Incorporated: 1979 as Gartner Group, Inc.
NAIC: 518111 Information Retrieval Services; 511210 Prepackaged Software; 541910 Marketing Research and Public Opinion Polling
SIC: 7375 Information Retrieval Services; 7372 Prepackaged Software; 8732 Commercial Nonphysical Research
Gartner, Inc., is one of the leading U.S. providers of research and analysis for the information technology (IT) industry, which is composed in part by the computer hardware, software, application, network, and communications industries. Gartner operates in four primary areas: Gartner Research provides IT companies with extensive intelligence and advice either through direct consulting or subscriptions to online research products; Gartner Events oversees conferences and programs for IT professionals; Gartner Consulting provides individual service for corporate clients in need of business plans and strategies for managing their IT operations; and Gartner Executive Programs provides programming and information for corporate CIOs (chief information officers). The company has offices located in more than 75 countries and reports that 80 percent of the Global 500 relies on Gartner for IT solutions.
The Early Years: 1979-83
Gartner Group, Inc., was founded in 1979 by Gideon Gartner as a provider of research and analysis in the field of information technology (IT), with a specialization in information about IBM and its products. At the time that he created the company, Gartner possessed many years of experience in the IT field, after having worked for IBM in both the United States and Europe in the company's competitive intelligence operations division. Prior to that, he had received his bachelor's degree in mechanical engineering at the Massachusetts Institute of Technology, and his master's of science degree in management at the Sloan School.
Following his stint at IBM, Gartner was a partner at Oppenheimer & Co., where he worked as an analyst and developed the research methods that later came to typify Gartner Group. While at Oppenheimer, Gartner was rated as the top individual securities analyst in the technology field for seven straight years by Institutional Investor. As computers became more prevalent in the work world, Gartner began to research and track the computer industry more so than did other securities dealers. He attended countless trade association meetings and IBM user meetings and combined that information with the knowledge he possessed from his time at IBM to gain an insight into the industry that other analysts did not have. Thus, his research became quite valuable to those in the business of buying and selling computer and telecommunications equipment.
After Oppenheimer failed to pay as much attention to Gartner's research as he wanted, Gartner decided to start his own company. At that point, other consulting firms such as Dataquest had established themselves as counsel for the Silicon Valley computer manufacturers, so Gartner decided instead to target his services at confused corporate computer users. He approached Oppenheimer with an opportunity for a partnership, but the company declined. Instead, Gartner teamed up with David Stein, and in 1979 the two launched Gartner Group, Inc., with only $675,000 in venture capital. Initially they had no clients, but Oppenheimer soon agreed to give them existing contracts in exchange for royalties.
Gartner and Stein then went about the business of providing advice and information to buyers and sellers of computers. Their company spent a majority of its time tracking IBM and its advances, and then delivered information to clients in a substantially different form than did most other consulting firms. In attempting to help a client make a decision regarding a product or a marketing strategy, Gartner would forgo the typical lengthy and often-ignored written study, opting instead for a straightforward and easy-to-understand one-page memo. This strategy helped the company increase its customer base, and Gartner Group was soon a well-established presence on the IT scene.
Acquisitions and Adjustments: 1983-90
Gartner Group, Inc., soon became well known for its "insider" perspective on IBM and the comprehensive information that it possessed about the company's products and services. In 1983, Gartner Group was actually sued by IBM, who alleged that the consulting company had illegally revealed IBM trade secrets. The suit was later settled out of court. Gartner was quoted in Intercorp as saying that IBM was known to consistently provide Gartner Group with "enough information so we don't totally screw up, but not enough so that they are telling us what is really going on." At that time, many of Gartner Group's analysts were former employees of IBM, which may have led to the technology giant's unease at having a third party counsel its customers about its products.
