Yesterday we had the news that Informa is to acquire Datamonitor. As Dom says, this is the “biggest industry analyst story of the year so far.”
What can we read into this purchase?
Informa is a provider of specialist information and services for a variety of academic, scientific, professional and commercial business communities. A firm like Datamonitor fits nicely into its business model.
However, I don’t think we should start to get excited about Informa suddenly becoming a significant rival to Gartner in the technology research and advisory business (at least not in the traditional manner, but more on that later*).
First, the numbers don’t stack up. Last year, Gartner had revenues of $1 billion (USD). Even without consulting, its revenue is still over $700 million.
In comparison, Informa may have revenues of over £1 billion (GBP) but technology research isn’t that big a part of its business.
In 2006, Informa’s telecoms and media products (ie its technology offering) had revenues of £64.7 million. That’s everything – events, magazines and newsletters, and research services.
Datamonitor will bring in some additional technology revenue – but its total revenue in 2006 was £70.4 million and a significant part of that isn’t from technology research.
When you start doing the sums (even allowing for the dollar / pound exchange rate), then Informa’s technology analyst business is going to be a whole smaller than Gartner’s. (Although, interestingly, it’ll be of a similar size to Forrester’s – again, exchange rates permitting).
And it's not just the money. Informa’s existing research business specialises in the telecoms and media markets. By acquiring Datamonitor (and Ovum and Butler and Computerwire), it is broadening its coverage out – but it’s still got some way to go before it can effectively compete with Gartner’s breadth and depth of coverage of the technology sector.
If Informa plans to build an analyst business of a scale to rival Gartner, then there’s a lot of growth needed. Some of that must be organic but acquisitions will have to play a part too. Think Forrester and Yankee for example, perhaps with some boutique firms thrown in to provide coverage of more specialist market niches.
But I think we need to consider whether this is Informa’s plan at all.
Both Informa and Datamonitor have successful businesses outside of technology research. There’s plenty of low-hanging fruit that can be gathered as a result of this acquisition. And most of it’s not in the technology analyst market.
* There is another side to this acquisition that potentially poses a more interesting long-term challenge to those of us in the analyst relations market. I’ve got to go out now so that will have to wait - probably tomorrow.