More Forrester departures as Rob Koplowitz waves goodbye

On his final blog post, Rob Koplowitz has joined John RakowskiScott Santucci, Stefan Ried and “rock star’ analyst Josh Bernoff in leaving Forrester Research. The #2 analyst firm, which remarkably lost $90 million in market capitalisation earlier this year, announced 50 redundancies, including two analysts. The fact that we are at over double that number of analyst departures already suggests that this might be a modest inflection point where some folk are having conversations about the future. In short, folk working with Forrester need to me making sure that they have more than one point of contact at the firm, and know how they would stay in touch with folk if they left.

In a comment today, Rob wrote to me that “I left under the best circumstances to pursue an opportunity I was passionate about. I’d recommend Forrester to potential clients or employees in a heartbeat.”  Koplowitz will be joining a vendor and that’s a particular challenge for the AR team there. For them, I recommend Peggy O’Neil’s article. Peggy used to run AR worldwide for Oracle and knows this scenario well.

Forrester loses $90m & Josh Bernoff

Forrester Research’s management sounded confident when they announced the firm’s quarterly results this week, but shareholders are not. The firm’s earnings call said that 50 jobs have been cut to rebalance the business. Forrester Research’s management sounded confident when they announced the firm’s quarterly results this week, but shareholders are not. The firm’s earnings call said that 50 jobs have been cut to rebalance the business. On the call, just two analysts were announced to have agreed to leave, ensuring minimal impact on research. Nevertheless, Scott SantucciStefan Ried and “rock star’ analyst Josh Bernoff have announced their departures [and on February 19th, Rob Koplowitz also left]. Forrester is actively hiring and, by the end of the financial year, hopes to have 7% more staff.

The firm’s stock price, however, is not so buoyant. Over just ten weeks, the price fell from $41.15 (12 November) to $36.34 (on January 21), reducing the firm’s market capitalization by more than $90 million. Forrester closed at $37.61 yesterday, still $65 million down.

According to our research last summer, the change is not caused by the content of Forrester’s research. Outside Asia-Pacific, where the firm is weakest, it remains one of the top three companies in every segment of our 2014 analyst firm awards.

Forrester’s readership is changing, however. Kea Company’s 2014 Analyst Value Survey showed that Forrester’s hold on its potential audience is shrinking, especially in the freemium readership that is transforming the analyst industry. In 2014, Forrester was used by 65% of survey participants whose companies subscribed to analyst firms. That’s an impressively large number, despite being down on the 2013 percentage. Importantly, just 41% of those without corporate subscriptions use Forrester. Forrester’s audience is (like many of the top ten analyst houses) too small in the freemium segment, which is now the majority of the audience for analyst research. Of course, 41% isn’t a terrible percentage: Forrester’s the second largest analyst house, and it has a significant audience. That said, any analyst firm should look at the ratio between its freemium audience and the premium (subscription-paying) clientele. Some firms can get more freemium readers per client than Forrester does (such as IDC).

In 2014, the firm did more work but made less money. The financial year results announced this week, Forrester’s revenues went up $14.4 million, but net income was $2 million lower. That’s a turn off for folk like Claus Moller, the Danish activist shareholder whose firm recently cut part of its substantial holdings in Forrester. Moller’s stake fell from 6% to 5% so I don’t think explains a 9% fall in the stock price (if it did, then he should sell the other 5% quickly). Moller’s sale was announced on January 21st, and the price trended up after that. Moller’s smaller stake shows that he does not think there’s a better growth potential there than elsewhere. Indeed, Forrester recently gave a pile of options to the CMO. They have a pretty modest strike price of $38.88.

None of this is good news for Forrester’s shareholders, customers or for the companies that it researches. Forrester has a simple solution: stop losing share of voice, and win a bigger audience. Freemium readership does not reduce sales: it boosts Forrester’s brand and credibility, helping more professionals to understand what the firm has to offer. Forrester knows how to do that: its webinars and social media work shows that the company knows how to move some of the insights that its analysts have into the firm’s operations and sales enablement. Forrester’s challenges are, therefore, to grow both the premium clientele and the freemium audience, and to grow revenues faster than costs. It didn’t do that last year, and I think it should do this year.

For a few suggestions for Forrester’s next steps, we recommend David Taylor’s excellent webinar on sales enablement.


The top ten analyst firms for business growth

One of the most interesting discoveries of the Analyst Value Survey was that some demand-side firms have a very different idea from supply-side firms about which analyst firms are driving business growth. We asked users of analyst services to name the five firms that most drove business growth, Generally there was agreement about the top ten.

