation to one which now derives more than 60 per cent of its revenues from end-user organisations. According to Gartner’s Japan country head of research, Satoshi Yamanoi, the penetration of end-users remains quite small, particularly when compared with the US and EMEA, so the market opportunity is considerable.

Gartner now offers a complete portfolio of services in Japan, including research; consulting – which competes with likes of Boston Consulting & McKinsey; events – including Symposium/ITxpo & five summit events; and the EXP CIO peer networking program. The EXP program is approaching a critical mass, but Gartner hopes to increase this over the next couple of years.

Like other analyst firms in Japan, Gartner has very strong analyst retention, with many analysts having worked with the firm for several years. Headcount has remained stable at about 30 analysts for the past few years, but the research teams are now more tightly integrated with the global organisation, with the team leaders for infrastructure, applications & sourcing/IT management now reporting into global peers rather than working in isolation.

According to Yamanoi, Japanese CIOs and other executives are increasingly looking to understand global best practices for technology & business adoption and integration, so are more open to external guidance than previously. As well, other countries are looking to engage more closely with Japan, with Gartner working with government & business customers from China, India, Brazil & Japan.

IDC Japan

Similarly, IDC Japan has been enjoying some solid business growth without increasing its analyst headcount, which remains at about 35. Analyst retention rates are high, and according to managing director, Masato Takeuchi, it is difficult to recruit quality analysts due to the specific mix of skills required.

As in most other countries, IDC’s revenues are heavily dependent on quarterly market share trackers (which are often purchased at a corporate level by US & European vendors), but IDC Japan is also able to generate local language reports to meet the needs of Japanese vendors at both local & global levels.

The strong position of Japanese vendors in some technology segments means that IDC Japan is more actively involved in driving IDC’s global research agenda than most country offices. Several of the world’s leading printer vendors are Japanese, for example, while Japan’s strong manufacturing base across many segments means that IDC Japan is providing considerable input into defining the methodology around IDC’s research into the Internet of things (IoT).

According to Takeuchi, Japanese CIOs recognise that their role needs to change to one which acts more as a strategic advisor to the CEO, which opens up buy-side opportunities in some vertical markets, although IDC has not yet put significant focus on developing the Insights business in Japan. Retailers starting to explore the implementation of big data as they move to omni-channel is just one example of how IDC might leverage its global expertise for Japanese end-users.

ITR

Established 20 years ago, ITR has carved out a comfortable niche in the Japanese research & advisory market. With a comparatively small roster of 10 fulltime analysts plus about half a dozen contractors, it services about 300 clients, about one-quarter of which are end-user organisations and the balance are Japanese & multinational IT vendors.

ITR delivers buy-side advisory services to end-users through its subscription-based Strategic Partnership Service (SPS), plus undertakes short-term consulting engagements to help clients with vendor selection, IT strategy and IT architecture development. At the same time, it works the sell-side by producing market sizing reports for local vendors, primarily focusing on segments which aren’t addressed well by the bigger firms.

Originally a data-gathering partner for Gartner, ITR has a long history of partnering with global research firms, often translating selected content into Japanese to share with its local clients. Having also worked with Meta Group & Forrester, ITR is now aligned to US-based Constellation Research, which focuses largely on disruptive technologies.

According to ITR general manager, Hiroshi Yamamura, Japanese companies are slower to adopt disruptive technologies than their counterparts in the US, but there is a trend to technology purchasing moving away from the IT department to lines of business. Interest certainly seems to be growing – an ITR conference in May keynoted by Constellation founder & principal analyst R “Ray” Wang attracted 1,200 attendees.

Bottom line

There is growth at many levels in the Japanese analyst business. While revenues from existing services look healthy, there are new opportunities opening up as end-users more actively engage with external advisors, which means that the influence of Japanese analysts working for both local and global firms is increasing.

