Gartner Thrives, Forrester Falters: Why AR Can't Ignore the Numbers

Do historic stock performances point to a structural realignment in the IT Advisory space?

One performs like Wi-Fi that never drops. The other is like dial-up internet on a rainy day.

Quarter after quarter, Gartner has demonstrated metronome-like consistency in its revenue growth, client retention, product migration and margins. Quarter after quarter, Forrester struggles with revenues, client losses, staff reductions/turnover, and slower migration toward its more margin-rich, role-based solutions. The side-by-side comparison of the quarterly financial performance, and the resulting stock prices shows stunning variance. Should Analyst Relations professionals care about stock performance of the advisory firms they engage? Emphatically, YES, as it is a predictive signal for future investor behaviors, market sentiment, ability to invest in improving business capabilities, and as an indicator of future key employee retention.

Carter Lusher, former analyst, AR leader, and renowned industry watcher regularly publishes analyses comparing the quarterly earnings performance of Gartner and Forrester. He digs deeply into the financials, but more importantly into the conversations from the earnings calls themselves. He unearths trends associated with analyst headcount, sales staff, client retention, product migration/acceptance, and the impacts of financial performance on analyst influence (voice) in the market. Carter’s point of view is aligned to what AR professionals need to know about the business performance of each vendor so that analyst relations can prioritize their efforts.

His most recent analysis on Q2’2024 quarterly performance had keen observations on how Gartner and Forrester are headed in different directions in terms of influence on the tech market in general (both buyers and suppliers) and what it means for Analyst Relations teams battling for analyst attention. (You can find a link to Carter’s LinkedIn page as well as his Gartner/Forrester analysis at the end of this blog).

“Is Forrester’s voice still reaching or swaying our target buyer personas?”

“Life could not be better for Gartner.”

- Carter Lusher

Carter does not delve into the investment viability of IT or FORR and he is not recommending stocks. Neither am I. To be clear, I am in no way a qualified or licensed prognosticator of future stock performance and I don’t own any shares in any analyst/advisory firms. But I am all-pro at spotting Blinding Flashes of the Obvious.

In line with the conclusions Carter details in his analysis, I believe the historical earnings performance and related stock appreciation is an analog for the nearly insurmountable advantage Gartner has in brand loyalty, client interest, and in attracting/retaining talent compared to Forrester. I posit that the glow from its business performance and investment value makes Gartner a far safer bet for its clients and its employees — meaning both are likely to remain loyal and therefore remain tied to Gartner. The performance also indicates that Gartner is more capable and likely to attract critical new clients and high value talent.

With the growing divide between Gartner and Forrester’s performance, I believe that Gartner’s competitive stature is far less threatened by Forrester than it is by the dozens of nimble, fast, highly visible and vocal advisory firms swarming up from the bottom of the market.

Take a look below at historical share price for IT and FORR from their respective IPO dates (1993 for Gartner, 1996 for Forrester) until today. The gap in share performance is stunning.

Created with TradingView

Since its IPO in 1993, Gartner’s share prices have grown 14,549% and shown particularly strength from 2008 to 2024. Since its IPO in 1996, Forrester’s share price has increased just shy of 70%, but has been totally stagnant since 2000. Money invested in Gartner has dramatically grown. Money invested in Forrester has languished and the slow slog of migrating its clients to its role-based solutions, as noted by Carter, is a symptom of their plight. Or is it a cause?

(Aside: Gartner has been selling role-based solutions for over a decade. Well over 90% of its research revenues are driven by role-based offerings. Gartner has already “softened the beachhead” for role-based value propositions across IT and business leadership, as well as the higher subscription costs associated with them. Shouldn’t it be easier for Forrester as a follower?)

In MQ vernacular, buyers might debate the “vision” piece between the two, but the “ability to deliver” is a stunning gap in favor of Gartner. It is a divide that is reflected in brand value perceptions and, more importantly for AR, the potential for staff recruitment/retention. For AR, the question is …. will the economics of recruiting and retaining top talent in analyst, sales, and client support become too difficult for Forrester to overcome? Is Gartner’s advantage at the top-end, and the myriad options among new/emerging/rapidly growing firms at the low-end, going to narrow Forrester’s options?

Performance-based stock grants and employee stock purchase plans at both Gartner and Forrester could/should serve as powerful employee recruitment and retention incentives. But here, Forrester is at a massive disadvantage to Gartner. Vesting periods with big pops of equity growth are incredibly enticing to top talent. Without growing equity potential to attract and retain staff, Forrester loses a valuable arrow in its quiver. Therefore, it only has 3 other levers to pull.

• Aggressively compensate analysts, sales and service teams.

• Become a comfortable, life-style company that enables staff to explore their likes and interests outside the firm without the constant and crushing pressure of work commitments.

• Provide a compellingly stimulating and leading-edge work environment that attracts talent.

It is unlikely that Forrester pays significantly more than Gartner (or other smaller competitors for that matter). Further, under pressure for growth, retention, and conversion to its role-based solutions, Forrester is not a more laid-back, easy going, lifestyle option either. The pressure on analysts to create content with new and sharper points-of-view and perspectives; the pressure on sales to get clients and prospects to understand and adopt new and more expensive solutions; and the pressure on client services to provide support on richer, more complex solutions means that the “lifestyle” option is out.