  1. afoty14-TOP5GROWTH600x400Gartner was named as the top firm for business growth by the most people, and over 65% of them were on the supply side. Interestingly, more than three-quarters of them used Forrester and two-thirds used IDC.
  2. Forrester was named as the top firm by fewer people, but only 26% of them were on the supply side. It seems that these two top firms have rather different value propositions. As we noted last month, Gartner is more highly rated by the supply-side than by the demand-side.
  3. IDC has in a more balanced position that you might expect. 42% of those who said that IDC was top for business growth were on the supply side. It has an especially strong position in the services segment.
  4. HfS Research, which came in the top three firm on many of our analyst firm awards, came in fourth place for business growth. This shows the limitations of its freemium strategy; while the firm’s research is valued, those who are reading for free do not feel that HfS is influencing purchasing decisions.
  5. Everest Group, another firm which is somewhat undervalued by the supply side, made it into the top five. It scored especially strongly with folk in the North American services segment.
  6. afoty14-TOP10GROWTH600x400NelsonHall scored strongly in Europe and Asia, but it seems that most of the firm’s notable readership in North America does not feel the firm is driving business growth there.
  7. Frost & Sullivan is a firm that many industry insiders, especially those outside North America, will be surprised to see in seventh place. More than 70% of those who felt the firm was driving business growth are on the supply side.
  8. Digital Clarity Group is developing a notable niche leadership in the North American software market. It could make much more of the impact available through community services and reprint rights.
  9. Greyhound Research seems to be driving results in India’s services and software markets. It will be interesting to see if it can consolidate its leadership
  10. ISG rounds out the top ten with one of the most uneven scores: 90% of those who said it was driving business growth are on the supply side. It’s clearly a firm that brings home the bacon for clients.


Zilch joins PAC from Experton

One of Europe’s best-known analysts will switch firms next month. Experton Group director and lead advisor Andreas Zilch has joined PAC, the services and software firm which CXP Group recently bought. As a cloud computing specialist, Zilch as advised many of Europe’s biggest businesses and has been the key watcher of Fujitsu.

Zilch is a star analyst by any count. He joined IDC in 1991, leaving after several years to lead consulting in Germany for META Group. After Gartner brought META,  Zilch was part of the team that set up Meton, the business which was forced by Gartner’s legal threats to become Experton.  He also worked with TechConsult.

It is a surprising move for Zilch, who was a member of Experton’s executive board and presumably one of its major shareholders, to leave for another firm. Amongst other strengths, Zilch pointed to PAC’s international orientation and solid business model. This move should help Zilch’s insight to reach beyond the German-speaking markets.

Announcing the ten top telecoms analyst firms

Over 200 telecoms and networking professionals told the Analyst Value Survey that Gartner, IDC and Forrester were the three most valuable analyst firms. That’s a great result for IDC, but the real surprise is the strong performance of services firms in the telecoms top ten of our analyst firm awards, and the fall of telecoms specialists like Ovum and the 451 team that was previously Yankee Group.

afoty14-TOP5TELECOMS&NETWORKING600x400Gartner has a huge impact on the telecoms and networking industry. Its signature research formats are high valued. The Magic Quadrant is the most widely-cited business research series, differing massively from academic or financial research because of its method and broad reach.
IDC‘s unequalled depth, in developing market share data, is massively valued by operators, vendors and solution providers.
Forrester Research’s role-based research and community services allow clients to better align telecoms with the business agenda.
HfS Research is the lead freemium player. As research from Freeform Dynamics has shown, free-to-view research is now the most widespread form of analyst influence.
ISG has risen in its impact in the telecoms industry massively because telecoms is the number one market for outsourcing.

afoty14-TOP10TELECOMS&NETWORKING600x400CXP Group, which owns PAC and BARC, now leads the dynamic French-language market for analyst research. It has been on the leading edge of understanding the network deployment of applications.
Everest Group‘s research into global telecoms services trends has become a go-to resource for sourcing managers.
Greyhound Research has used its base in India to give outstanding research into the growth of telecoms firms like Huawei into Asia’s booming IT services market.
Ovum, for a long time the dealing telecoms specialist, is still a top tier influencer but clearly faces competition from firms that see telecoms as a vertical market rather than an industry.
Current Analysis, which was acquired last year, rounds out the top ten with its punchy, rapid research into market developments.