Industry Analyst Firms: The Numbers
While putting together Curmudgeon: How to Succeed as an Industry Analyst, I reached out to ARInsights which provided some data on the top 100 industry analyst firms. Give an analyst data and they want to do something with it. So let’s take a look.
Gartner is the largest analyst firm with 1,008 analysts. I would argue that Gartner is a pure play analyst firm. Although it has some revenue from consulting and events (9.4% and 1.4% respectively out of Q1 2020 revenue of $1.019 billion) its ability to deliver those are wholly dependent on the value proposition from the analysts. I find it useful to treat its numbers as a benchmark.
IDC, acquired in 2017 by China Oceanwide, is the number two firm in the world with 766 industry analysts tracked by ARInsights. As a private company it does not report financial data.
Omdia (what most people still think of as Ovum which was rolled up into a larger media empire by Informa) has 289 analysts, although they claim 400, which I suspect is due to a generous classification of people as analysts.
When I was at Gartner we claimed 600 industry analysts. I questioned that number because it felt like I was part of a much smaller community than 600. I had access to a tool that allowed me to search on employees. I sorted all employees by title and was able to determine there were only 150 employees that I would think of as industry analysts—researching, publishing, and presenting their research. The other 450 were indeed researchers but they covered the Asian semiconductor market.
All that to explain that ARInsights probably has fairly accurate data on number of analysts, so I am sticking with 289 for Omdia.
I find that revenue per employee is a remarkably accurate way to judge a company’s strength and viability. Only four firms are public but as you can see the revenue per employee is fairly consistent.
With an average of $214k, Gartner is on the higher end with $242K. That number is pretty good compared to technology firms in general. If I were an analyst of analyst firms I could take the average revenue per employee of these four and estimate the revenue for each of the firms in the space.
IHS Markit has fewer employees than Gartner but total revenue is more, so they are doing extremely well at $292k revenue per employee.
But what about revenue per analyst? That’s what I am really interested in. This is where the data diverges dramatically. Forrester can claim $1.8 million in revenue per analyst. GlobalData $2.9 million. Gartner an astounding $4.2 million. And IHS Markit is off the charts at $51 million.
IHS Markit is much more that an industry analyst firm. With only 86 analysts out of 15,058 employees its revenue derives from its other products and service which include supporting financial market makers with data they need. It would probably make more sense to compare it to Bloomberg than to Gartner. Unlike Gartner its business is based on software, services, and data. Analysts play only a supporting role.
There appear to be two different ways to go to market. The one we are familiar with is to sell subscriptions to research and access to analysts as Gartner, IDC, and Forrester do. The other is to use analysts in a supporting role to enhance the value of other offerings.
The two pure-plays we have data on are Forrester and Gartner. How can we explain the dramatic difference in their size? They were both founded over 30 years ago with similar models. I think these numbers tell the story. 12% of Forrester’s employees are analysts, compared to only .6% of Gartner’s. Forrester needs to double down on its sales activity.
Anyone who has dealt with Gartner knows that they have built a world class sales organization. On top of that they have successfully sliced and diced their product offerings so they can sell their underlying products to different buyers within their customer base. Gartner has only about 12,000 customers, up from 10,000 20 years ago. Yet, its sales team delivers growth year after year.
This unrelenting pace takes a toll on Gartner analysts who by all reports are over worked and micro managed.
What do these numbers mean for the independent analyst—those that set up shop for themselves? In Curmudgeon I suggest calculating your ability to deliver services. How many speaking engagements, webinars, and strategy sessions could you manage if you were fully booked? It is not hard to get to $1.2 million on a spreadsheet, which would represent a grueling schedule, but gives you something to measure against.
When I was at Gartner I learned that the top account execs had an annual quota of one million dollars. That is the first time it occurred to me that if I could team up with a good sales person we could split that one million and both be very happy. Unfortunately good sales people like to have a salary and benefits. They are also very hard to find. Once I figure it out I will be sure to let you know. In the meantime I will be thinking about how to match Gartner’s $4.2 million in revenue per analyst.