451 Doodle Went to Town

by Dave Michels

This week the Yankee Group Research was acquired by 451 group. It’s another indication of how the analyst business is changing.

Yankee’s history involves several owners. The firm was founded in 1970 by Howard Anderson, and then sold to Primark in 1996 for $34 million. In 2000 it was sold again to Reuters for $72.5 million. In 2004 Reuters sold it to Decision Matrix Group (DMG) for around $30 million. DMG had planned to merge it with its META Group. Gartner bought META, so DMG then sold Yankee to Alta Communications in 2005 for about $33 million. Yesterday, The 451 Group acquired Yankee for $1 (unconfirmed).

Yes, Alta killed Yankee. Alta placed Emily Green in charge, she had experience with Forrester, and she undertook an aggressive plan to transform Yankee into a smaller and nimbler Forrester Research. The problem with aggressive strategies is sometimes they fail. Yankee wasn’t able to penetrate enterprise accounts like Forrester or Gartner. Zeus Kerravala, a Senior VP at the time, said there was a notable shift in focus from ongoing client relationships toward more generic quantity reports.

Terry Waters replaced Green in 2010 with the direction to find a buyer for the business. Yankee wasn’t easy to sell with most of its star analysts gone and few recurring customers. The business went into the red in 2012. Reportedly, the 451 group agreed to acquire the firm for $1 and assume approximately $700k in debt. The 451 Group intends to keep Yankee as a separate subsidiary as it did with its previous acquisitions of the Uptime Institute and Change Wave. It’s a nice theory, but doesn’t explain how 451 intends to reverse Yankee’s losses.

The story of Yankee is just a small illustration of how technology analysis is changing.

Originally, analysis or “advisory” firms targeted computer hardware vendors with rich competitive information. Gideon Gartner came up with the idea of targeting enterprises with similar content. He introduced continuous open ended research for clients as opposed to fixed consulting efforts from vendors such as McKinsey and Booz Allen. Gartner’s approach offered scalability and efficiencies. Gartner than expanded by leveraging its research for additional constituencies such as investors and vendors. Even better, new clients contributed to Gartner’s visibility. The data became richer and more valuable as the business grew.

Gartner today, like Avaya, is a Silver Lake company. Its impact and influence over vendors and enterprises remains significant – particularly via its Magic Quadrant report (the firm published over 150 MQ reports last year). Gartner’s impact is so significant that some believe the firm sucks the life out of the enterprise analysis market.

Gartner isn’t the only giant – along with IDC and Ovum these firms are industry stalwarts, and Yankee found that the club isn’t easy to crash. Instead other analyst firms are specializing with different approaches and new markets. Consider the following major trends that are creating new opportunities.

  • Categories are Resisting Definition: It doesn’t matter where you look, but things just don’t fit into categories any more. Everything is becoming a big blur such as consumer vs. enterprise; software, hardware, and services vendors; voice and data, desktops and mobiles, and so on. It is more than technical trends – consider the merging roles of analyst, consultant, and media. Today, a UC expert must be knowledgeable in APIs, VoIP, messaging, video, standards, virtualization, SIP, DECT, Wi-Fi, contracts, contact center, and so on.
  • The IT Decision Maker is Different: We are approaching a world where everyone is an IT decision maker. Different buyers require different types of information and have different questions and paths to implementation. IT decision makers include CIOs, CMOs, CEOs, IT Directors, other directors, other managers, Joe, and you.
  • Social Media: As categories clash and decision makers change, confusion ensues. People turn to online social communities for answers. Experts don’t need Yellow Pages ads in every city, they need an online voice on Twitter, blogs, and various social communities.

There is always a market for experts, and the experts are analysts in various firms and niches.  For example, Aberdeen and Nemertes focus on end user surveys. Frost specializes on global coverage. Current Analysis focuses on competitive differentiators. MZA specializes on market share. Opus Research on speech technologies. And so on. Of course there is overlap among these firms.

Perhaps most interesting, and dearest to my heart, is the rise of independent analysts. Thanks to an ever connected society via blogs, Twitter, and personal relationships; independent analysts are now viably able to share insights and opinions with multiple constituencies. There is always demand for experts. Also new are loose confederations of like-minded, big thinkers such as UCStrategies, Altimeter, and Constellation Research.

Special thanks to Zeus Kerravala of ZK Research and Dan Miller of Opus Research for filling in some holes for me on this post.