Japanese analysts rarely have influence outside of Japan, but they are significantly more influential in the domestic market than any foreign analysts will ever be. While IT spending growth remains moribund, Japan remains a huge market for multinational IT vendors, who would be well-advised to review & upgrade their level of engagement with analysts in the world’s third-largest market.

Cheers,

Dave

 

Constellation links with ITR to enter Japanese research market

Constellation Research has continued its foray into the APJ region with the signing of a research partnership with highly-regarded Japanese end-user advisory firm, ITR, which recently dissolved its long-standing association with Forrester Research.

Under the agreement, ITR will have access to Constellation’s full portfolio of research, which focuses on innovation & disruptive technologies, including digital marketing transformation, the future of work, consumerisation of IT, big data & analytics, and matrix commerce.

R Wang_0According to Constellation CEO & principal analyst, R “Ray” Wang, ITR will highlight Constellation’s Research in translated Japanese-language summaries for its monthly report ITR Review. From there,“we will work with them to provide the right package and access for the market,” he said.

Joint research projects are not out of the question, although Wang declined to provide details at this stage, saying only that they would “align with Constellation’s research themes.”

The choice of ITR as a Japanese partner is an interesting, but unsurprising choice.

Established in 1994, ITR has a long history of partnering with global research firms. Six months after incorporation, it entered into an agreement with Gartner, acting as its Japan research centre. This relationship lasted until December 1997, when the principals decided to revert to independent status, focused on research & consulting for the Japanese market.

A year later, ITR entered into a sales & research agreement with META Group, but this ended a few months after META was acquired by Gartner in December 2004 (perhaps not surprising). In June 2005, ITR developed a business relationship with Forrester, which largely revolved around translating & repackaging Forrester content for its local clients, as Forrester also had its own sales office in the country.

Initially, the Constellation arrangement looks quite similar, though it is likely that the relationship will evolve further.

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.

“ITR has a history of pioneering the IT research space.  We are honored to be their partner in Japan. Constellation’s focus on how to apply disruptive technologies to new business models and ITR’s sterling reputation, give clients an opportunity to collaborate on how new technologies will transform business models. We look forward to working with ITR to create new opportunities for companies in Japan to take advantage of disruptive technologies and business models,” said Wang in the firm’s press release.

The alliance is the latest in a series of forays outside Constellation’s US base, with the establishment of a market presence in India in 2012 and the appointment of an Australian analyst, Gavin Heaton, to lead the firm’s digital marketing transformation research only a few months ago. Wang said Constellation would continue to look for opportunities in the APJ region, as well as expanding into Latin America this year.

Like the previous moves, this announcement is not hugely significant in of itself. Rather, it is another indication of the subtle changes occurring in the analyst business, and plays to two key trends we’ve highlighted in previous posts – the huge opportunity that still exists in the APJ market, and the shift to focus on non-traditional IT buyers, as highlighted by Forrester’s push into APJ with its marketing & strategy programs.

One of Constellation’s key differentiators – which has both supporters and detractors – is its strong focus on engagement via social media, and it is unlikely that will translate well into a non-English market where social media usage patterns are starkly different. It will be interesting to watch how Constellation & ITR adapt these new business models in a mature IT market which still has a fairly conservative approach to analyst research.

Cheers,

Dave

Forrester eyes marketing & strategy opportunity in Asia/Pacific

As ICT vendors begin to focus more on the increasing proportion of enterprise technology spending which is not controlled by the CIO, Forrester Research has been quietly building out a program targeting the “new breed” of budget-owners in the Asia/Pacific region. Not surprisingly, China figures prominently.

While Forrester’s focus on delivering digital marketing & strategy services to line-of-business technology buyers in North America and Europe is well-known and now well-established, it has primarily concentrated on its mainstream technology services in APJ, particularly following the acquisition of Springboard Research in May 2011.

Although a long way behind Gartner, and despite only having a small number of buy-side analysts located in APJ, Forrester has been relatively successful in building up a client base among the IT departments of banks, retailers, government departments, FMCG suppliers and other large enterprises.

