Gartner Acquires Burton Group, Finalizes AMR Deal

Just before the new year, Gartner acquired research and advisory firm Burton Group for $56 million in cash, adding to the firm 41 research analysts, 40 sales and client service associates, and a projected $30 million in revenue, according to company statements. Historically focused on the top 10 percent of the information technology organization -- chief information officers and senior technology executives -- Gartner plans to integrate Burton Group's expertise with front-line technology professionals.

Chris Lafond, Gartner's chief financial officer, emphasizes that the Burton Group brings a "very complementary" offering as it targets a largely different audience. "Putting the two together allows us to have a product from the most senior person down to those implementing [technology] projects in the organization," he says. According to Lafond, the CIO audience presents a market opportunity of between $10 billion and $11 billion. Appealing to the front-line technology professionals will effectively double the research firm's potential revenue, he says.

At least for now, Gartner says it will retain the Burton name in addition to all Burton research analysts and client-service employees. "This isn't about going in and reducing cost and eliminating analysts," Lafond says, though the Gartner press release does point to operational efficiencies and cost savings. "[Burton] has great recognition in the market place," he says. "[The acquisition] gives our sales team much more product, top to bottom, to bring to market."

Shortly before the Burton Group acquisition, Gartner finalized its early December acquisition of AMR Research, an analysis firm known for its focus on supply chain management and information technology professionals, for $64 million in cash. Lafond describes the earlier acquisition as having been driven by the significance of technology in the supply chain. Similar to the Burton Group acquisition, he says, "[AMR] sells to a different buying center, serves a different buyer, [and produces] content that's different from the content we have."

In a late-December blogpost, members of analyst relations firm SageCircle had predicted in its 2010 forecast that the Burton Group, a firm that "has a solid reputation, desirable research coverage, a sales force, and a client base that includes enterprises and government agencies, would likely be a prime candidate for acquisition."

"Acquisitions and spin-offs...have been an essential element of the analyst ecosystem since Day One," says Carter Lusher, a SageCircle analyst. "If you look at the ’90s, there were nearly 100 acquisitions, and we ended up at end of the [decade] with actually more than we started out with."

William Hopkins, chief executive officer and founding partner of analyst relations firm The Knowledge Capital Group, sees Gartner's acquisitions having a much more dramatic impact on the analyst industry. "Everyone says [an acquisition] is a big deal," he notes, "but this is a huge deal." With the purchase of AMR and Burton, he says, Gartner has eliminated two of the top remaining independent firms that cater to the buy-side (i.e., companies seeking analyst expertise on technology purchases). Hopkins says that, in his experience, companies might buy from Gartner and Forrester Research, and then look to AMR or Burton for a second opinion. Now, he says, that independent voice has been -- or soon will be -- eliminated.

"It's a game-changer," Hopkins says.

[Editors' Note: Earlier versions of this article mischaracterized the number of major research firms that would remain in the technology industry following Gartner's recent acquisitions. The editors regret any confusion this may have caused.]

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine

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