What might our industry look like in 10 years?

The Art of Corporate and Industry Reinvention

In the month when we launch our industry trends for the year ahead (check the website next week) I thought it appropriate to take a look at our little part of the industry and one possible sceanrio for what we may feasibly look like in the next 10-years.

Back in June I wrote about Gartner's exit from the Australian ICT consulting environment. To save you re-reading the blog, the basic premise was that demand (what the customer was willing to pay) was not the reason. It was merely an inadequate depth of financial relationship with its Australian customers that alluded the Connecticut-based advisory firm. Of course the local dichotomy to that was the perceived lack of relationship heaped upon those same Australian clients.

For the last few years I have always held that Gartner isn't the real competition to the likes of IDC, Forrester, and Ovum ? and yes even us and the other 15 tech research companies in Australia (did I get the numbers right Len?). Now that's not to say that we don't pursue the same client-base with similar product and service. What I have meant is simply that Gartner has changed direction. They have entered a new pond. But it hasn't been all on their own terms...

Whereas they used to compete against the likes of the above mentioned research companies they have now moved into a new sphere. It is the sphere of Booz Allan, KPMG, McKinsey, PWC and Deloitte whose high-level numbers I have aggregated below.

Company	Gartner	Booz	KPMG	PWC	Deloitte	McKinsey
Type	Public	Private	Co-op	Co-op	Co-op	Private
Total Revenues	1,060,321,000	3,700,000,000	5,280,000,000	22,000,000,000	20,000,000,000	-
Staff	7,000	17,000	105,000	149,000	135,000	-
Fortune 500 Clients	400	-	360	424	424	-

While at first they may seem like the minnow in this new competitive sphere, on closer inspection, the numbers start to stack-up. All that is missing is scale. But if scale is the only thing missing in the plan, then what about the hundreds of boutique ICT advisory firms that have sprung up all over the world over the past decade...

Eyeballing the Numbers

Gartner are as close to Booz as Forrester is to Gartner (~20%) and Forrester is currently considered Gartner's biggest competitive threat.
By stripping out the audit and tax revenue from PWC and Deloitte (let's call it 75%), each major company represents between USD$2B-USD$5B in revenue from pure business advisory.
As such Gartner is already 1/5th the size of its largest global rivals in revenue.
Of PWCs 149,000 people, 8,000 represent Partner level advisors.The percentage split between Gartner's "partner-level" analysts and support staff is similar.
Gartner has an enviable client share of the Fortune 500

The Future

The Deloittes and KPMG's are already moving "down" the stack with growing ICT published research capability to support their business advisory services. This will force Gartner to protect its highly successful Fortune 500 patch.
Gartner's business model will have to change for them to grow. They have to take one hand off ICT in order to seriously embrace a business advisory role.
They are at a minimum 10,000 client support staff short of their nearest rival and cash and access to funds under current model is limited.
The bi-furcated global analyst market with 100's of boutiques operating right across the globe would suit a partner buy-out and co-operative expansion model for the monolith.
Such an approach would provide a dominant ICT business advisory firm to rival the Big 5 and provide local regions with 1) deep customer support and relationships based on locally owned partnerships in the "law firm" sense of the word 2) some brand, business and research control to the local partners ? basically the controls that forced so many independents out.
By "locally owned partnerships" I refer to a Partner ? Associate hierarchy as opposed to the start-up franchise models deployed through the 90's.
The bottom line is that despite Gene Hall's "blue sky" speeches growth potential for Gartner under the current model is limited.

Perhaps the icing on the cake is the opportunity to collectively achieve more for the industry than is possible alone. The largest global business advisory companies are well respected in their local regions, contribute significantly to charities and public life and most importantly for our industry provide structured career-paths for encouraging graduates through a fulfilling career mixed with deep skills and customer engagement.

See you next year...Harvey