With the Springboard acquisition consolidated, Forrester is now eyeing the opportunity to tap into the wallets of large enterprises across the Asia/Pacific region that need help developing digital marketing strategies which will allow those organisations to more effectively sell their products & services to the world’s largest consumer markets.

Lead by a 12-year Forrester veteran, vice president Andrew Stockwell, the firm is well down the path of tailoring its services to meet the different needs of sales & marketing organisations in APJ. Stockwell relocated to Beijing in March 2012, a location which was chosen because “it’s the hardest place to find & recruit talent, it’s the hardest place to navigate the business, and it offers the biggest growth opportunity.”

Andrew-Stockwell Bio Picture - NEW“We did an analysis of our own research – what markets have the highest online population, the greatest levels of disposable income, the highest adoption of technology, the greatest opportunity for our clients? China came out number one in almost every one of these categories,” he said.

While cagey about revealing too much detail about headcount, Stockwell is actively recruiting local analysts, initially focusing on China and Australia – firstly to replace e-business analyst Steven Noble (no relation) who left to kick off his own tech start-up a few months ago, and potentially another Australian analyst. Singapore and India are also likely locations for marketing & strategy analysts, while Stockwell can also draw on existing resources in the US.

“We have been collecting data from consumers in APJ since 2007 – covering South Korea, Japan, China, Australia and India,” said Stockwell. “We have a good base of understanding about the customer, but the research we have been writing has been out of West, about the East, so we want to get a lot more localised about our strategy.”

While Stockwell doesn’t see Forrester replicating Ovum’s recent move to begin translating selected global research into Chinese, he does see local language capability as a key skill, with enquiries and consulting to be delivered by local staff to provide context around English research content.

“We can take a piece of research which has been written globally, spin it and add customer case studies and examples about what that means locally, and translate that piece if necessary,” he said.

“It goes back to who we are trying to serve – at the level we’re targeting, these people generally can read English .…  Our focus in the short term is not selling to the local Chinese companies, but on developing the content, the insight, the data, the analysis and the consulting that we can use to help the local representatives of multinational companies, or the clients who are sitting in North America or Europe or Australia or Singapore who don’t know how to get into China.”

From one perspective, Forrester’s strategy is not that different to that of firms such as Gartner and IDC, which initially built their China – and some other APJ country – operations to support the market entry strategies of multinational IT vendors. Those operations have since broadened significantly, with Gartner generating growing revenue from the IT organisations of Chinese companies and IDC now boasting a full complement of analysts across all of its Insights vertical market research practices.

That Forrester will gain initial success in China with companies with which it already does business in North America and Europe is undoubted – it has a global reputation, if a more limited global presence. The number of prospects is considerable, but ultimately Forrester will need to turn its attention to local companies in China and other country markets, a long-term objective which Stockwell acknowledged.

It will also have to deepen its local research, and that is much closer on the horizon. Forrester currently surveys about 10,000 consumers in the top 10 to 12 cities in China (the largest cities known as Tier 1 & 2), but Stockwell wants to extend that research to Tiers 3 through 6 – there are more than 160 cities in China with populations of more than one million, which is why companies selling to consumers are so eager to invest in China. There are also plans to extend the consumer research into other countries in the region, including Indonesia – which has the third-largest population in the region after China & India, and a growing middle class.

That these companies are also buying technology outside of the conventional IT frameworks is also without doubt. Non-IT buyers have become a significant focus for vendors such as IBM and SAP over the past couple of years, a period which has also seen the emergence of specialist analyst firms focused on the digital marketing space, such as Altimeter and Constellation, which recently appointed Gavin Heaton to lead digital marketing research from Australia.

“Companies are now seeking competitive advantage from new areas, which means they need a better understanding of the customer, to provide a better customer experience. So we want to focus on where the decisions are being made, where the budgets are being held,” said Stockwell.

