Gartner to Acquire AMR Research: Supply Chain and Procurement Analyst Game Over?
Categories: Spend Management |
Earlier this morning, Gartner announced that it was acquiring AMR Research. For those who are not familiar with AMR, the firm, for the longest time, has been the most influential analyst outfit focused on supply chain and procurement. While it has technology research and practices in many other areas -- and Bruce Richardson, its gregarious uber-analyst, is well regarded in ERP circles -- its true strengths have always been at the intersection of supply chain technology, process and innovation. For many years, there were rumored on-again / off-again discussions between AMR and its Cambridge-neighbor, Forrester. Clearly, George Colony, Forrester's leader, who we know is friends with Tony Friscia, AMR’s President and CEO, will be disappointed that they lost the bidding on this one (I have no doubt that AMR’s bankers would have included them in the discussions). But where does this deal leave Gartner, not to mention the broader industry analyst landscape?
First, let’s analyze the numbers. The above-linked WSJ summary gives some specifics on the deal, noting that Gartner’s “$64 million agreement to acquire fellow data provider AMR Research … will expand its range of offerings. AMR, which is projected to have nearly $40 million in revenue this year, serves supply-chain management and information-technology professionals. Gartner said the purchase would also complement its consulting and events businesses and 'enhance Gartner's ability to further penetrate the vast market opportunity for syndicated research'." Clearly, for Tony and Bruce, the dynamic duo leading AMR would have liked for things to have ended differently.
A number of years ago, I recall that AMR filed its S-1 agreement hoping to go public. At the time, if memory serves, the SEC filing showed materially higher revenue than their current estimated $40 million in 2010 (I need to track this down and will share what I find). I believe that the valuation of this deal, at just under 1.5X current year revenue, is quite low given AMR’s brand cache not to mention AMR really is the only analyst game in town with any scale in the supply chain and procurement arena. Perhaps this speaks to the perceived value of traditional analyst models today, at least from a financial perspective.
In good supply chain and cost reduction form, the announcement also suggests that “an undisclosed amount of cost savings are expected.” But I doubt that much of the cost reduction will come from a reduction in the analyst and consulting workforce. However, given the coverage overlap between AMR’s Mickey North Rizza and Gartner’s Debbie Wilson in procurement, they’ll clearly need to divide and conquer different areas of Spend Management if they’re to collectively cover this corner of the enterprise world in particular. In my view, AMR's practice in the procurement space is stronger than Gartner's (and I'm not alone in this view).
However, I am already telling my clients on both the vendor and practitioner side of the fence that they should exercise caution in renewing Gartner and AMR agreements until the deal closes (which Gartner suggests will happen before the year is up). At that point, when the dust begins to settle on how the joint practice and coverage areas will work, the combined value proposition to clients should become more clear. Check back for additional commentary on this story throughout the day. As the story develops and we learn more facts, we will plan to share our findings and analysis on Spend Matters.