Meanwhile, Gartner had been developing an addition to the company that was engaged in providing the investment community with advice and information related to the IT industry. This new brokerage and investment division was separated from Gartner Group in 1985 and became a wholly owned subsidiary called Gartner Group Securities. The following year, after seven years of steady increases in sales and earnings since its foundation, Gartner Group initiated a public offering of its stock. Within a year, the company ranked ninth on the 1987 Business Week list of "Best Small Companies and Corporations," and an overwhelming majority of the top Fortune 100 companies were part of Gartner's client list.
Just one year later, in 1988, the company was purchased for $90.3 million by the British communications firm Saatchi & Saatchi. No major changes were made within Gartner Group following the takeover, and business proceeded as usual for both entities, with Saatchi & Saatchi acting as a holding company. Gartner Group benefited from the deal because its new owner was able to offer the still-growing company any necessary capital support, as well as help the consulting firm increase market share on an international level. Meanwhile, Saatchi & Saatchi would benefit from Gartner's in-depth knowledge of the industry, in order to make wise decisions regarding future acquisitions.
By the time the acquisition by Saatchi & Saatchi was complete, Gartner Group had expanded from the one service it had offered when founded to 13 different "Continuous Services," each of which provided in-depth analysis of different high-tech industry segments. Continuous Services were available for subscription to clients on an annual basis. Revenues for the 1988 fiscal year topped off at $40 million, which gave the company a profit of $2.3 million for the year.
Just a year later, however, Saatchi & Saatchi's bid to become a business service powerhouse took a turn for the worse. After plowing through a short-lived and perhaps overzealous acquisition phase, the advertising and communications giant suddenly found itself short of cash and began making changes to avoid being taken over itself. In late 1989, it decided to begin selling many of the consulting firms that it had just purchased, including Gartner Group. Gideon Gartner himself made plans to repurchase his company. In an attempt to discourage any other potential suitors, Gartner stated that he would quit in 1991 when his contract expired if he lost the bidding, hoping that the idea of Gartner Group without its founder would be unappealing to another bidder.
New Ownership and Growth: 1990-99
In 1990, Gartner Group management led a leveraged buyout of the company, with assistance from Dun & Bradstreet. The new owner was listed as a group called Information Partners Capital Fund, L.P., while the company itself became Gartner Group, Inc., Holding Corp. (GHC). GHC was then merged back into Gartner Group, Inc., under new management, including a new president and CEO named Manny Fernandez. At that time, Gideon Gartner left the day-to-day operations of the company. New management restructured the ailing company, which had suffered losses during its time with Saatchi & Saatchi. Although the company registered increased revenue figures during 1991 and 1992, its books remained in the red. Gideon Gartner stayed with the company--on paper only--until 1993, when he sold his equity position and completely severed ties with the company.
In 1993, Gartner Group finally registered earnings of $6.8 million on $122.5 million in sales for the year. This boost in profitability enabled the company to go public again, listing and offering shares of its stock on NASDAQ. With offices spread throughout 20 different countries, Gartner Group continued to provide its growing client base with objective research and analysis of the IT industry. The company also began positioning itself for expansion, which it initiated with the acquisition of New Science at the end of 1993, and of Real Decisions from NYNEX Worldwide Services Group, Inc., in early 1994.
If 1994 was a successful year at Gartner, with earnings more than doubling to $15 million from sales of $169 million, then 1995 was outstanding: earnings skyrocketed to $25.5 million from sales of $229.2 million. In July 1995, Gartner purchased a majority interest in Relational Courseware, Inc. (RCI), a developer of computer-based training products. RCI continued to operate as an independent company, although it took advantage of Gartner's worldwide distribution channels and could use Gartner's extensive network of research analysts. Later that year, Gartner also expanded its holdings with the formation of Gartner Group Japan, K.K., and with the purchase of longtime IT consulting rival Dataquest. The Dataquest acquisition greatly increased Gartner's share of the IT consulting market.
