With IT budgets tighter than ever, CIOs and IT directors need to assess how they get the best from advisory services.
IT directors often use big-name advisory services to rubber-stamp their IT strategies. They know that an executive board will often look favourably on the advice of a well-known analyst house.
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Even in the recession, CIOs and IT directors consider advisory services important. Gartner, which has 75% of the CIO market, is performing well, losing revenues where expected, but growing the number of enterprise clients, says analyst relations site SageCircle. In the third quarter of last year, Gartner reported revenue of $187m from research for IT clients - down only 4%.
"Even in the current economic climate, due to the complexities companies face in running IT, CIOs are still looking for advice," says Chris Lafond, executive vice president and chief financial officer at Gartner worldwide financial operations.
But advisory services are not cheap. Global 2000 businesses spend on average $300,000-per-year on analyst subscriptions, according to analyst relations strategy firm The Knowledge Capital Group (KCG).
IT directors, though, say it's worth the money.
Former CIO Colin Beveridge provides mentoring and interim CIO services for businesses. He says: "No CIO or IT director can possibly have enough time to keep fully abreast of a dynamic industry."
Cancellation of analyst services is a false economy, he says. It simply displaces the cost-effective subscription funds towards less effective, self-service efforts, which can damage the business.
Ben Booth, global chief technology officer at research and polling organisation Ipsos Mori, says his relationship with Gartner has paid for itself.
He says: "Gartner helps us with our hosting renewal and we have saved about £400k. We expect similar results with telecoms, so it is good value."
However Booth says: "I would not use Gartner to develop strategy, as there are lots of sources for this (including my own experience). I would use Gartner to support a specific strategy decision, which I and my team have made independently."
But some organisations, like local government, do benefit from analyst firms' strategic advice.
Peter Gallon, vice president at local government IT directors' group Socitm and head of ICT at Northumberland County Council, says: "I think analysts continue to play an important role in helping set the architectural framework. For example, their input into developing key infrastructure agenda such as Enterprise Architecture is very beneficial.
"Under the current economic climate, it is difficult for local government to sustain such capacity. We would also look to our professional organisations such as Socitm or the BCS to help develop thought leadership in such areas."
With services like LinkedIn and user communities able to keep IT directors and CIOs better informed, some IT directors feel analysts like Gartner will have to work harder to prove their worth.
Independent CIO membership group, CIO Connect, is attempting to help IT directors use analysts more effectively. CIO Connect has teamed up with KCG to advise members on the best individual analysts to engage with for each technology initiative. "It's hard to identify the experts," says Nick Kirkland, chief executive officer at CIO-Connect.
Steve England, president of KCG, believes CIOs and IT directors will need to make better use of the analyst services they buy to get better value for money, at a time when budgets are coming under pressure. "Most people do not understand how to work proactively with an analyst; 90% of CIOs spend too much time reading research. They do not spend enough time on one-on-one consultations."
IT analysts are trying to add value by becoming hubs for CIO communities. Charles Rutstein, chief operating officer at Forrester Research, says, “Online communities provide a great way for us to facilitate customers helping each other and help us find smart people we can talk to.”
But Jos Creese, head of IT at Hampshire County Council, says: "As long as the big analysts can provide robust, clear and objective insight, they will have a place. However, they will need to consider their prices in a tighter climate, and also avoid affiliations that could draw in income but dilute their objectivity. A focus on real business value from IT rather than just technology trends will be increasingly important."
Gartner broadens its offering
Analyst house Gartner is fast cornering the market for advice to senior IT professionals. It has acquired two smaller firms in the last month. Its acquisition of Burton Group, will allow Gartner to widen its audience to IT managers and operational IT staff. Another acquisition, AMR Research, adds a supply chain service to Garters, an area of research, not covered by Gartner's existing services.
Chris Lafond is executive vice president and chief financial officer at Gartner Worldwide. He says that in the past Gartner has targeted the top 10% of the IT department, providing strategic advice to CIOs. "With Burton, we now have products to service the whole IT organisation. We offer an executive programme [for CIOs], IT leaders for the next level down, and I expect we will provide a separate subscription for Burton Group."
This will mean Gartner will sell practical and operational advice and research to front-line IT managers and IT operations staff.