Successfully targeting enterprise technology buyers and investment in infrastructure challenges large end-user advisory firms and raises the bar for boutique analyst firms
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On Tuesday, January 26th, 2010, the Altimeter Group announced that it is adding two partners to the existing staff of four partner/analysts. 
While significant, these two hires were not the only important information SageCircle learned during a briefing by partners Jeremiah Owyang and R “Ray” Wang. In addition to expanding its team of partners, Altimeter also mentioned that that it has hired an operations manager, hired a researcher, and added enterprises to its client base. This activity is on top of investing in the “Hanger” (a lab facility), hiring a VP of sales, and retaining an agent to handle speaking opportunities. All in all, these activities indicate that Altimeter’s partners know what it takes to develop clout in the marketplace (see Boutique Analyst Firms: Pretenders and Contenders).
New Partners
Today’s announcement is about two experienced advisory analysts joining as partners. Lora Cecere (Twitter), formerly with AMR Research and Gartner, is a noted supply chain management analyst. Alan Webber (Twitter), formerly with Forrester Research, covers eGovernment (aka Government 2.0) and sustainability.
These new partners will extend Altimeter’s existing research coverage (e.g., disruptive technologies, emerging technologies, social media, and enterprise software) into adjacent markets. Besides extending market coverage, the new partners will collaborate with their colleagues to identify where disruptive technologies are colliding with established technologies or practices. For instance, one area of research is how supply chains are being impacted by social media and mobile computing. Altimeter anticipates that because its analyst team is small and cohesive it will be able to quickly respond to markets it covers with in-depth analysis on fast-moving changes due to disruptive technologies. Another key factor is the emphasis on collaborating with a large and growing community using “open research” techniques enabled by social media.
Building Out the Infrastructure
Not part of today’s announcement is the quiet work Altimeter is doing building a scalable business. Activities include:
- Extending the original sales capabilities provided by analyst broker Valley View Ventures with in-house staff is an important step because it significantly enhances the ability to close business. This is especially true for enterprise clients, which require a different type of selling motion from Valley View’s specialization.
- Hiring an operations manager to free up the partners to focus on research, client service, sales support, and continuing to leverage social media to build the brand and generate leads.
- Adding a researcher to permit the firm to conduct more extensive and detailed projects and generate signature research that enhances the brand and provides a strong selling point.
- Signing on with a speakers’ bureau to facilitate use of the speaking circuit to build the brand and generate leads
Client Base
Altimeter reports that it has signed up 40 clients for retainer/advisory services. Wang and Oywang indicated that this number does not include small, one-off projects. What is interesting about Altimeter’s client base is that it includes technology buyers at enterprises. This differs from the typical boutique IT analyst firm that has only vendors as its clients. Using the clients listed on its conflicts-of-interest disclosure page (a topic for a future post) hints that approximately 20% of its clients are not vendors.
Analysis
While larger firms like Forrester, Gartner and Ovum have analysts covering similar markets to Altimeter, they lack the culture and infrastructure to encourage collaboration (though Datamonitor-Ovum is explicitly trying to develop a collaborative culture). In addition, research agenda changes and commentary that cross the boundaries between analyst teams frequently, if not always, requires management approval. This slows down the process. Another major advantage of a firm like Altimeter is their willingness to build a community that extends beyond its client base. The large advisory firms, while playing with social media, are still very much limited to getting data points from their existing clients. This skews their data and hampers their ability to spot disruptions. The somewhat lumbering and insular nature of the large firms should provide Altimeter with an edge when competing with them in thought leadership, market mindshare, and common sales deals.
Of course there are many boutique analyst firms and single practitioners that are very nimble and smart in these markets as well. However, the traditional analyst boutique has not hired at the rate that Altimeter has. They have not built a broad and deep enough team to cover a breadth of markets and identify the disruptions at the boundaries of those markets. Nor have traditional boutiques built the marketing, sales, and business infrastructure to permit them to scale and generate the revenue that fuels investment in growing the analyst team, which would further expand the addressable market for their services.
Finally, Altimeter’s mix of enterprise and vendor clients is an advantage at both ends of the competitive landscape. Enterprise clients give Altimeter access to a different set of data points and a much larger addressable market with a different spending pattern than vendor clients. More enterprise clients makes a firm more attractive to other enterprises because their staff, whether marketing or IT, highly values insights regarding activities of their peers. Having enterprise clients also enhances Altimeter’s relevance to vendors and their analyst relations teams. This will likely have the effect of diverting both spending and access to executives and domain experts away from large firms and boutiques alike.
Bottom Line: The hiring of analysts and support staff, building infrastructure, aggressive research of new disruptive technologies, and targeting enterprises as prospects are hallmarks of an ambitious firm. A firm that is not content with resting on the prior accomplishments of its partners gives it enhanced credibility and relevance to both enterprises and vendors alike. Altimeter is exhibiting all the traits of a firm that is serious about extending its thought leadership and influence. This makes Altimeter a serious competitor to large advisory firms like Forrester, Gartner, and Ovum whenever they meet head-to-head in a sales deal. At the same time, Altimeter is simultaneously putting pressure on small analyst boutiques and single practitioners by raising the expectations of clients and prospects. This also makes Altimeter a very effective competitor to small firms in head-to-head sales deals competing for the same spending.
Tags: Alan Webber, Altimeter Group, analyst relations, Charlene Li, Lora Cecere, R "Ray" Wang, Ray Wang, supply chain, supply chain management
For every Gartner acquisition, we’ll see two new boutiques spring up.
I predict we’re going to see several innovative analyst/consulting firms appear over the next few months, which engage social media effectively and deliver free-thinking thought and analysis. The old model is consolidating and making way for the new one :)
Phil.
I see the Altimeter Group as a really interesting new model and one I’ve been watching with great interest. They have a group of top-notch analysts and will no doubt do well.
However, I’m not sure I agree with your point that “firms like… Ovum … lack the culture and infrastructure to encourage collaboration”. Ovum has always had a very collaborative culture – more so than most other firms, from what our clients are always telling us, and the Collaborative Intelligence intiative is merely an attempt to take that collaboration which has always existed within business units across business units to take advantage of the assets which are now under one roof in the Datamonitor family. Altimeter may be pioneering in its use of collaboration with the wider community, but our analysts have always worked together very effectively to cover topics which crossed over topic areas.