In 1996, Dun & Bradstreet's (D&B) 54 percent stake in Gartner Group, Inc., was transferred to a D&B subsidiary called Cognizant Corp. The transfer of holdings, however, caused no major changes in Gartner's day-to-day operations. The consulting company continued to seek out and purchase other companies that complemented its own services, including Internet vendor Fox Industries, Italian consulting entity Nomos Ricerca, J3 Learning (a leading provider of IT training products), and Mindware Technologies. In order to accommodate its rapid expansion efforts, the company increased its base of analysts by 25 percent.
The late 1990s marked a surge in popularity and use of the Internet as a means of transferring and obtaining information, and Gartner took advantage of the trend by creating a web site called @vantage. @vantage was a compilation of information about industry outlooks and research about the IT industry, in an easy-to-find and simple-to-use format. Although Gartner Group had traditionally faced very few direct competitors in its field, the end of the century drew rumors that Gideon Gartner was planning on launching his own IT consulting service, and he did launch Giga Information Group and Soundview Technologies, both later sold to larger IT firms. Even in the face of competition by its own founder, however, Gartner Group still possessed major advantages: years of experience and a stellar reputation among a client base that included almost all of the top companies in the world.
In 1997 and 1998, Gartner continued its aggressive strategy of acquiring competitors. Gartner bought French technology publisher Bouhot & LeGendre and also the Singapore-based IT vendor and information services compiler Datapro Information Services, Inc. Next, Gartner acquired Swedish company Informatics MCAB, which specialized in management consultation, and in 1998 acquired the National Institute of Management Technology in Ireland and Norbert Miconnet Information Technology Advisors in France. With a wave of European expansion, the company's position in foreign markets was greatly strengthened, and Gartner was also able to increase the range of services offered to domestic customers. Gartner also established, in 1998, a technology education program at five U.S. postsecondary institutions. The program provided classes in IT services, management, and analysis.
Also in 1998, Gartner began trading its shares on the New York Stock Exchange under the ticker symbol IT. The following year brought new leadership, as CEO William Clifford left the firm to accept a position at a start-up IT company, and the board of directors voted former Chief Financial Officer Michael Fleisher to replace Clifford as CEO. Among Fleisher's first projects was to initiate an extensive program to bring Gartner to the forefront of the emerging e-commerce industry. Gartner purchased INTECO Corporation, a company specializing in e-business research, and also invested in software for e-commerce applications. The company's own gartner.com web site went live in 2001.
Gartner in the 21st Century
Gartner expanded its staff by over 400 new hires in the first quarter of 2000, which included 24 new e-commerce professionals. Under Fleisher's leadership, the company continued its expansion and thus streamlined the company's name to Gartner, Inc. While several competitors were challenged during this time by fluctuations in the Internet market (the so-called bursting of the dot-com bubble), Gartner remained strong with its core focus on analysis and research. The company's web site was redesigned and debuted in 2001. While it initially met with criticism from users, being fraught with glitches from faulty programming, Gartner moved quickly to address the problems.
In 2002, Gartner, along with publisher John Wiley & Sons, produced three books aimed at helping business managers and laypersons understand the development of business and technology. The company's first release, World Without Secrets, was written by Gartner analyst Richard Hunter and dealt with issues regarding computer privacy, security, crime, and the Internet era. The second book, Achieving Business Value from Technology, was written by company Vice-President Tony Murphy and was intended as a practical guide to using technology to fuel business growth. The company followed these up with Consumer Evolution, written by company research director Judy Carr and industry scientist Charles Graham, which explored the evolution of consumer psychology in the information age and provided a guide to businesses looking to maximize the potential of their expenditures on technology and e-business.
During this time Gartner introduced an employee rewards and research program known as Gartner Fellows. Employees chosen for the program were granted the title of Fellow and were given a two-year period in which to work outside their regular duties to develop between one and five of their own ideas with the support and resources of Gartner at their disposal. Each Fellow's work was published as Gartner company research, which was analyzed by competitors, clients, and industry experts. Much of the data that came from the company's Gartner Fellows program involved interviews and research sessions with industry leaders and entrepreneurs from leading technology and research companies. The data that were collected served not only to reinvigorate Gartner's existing bank of knowledge but also as a resource for educators, students, and employees of the industry.