“We have been saying for a long time that you don’t want to choose your technology, then define your objectives. You figure out the people you want to target, then determine your business objectives, then work out your strategy, and then decide on the technology.”

That all of the key current technology trends – cloud, big data, mobility & social media – play directly to the marketing & strategy space adds another layer of interest around this gradual shift away from IT departments being the owners of all technology spending, and how analyst firms are dealing with that shift.

It is still early days, but it will be interesting to watch & see if Forrester’s foray is successful. And just as interesting to see who else follows…. What do you think?

Cheers,

Dave

Constellation adds an Aussie analyst to lead digital marketing transformation

Constellation Research has added to its research portfolio with the appointment of an Australian digital media veteran to lead its coverage of digital marketing transformation, a new research theme which again shifts focus away from traditional IT purchasers and on to business buyers. And while it’s easy to look at this as a regional/local appointment, it’s really a global story.

Based in Sydney, Gavin Heaton was for five years the leader of social media engagement for SAP’s Premier Customer Network, a CEO peer group encompassing 300 of the software vendor’s most strategic global accounts – not surprisingly, few of these customers are located in the southern hemisphere.

Heaton has an extensive IT and marketing background, having worked with IBM Global Services and DMR Consulting, an Australian services firm acquired by Fujitsu, and then as director of interactive with marketing agency Creata, where he lead the global digital strategy for McDonalds.

He also walks the talk. Heaton is a prolific tweeter and blogger – his Servant Of Chaos blog is one of most-read business sites in Australia and a source of constantly-updated insights into what’s happening in social media, digital strategy and related business issues. He is also a passionate advocate of crowd-sourcing, micro-financing and other community-based, social media-enabled processes.

The appointment of a single analyst is not news in itself – this brings Constellation’s roster to just 13 – rather another data point in the ongoing discussion about the changing roles and focus of the analyst business. In the IIAR APJ Forum on new & emerging analyst firm business models a couple of weeks ago, Constellation founder Ray Wang talked about the firm’s focus away from traditional IT purchasers.

“We’re focused on business needs and business challenges – we’re not focused on technologies, or roles, or markets… we’re targeting people who are buying from the business side, not IT,” he said.

According to Constellation’s press release on the appointment of Heaton, his research will focus “on the changing role and expectations of CMOs, the fusion of marketing channels and change-driven marketing innovation, [and] expand Constellation’s ability to provide digital marketing research and advisory services to its early adopter clients worldwide.”

In a blog post discussing his new role, Heaton continued the theme of disruption in IT spending. “There is no doubt that we are seeing a dramatic shift in the role of marketing. Advertising is under pressure, social is changing our customer relationships and the consumerisation of IT is changing the way we do our work. There has never been so much change or opportunity…” he wrote.

From an AR perspective, this trend is a challenging one. While traditional analyst firms have fairly clearly focused on influencing purchasing through IT departments (or working directly with vendors), the business buyers are a little less obvious. Vendor salesforces don’t necessarily target business buyers – yes, some do, but many don’t – which makes aligning AR to sales a much tougher proposition.

Social media influence on enterprise IT buyers of any stripe is also still unresolved, but it’s a trend that AR pros cannot ignore. Once again, though, the level of focus that AR should apply to this channel is unresolved, and varies considerably depending on the product/solution portfolio.

It’s the speed of movement – not necessarily change – in this space that makes it both interesting and challenging. Current information and insight has more value than research published only a few months ago, but it doesn’t always make it more correct. (Though I must give Gavin Heaton a thumbs-up in that respect – his Twitter, LinkedIn and Servant of Chaos bios were all updated within hours – if not minutes – of this announcement).

It’s a bit lame not to come to a solid conclusion with a piece like this, but this is still an evolving space. AR pros need to watch, listen & learn and – picking up a few tips from the analysts driving the agenda here – engage outside the traditional IT purchasing silos.

And ask questions of these new firms and new analysts. And ask questions of your peers – that’s what these platforms are all about.

cheers,

Dave