Downturns are always interesting times for the analyst industry. I’ve lived through a couple but always as staff. Layoffs always happen, as we have seen with Gartner and Forrester culling 2-3% of their respective global research headcount over the last month. Australia hasn't been immune. Management changes will occur as well as the usual chop and change of resources between companies. Further consolidation is inevitable.  

What makes this recession interesting is that it is the first since 2005 when the last big spike in new analyst firms (like us) popped up on the radar. Times have been pretty good since then. However as a business owner I am glad that we started almost four years ago and not in the last 12-months. 

Since those times we have made it abundantly clear to most organisations we talk to that a stretch end-game for us is IPO. We want to be the recognised Australian analyst brand. To get there our challenges are not just internal because the industry itself has changed dramatically in the eyes of the customer and analyst relations alike. 

It is not just new firms that have popped up during this time but also new models. Some of them still confuse me and seem in conflict with the market research we do to align ourselves to the market. The major segments I see in the market today include:

• Traditional firms staying traditional: those companies continuing to pursue balanced advisory, consultative, and syndication activities within a specific geography.
• Traditional firms going transactional: customers tell us that the global brands have made a significant shift towards transactional presences (high volume low margin) than interactional in many secondary geographies
• Portal businesses emerging: aggregation portals that "give away" content in exchange for something (usually advertising) are feeding off this business model. 
• Co-brands and resellers: analyst firms that write and publish their own research but also pursue transactional sales of other company’s research.  
  

The key differences in the different models today are the nature of the annuity business, and it is on this axis that the next leaders will rise. While building brands, finding staff, and conducting meaningful research is difficult, building annuity clients and sales is the lynch-pin that is easily glossed over in good economic times when all sorts of revenue streams are open and new models are created. But in the shake-out of a recession it is the tried, tested and trusted models that prevail and remain to drive the next upswing.  

I saw a story on Lighthouse last year about "29% of CIOs not trusting Googling for research..." and I have to agree. I mean I really have to agree because that premise is fundamental to the success of our business and pretty well sums up our target market. 30% of Australia’s and its near shore markets large enterprises will do us just fine. In Australia alone that is close to 2,000 large businesses and represents more than any one company is successfully touching in this part of the world in the 30 years since the inception of ICT analysts on the planet. 

My point is that there are a lot of new business models within this industry and a lot of new companies; but that’s ok. From our strategic position we see very little competition on a month-to-month basis. I put that down to a change of focus in the industry which we have not pursued. The value of this business as a business (for investors who ultimately measure and value a company’s strength) is the credibility of our annuity business; an annuity business that can be valued and one that we strive to regularly reinforce with our customers through interaction.

Neither transactional report sales, nor portal aggregation, nor reselling are the business we are in. Nor are they the business models that we believe will get us to IPO; whenever that may be.