As Gartner expands, so does the competition

Gartner Inc. said it is acquiring enterprise IT advisory firm the Burton Group for $56 million, just one month after it announced it was buying AMR Research for $64 million. But if Gartner is attempting to consolidate the IT analysis industry, it may be playing a game of whack-a-mole.

Analysts across the board are emerging as independent brands with their own followings, and there's a general view among IT analysts that the number of independent analysis firms is on the rise, even if no one is really sure on the number.

However, Gartner surely has reach. Its conferences attract thousands of people including major IT users, and the CEOs of the largest IT vendors, such as Microsoft, Google and Hewlett-Packard, are frequent speakers.

Gartner's technology recommendations carry so much clout that one company, ZL Technologies Inc., an email archiving and records management firm, filed a lawsuit last year against Gartner for its ranking in its “Magic Quadrant,” which broadly defines vendors as either as a leader, challenger, visionary or niche.

ZL Tecnologies filed its case in U.S. District Court in Northern Calif., alleging that placement of ZL Technologies in the “Niche Players” category was defamatory. Gartner has argued in court papers that its rankings and analysis “constitutes non-actionable opinion.” The court agreed and the case was dismissed in November, but it left the door open for an amended complaint that ZL Technologies filed in December.

But Gartner is also in an increasingly competitive market, up against independent analysts and boutique firms. Analysts appear more willing to join niche firms. Helping this trend are changes in technology, particularly open source adoption and the increasing importance of consumer technologies — all “bottoms up” technology innovations, said Michael Cote, an analyst at Red Monk.

Smaller analysis firms have more ability to act freely, and interact with audiences as they see fit, said Cote. “When there are so many new technologies and the urge to use them, the more nimble an analyst firm is, the more help they can be to the IT world as a whole,” he said.

Charles King, an analyst at PundIT Inc., doesn't see a big danger in Gartner's acquisition of Burton because “there are still a lot of firms that out that there that are directly competitive or offer services that Gartner doesn't dabble in.”

Rob Enderle, an independent analyst, believes the Web is filling the need for analysis on tech trends, and is making it easier to compete with Gartner.

“From publications and sites dedicated to IT to social networks of IT professionals the alternatives to traditional IT focused analysis are increasing and Gartner is increasingly shifting away from analysis to consulting over time as well,” Enderle said.

James Governor, also an analyst at Red Monk, said “Gartner could buy every single analysis firm in the world, including Red Monk, and there would still be more options than ever available to enterprise purchasers and decision makers, should they choose to take advantage of them.”

The downside for vendors is that Gartner becomes increasingly “the voice,” Governor said. “But to be fair to Gartner, it is becoming more open about its processes in, for example, Magic Quadrant selection, and it's doing a better job of tracking open source.”