As companies hunker down to business, many IT executives continue to rely on analyst firms for finding ways to squeeze more out of their IT investments.
Companies are tapping research from Forrester Research Inc., Gartner Inc. and other advisory services to help them place educated bets on vendor selection, acquisition and deployment. IT analysis can help IT executives build a business case around a technology and benchmark IT efforts against industry peers.
Hilton Hotels Corp. is spending more than US$100,000 for Forrester services this year, more than $25,000 for Giga Information Group Inc. services and $8,000 for Norex Online IT peer subscription to shared experience and strategy.
Forrester Research is helping Hilton CIO Tim Harvey formulate a strategy for increasing online revenue from customers who previously booked rooms through Hilton’s call centres. Harvey said insight into what online travel services are used, and what percentage of business has shifted to travel sites such as Priceline and Expedia Inc., helps IT determine how to lure customers to www.hilton.com.
With Forrester forecasting total online U.S. travel purchases to increase from an estimated $29 billion this year to $35 billion in 2004, IT is gearing up to position the Memphis hotel chain for growth. Reservation system changes now ensure that honours points are assigned to customers who book rooms through Hilton’s Web site. The company also is evaluating the potential for guaranteeing those customers the lowest room rates, a strategy that would require IT to integrate applications for managing rates across all distribution channels. “The research from Forrester predicted those were the kinds of changes we needed to make,” Harvey said.
Moreover, four years worth of Giga research has led Hilton to select frame relay for the WAN, EMC Corp. for storage, and identify a feasible timeframe for replacing phone lines in hotel rooms with high-speed internet access, he said.
Anthea Stratigos, CEO of Outsell, a content analysis firm in Burlingame, Calif., said analysts typically generate baseline research that’s valuable to many people who crave technology trends, pricing and performance metrics. Users need to validate their thinking with the credibility that comes from an independent viewpoint, she said.
Historically, firms have varying methods of delivering research, typically forcing users to seek out consultation and weed through silos of topics. Customers want more flexibility in accessing syndicated reports and advisory relationships, Stratigos said. The rise in commodity information and drop in IT spending has ignited a change in how firms deliver research to best meet customer needs. In a strained economy, IT often requires better access to consulting and a granular view.
IT analysis firms are weathering tough times themselves, and Outsell reports it suffered an aggregate 5.8 per cent drop in analyst revenue in 2002. Some well-positioned firms such as Forrester are filling a portfolio gap with its Giga acquisition, a group that has always kept an open door to consultant services. Other firms with a largely dot-com client base such as Jupiter Research saw revenue whittled back.
Tough times breed tactical needs, and firms are unbundling content for customers who won’t buy the fire hose but will buy the drink. “They want to know about this specific issue, about me, now, today,” Stratigos said.
Chris Morgan, senior IT staff member for Sandia National Labs in Albuquerque, N.M., has noticed the holistic transformation and increased visibility of research firms in the past two years. “A year ago, I’d never even heard of The Burton Group,” she said. The research that closely matched specific projects in progress proved vital to the IT department, which has also added a Meta Group subscription and has long been a Gartner customer.
Analysts share a consumer advocate role, evaluating technology that’s emerging or fading away, but Morgan sees differences in the research focus of the firms. Burton defines how products fit in the market, how they work in specific parameters, and how clients can learn lessons from previous installations.
While Sandia National Labs only recently began using Meta research, Morgan sees its focus as similar focus to Burton’s. However, Gartner is all about making the case for technology. “The return on investment…the balanced score card that looks at money, satisfaction, and effectiveness of internal processes…it’s a business point of view,” Morgan said.
Harry Roberts, senior vice-president and CIO for Boscov’s Department Stores in Reading, Pa., said Gartner’s Total Cost of Ownership reports add bite to the business case he makes to the CIO. “It’s not easy to measure return on investment,” he said. “Those performance measures show a payback for the business.”
Yet Roberts watches his wallet and doesn’t subscribe to any of the major IT analysis services. He values reports from Gartner and AMR Research, yet won’t pay thousands of dollars for information that eventually trickles down. He has a subscription to Retail Systems Alert, a monthly newsletter, and scours publications, conferences, and the Web for retail topics such as markdown optimization software and radio frequency identification chips.
There’s so much information on the Internet, and with certain parts of the industry under suspicion, Outsell sees more discernment. “People realize they have to vet what they’re going to consume,” Stratigos said.