And while Forrester may be a more stimulating and cutting-edge business environment, it faces huge differentiation challenges compared to smaller and nimbler analyst/advisory emerging firms and boutiques who have as much throw-weight in key niches as Forrester does (and in many cases Gartner, too). The ability of these upstarts to offer pre-IPO shares, competitive compensation, dynamic entrepreneurialism, stimulating thought leadership, greater visibility, new delivery models, and trailblazing market coverage are compelling. The value proposition of these growing firms for top talent is growing (e.g., 451, Futurum, HfS, Informa Tech, Ventana, Info Tech, ZK, Moor, etc.).

The squeeze is on for Forrester. It is finding it more and more difficult to compete upwards against Gartner. At the same time, life sustaining oxygen is being consumed by smaller, more aggressive, and rapidly growing rivals below who are growing much faster. Can Forrester continue to make a viable living as an alternative or second opinion to Gartner? Or will IT buyers (and vendors) seek that second opinion from smaller, more focused, and faster moving advisory firms? The question, for another day, is how Gartner will fend off these rivals and avoid a death by a thousand cuts. The swarm is growing.

Should AR watch the financial performance of Advisory firms? It is probably worth it to at least have them in your stock tracker. Not for “buy” or “sell” recommendations, but as a barometer for where your attention, focus, and time investments should be prioritized.

A Personal Note — And a Free Offer

After more than 30 years in the IT advisory industry (Sentry Technology, META Group, AMR, Lux, Gartner), I retired 3 years ago. When I left, one of my goals was to write a novel. I’d been kicking around an outline for several years but now I’d finally have time.

Then wham! I was diagnosed with serious health issues in 2022, resulting in 5 cardiac stents, an aortic valve replacement, and a coronary bypass. It was a shocking diagnosis as I’ve never smoked, I exercise vigorously, and I have my weight in check. Genetics are a bitch. During my recovery, finishing the novel became an obsession.

Pay for Play publishes September 18.

The protagonist of the story, Marcus Shea, is a brilliant IT analyst and a skilled MMA fighter, with a hair-trigger for violence. When a job offer from a former rival presents an irresistible opportunity, Marcus is thrust into a world of incredible wealth and life-and-death ethical decisions. Eager to capitalize on his firm’s rising influence and notoriety, Marcus and his team find the lure of transformative wealth too strong to resist. What starts as small-scale insider trading spirals into darker schemes of stock manipulation and corporate espionage, all secretly financed by shadowy benefactors aligned with a rogue foreign government and a multinational drug cartel. Caught in a web of deception and lies, Marcus must fight his way to freedom while evading cartel assassins and the FBI. He trusts only one person—but is Beth Rivera truly worthy of that trust? Three colleagues are dead, and she is at the center of it all.

Pay for Play is a lightning-fast thriller about betrayal, resilience, and the redemption of a man willing to risk it all for the people he loves. Can an IT analyst be an action hero? Marcus Shea can.

In all my years in advisory services industry, I’ve never even had a whiff of impropriety from the analysts I supported. But after writing Pay for Play, I scared myself at how easy it could happen <grin>. This early review sums it up:

“Anybody with experience in the IT industry, advisory firms, or in Analyst Relations will find this a fun and gripping page turner. Does it happen? Doubtful. Could it happen? Bill Gannon lays out a frightening scenario.” - Peter C. IT Industry VP

A Free Offer

Would you like a free copy of Pay for Play? The first 10 people who visit my website (link below) and send me a message in the “Contact Me” section will get a free paperback copy of the novel.

Pay For Play Website

Pay for Play is now available for pre-order on Amazon.com. Both paperback and ebook options are available and will ship on 9/18.

Link to Amazon for Pay for Play

Here is a link to Carter Lusher’s LinkedIn page where you can find some incredibly valuable analysis comparing the earnings performance of Gartner and Forrester and what it means for AR professionals.

Link to Carter's LinkedIn page

Here is another take on the Gartner/Forrester comparison from SageCircle. It’s a great read.

https://lnkd.in/dV8d4Yvg

Here are some other Substack posts on AR practices and the IT Advisory market:

(1)  The impact of recessionary pressures on analyst firms, how they react and what it means for IT vendors.   Substack Link: (Your AR/Influencer Strategy Is Not Ready for 2023 (substack.com)

(2)  Strategic Selling skills are gap in thinking and a blind spot for better aligning with analysts and influencers.  Substack Link: (For AR Leaders, Strategic Selling is a Blind Spot (substack.com)

(3)  How to drive new areas of value, interaction, and impact (without necessarily spending more money).  Substack Link: 9 Reasons AR Should Think About Their Relationships with Advisory Sales Teams (substack.com)

(4)  Assumptions about Advisory Firms That Can Derail Your Journey to Next-Phase AR.  Substack Link:  Insider View: These Assumptions Can Derail Your Journey to Next-Phase AR (substack.com)

(5) Strategies to raise AR Impact and Effectiveness. Substack Link: Advisory Insider: Picture This AR Strategy and Widen Your Aperture (substack.com)