In 2004, the company's board of directors voted to make Gene Hall CEO of the company and to eliminate the position of chief operating officer, formerly held by Maureen O'Connell, who had been named to the position in 2003. Hall praised O'Connell, who was named CFO for Barnes and Noble, Inc., the following year, for her year at the helm of Gartner but indicated that the board of directors felt the business needed a more unified executive structure.
Gartner grew significantly during the second financial quarter of 2005 by acquiring META Group, one of the company's major competitors in IT consulting and analysis. According to CEO Hall, the acquisition was intended to strengthen Gartner's core research business and to give the company stronger representation in the United Kingdom and Germany. Dale Kutnick, former chairman of META, was also asked to serve as director of research and senior vice-president for Gartner after the buyout.
In September 2005, Gartner increased its presence in the Chinese market by expanding an existing research office opened by the company in 2002. Gartner established a wholly foreign-owned enterprise in Beijing to aid in expanding the range of services and products that could be brought to Chinese consumers. In 2007, two of Gartner's leading analysts published the book IT and Asia in conjunction with Harvard University Business School, which focused on the development and dominance of China and India in the technology sales and development markets.
Also during this time Gartner initiated its Gartner Business Intelligence (BI) Excellence Awards to recognize companies that demonstrated leadership in the integration and analysis of business data and information. Continental Airlines was named as the recipient of the first BI Excellence Award, with AXA Financial and Cardinal Health also receiving nominations. The BI Excellence Awards also promoted Gartner's business research industry by sharing the successes and strategies of the world's leading IT businesses with a global audience.
Following its growth and global expansion, Gartner enjoyed a position of leadership among the world's IT consulting firms. Its stock reflected industry and consumer confidence, with prices rising to over $20 per share. Moreover, the company's sales increased, surpassing the $1 billion mark by 2005 and $1.2 billion by 2007. Continued growth seemed likely.
Principal Operating Units
Gartner Research; Gartner Executive Programs; Gartner Events; Gartner Consulting.
Principal Competitors
The Butler Group; Forrester Research, Inc.; Cutter Consortium; IDC Research, Inc.; Yankee Group Research, Inc.
Further Reading
Brubeck, Noreen, "Gartner Group Sold to Saatchi & Saatchi," Fairfield County Business Journal, June 20, 1988, p. 1.
Burke, Steven, "London Ad Agency Buys Gartner, Hopes to Be Top Consulting Firm," PC Week, July 11, 1988, p. 133.
"Company News: Gartner Group to Buy Back up to 15.7 Million Shares," New York Times, July 17, 1999.
Deutschman, Alan, "What Price Freedom?" Fortune, November 20, 1989, p. 213.
Ferranti, Mark, "Gartner, Align Thyself," CIO, November 15, 2001.
Finucane, Stephanie, "Gartner Group Revenues Climb as Market's Thirst for Research Intensifies," Fairfield County Business Journal, March 21, 1994, p. 7.
"Gartner Announces Business Intelligence Summit, 2007," Business Wire, January 16, 2007.
LaMonica, Martin, "Gartner Acquires Smaller Rival Meta," CNet News, December 27, 2004.
Lohr, Steve, "Millionaires by the Dozen: They Know Computers, Who Knows Them?" New York Times, October 1, 1995, p. F1.
Matters, Craig, "Gartner Group Tracks Big Blue for Fun and Profit," Intercorp, January 24, 1986, p. 13.
Popoloski, Martha, "Gideon Gartner Becomes Chairman of BIS Decisions and Giga Information Group," PR Newswire, June 5, 1995.
— Laura E. Whiteley; Updated by Micah L. Issitt
