451 Doodle Went to Town

January 04, 2013 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.

By Dave Michels

Dave is an independent analyst and founder of TalkingPointz which is focused on enterprise communications. In addition to this (free and paid) content on TalkingPointz, he contributes to industry sites, can be found at major industry events, and provides advisory services to vendors and financial analysts.

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Discussion

Duncan Chapple January 4, 2013

Thanks for linking to my article. We have a lot of the same analysis, but I’m afraid you’ve taken one error from my report. Howard Anderson confirmed to me that while he initially got $34m for the firm, the final payment was $51m. I asked Yankee and 451 about the $1 and $700k figures you give: they say they are mistaken.

Reply
1. Dave Michels January 4, 2013
  
  Thanks for the correction. The $1/$700k debt does seem like a steal. I’ve heard it as accurate, but I added “unconfirmed” above. I wonder why 451 won’t confirm a figure?
  
  Reply
  1. Duncan Chapple January 5, 2013
    
    451 can’t confirm the figure, because they and the other parties, who knows the actual amount, have signed a non-disclosure agreement. But I’m sure they were not lying when they told me that those were not the figures. Indeed, if the deal is to assume Yankee’s current debt, I could easily imagine that even their CFO might know exactly what Yankee’s liabilities were on the day until a few weeks have passed.
    
    Reply
    1. Dave Michels January 8, 2013
      
      Over the weekend I got to see copies of the Letter of Intent and associated financials. They look legit, but I can’t verity authenticity. The LoI was from Lhasa Partners, the sole shareholder of 451, and addressed to Terry Waters at Yankee Group Research dated 12/21/12. It stated a purchase price of $1 “plus assumption of the Assumed Liabilities.”
      
      The liabilities totaled 731,635.77, but that appeared to include mixed currencies so actually about $750k in US dollars.
      
      Reply
Arthur Rosenberg January 6, 2013

Interesting history! (I knew Gideon Gartner when we both worked for System Development Corporation, a software development spinoff from the Rand Corporation in the early days of computers.)

What I think is now becoming the real game changer for computer and communications technology is the shift to hosted/managed “cloud” services, rather than CPE, for online business applications that are mobile and UC-enabled. That means that CEBP applications will start showing up through vertical market application developers to support a variety of mobile user and desktop interfaces (and OSs) that wireless service providers will be offering to all types of BYOD users (consumers and business users) through a variety of “app stores”

So, the metrics for Gartner’s Magic Quadrants will obviously shift to the final packaging (functionality, integrations, manageability, security, reliability) of mobile application services (both business and communication apps) that are software based, constantly changing, and not developed or supported by in-house IT. The carriers have already started offering 4G wireless connectivity to all end users, including business-oriented access to UC-enabled applications.

So, end user “hardware” will come into play primarily with mobile endpoint devices and all end users will be getting them primarily as consumers through their wireless carriers, in addition to any specialized mobile devices for non-BYOD work needs. That doesn’t mean wired desktop endpoints are going away overnight, but many will be easily displaced by mobile tablets.

Reply
Ludovic Leforestier January 9, 2013

Good post and history.

What it doesn’t say though is what are they selling exactly and to whom.

And what I’m wondering is how much influence they both have with technology and services buyers?

Reply