Opinion: Other consultancies might be seeking acquisitions this year after Meta Group is devoured by larger rival.
While you were away for your holiday vacation, Meta Group was acquired by Gartner. Sure, it wasnt Oracle-PeopleSoft, but it was a significant acquisition that could end up touching more IT decisions than some of the more vaunted industry megamergers.
Gartner sits atop the pile of analyst/market research companies made up of the likes of IDC, Forrester Research, Aberdeen Group and others. Its the go-to group when IT pros have doubts about a vendor or a deployment strategy. A ".5" probability from Gartner rather than a ".8" probability has no doubt changed many IT decisions over the years.
On the whole, IT people I talk to are pleased with the services they receive from Gartner. Many of them look forward to Gartners annual Symposium/ITxpo in Orlando, Fla., where they get their fill of PowerPoint presentations, Venn diagrams, and charts showing whos in and whos out of the coveted "Magic Quadrant."
In 2003, Gartner generated $858 million in revenue, dwarfing Metas $122 million. Going up against its giant Stamford, Conn., neighbor, Meta played the part of feisty upstart. As recently as the spring of 2003, Meta launched a major marketing campaign directed against Gartner, under the headline: "Meta vs. Mega."
Its rare for consultancies to directly target each other in that way, and it was indicative of a shrinking demand for their services and the apparent belief on the part of Meta that it would have to increase its market share at Gartners expense, rather than by attracting new clients.
Click here to read about Gartners take on Linux in the enterprise.
At that time, companies were cutting back on the number of consultants they were using, and theres no sign that theyll start adding them back any time soon. Meta had been seeking a buyer since last summer, and the fact that its acquirer turned out to be its hometown rival and nemesis can be seen only as a surrender. Gartner will pay approximately $162 million for Meta.
Meta was not the first significant IT market research company to disappear in recent memory. Forrester acquired Giga Information Group a couple of years ago, in the midst of the dot-com bust. All the major analyst companies had layoffs during that time and deservedly so if you consider that many of them were driving the dot-com hysteria, and few of them predicted the depth and duration of the subsequent bust.
Gartner has acquired 29 companies since 1993, but until the Meta deal, none since August 2002. With IT having emerged from the nuclear winter of 2001 to 2003, one might have thought it was time for more analyst companies, not fewer. I guess not. The Motley Fool reports that consolidation is the order of the day in consulting and suggests that Forrester and JupiterResearch also could be active on the acquisitions front this year.
With both companies sharing the same hometown, presumably, Meta analysts who work in the Stamford area wont have to relocate. Press releases from both companies lauded the complementariness of the companies, as one might expect.
Despite synergies, the loss of Meta as an independent company means there is less choice among IT analysis companies. Thats not such a good thing for IT professionals. While there are still choices, further consolidation looms, threatening to bring with it less competition and less divergence of viewpoint. Because the ability to compare perspectives in sorting out the truth is critical, it also means there is less value in the work of the remaining consulting companies.
Out and about
The IT consulting arena is not the only one thats seeing rampant consolidation. Jim Beam Brands signed on with HP Services to "upgrade its e-business infrastructure to support newly merged entities as well as to cater to any potential future mergers or acquisitions," officials said. HP will deploy Microsofts .Net technologies at Beam, which was one in a flurry of deals announced at years end by HP Services, giving the HP unit a 13 percent increase in bookings year over year.
Stan Gibson can be reached at firstname.lastname@example.org.
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