Gartner Buys CEB

On January 12, 2017, in HRExaminer, John Sumser, by John Sumser

2016 sumser john photo hrexaminer 200px.jpg

Principal Analyst at HRExaminer and CEO of TwoColorHat


Gartner Buys CEB (first thoughts)

For $3.3B, Gartner picked up CEB. The purchase has significant implications for the future of enterprise software, the value of service offerings and the way that data is integrated into professional services firms. With the purchase, Gartner puts its core enterprise software analysis business at risk.

In recent years, Gartner, best known for its ‘magic quadrant’ industry analysis, has struggled to reinvent itself in the face of declining enterprise software innovation.

The firm was built on large companies’ need to make sense out of IT purchases. Over the years, it found that its simplistic analyses of heavily commoditized software offerings left its customers gasping for insight. The magic quadrant became the unintended nexus of the brand, and in a highly commoditized software industry it wasn’t flexible enough to provide customers with the depth of insights they needed.

While corporate customers grew disenchanted, software vendors competed more intensely each year for a coveted spot on the Gartner market map. The Gartner examination of a software vendor is a lengthy and thorough process. The problem with it is that it is essentially limited to companies who can afford to pay for the privilege. It’s been many years since Gartner’s been able to actually offer an objective view.

This is not a problem with the amazing team of individual analysts at Gartner. Their work is largely memorable. The problem is that objectivity is not possible. The market is massive and, like all industry analysis, there is a limit to what can be seen and understood.

In a nutshell, Gartner surveys the companies that find value in the evaluation and are willing to pay for it. This rules out much of the market and exposes Gartner to the problems of serving customers of different scales. Imagine the pressure an Oracle or SAP could muster as a large-scale clients across multiple evaluation sections, for example.

Gartner produces an extraordinary crop of experts who understand a subset of the overall technology and services market in excruciating detail. Their software evaluations are painstaking and comprehensive. There’s just no way to effectively evaluate the entire market. So, Gartner’s surveillance is limited to a few large players.

The actual business at Gartner is shifting from deep market analysis to client advisory services. The CEB acquisition confirms that direction. CEB’s modus operandi minimizes the contribution of the individual analyst and focuses on systemic issues that can be addressed with broad best practice advice.

The problem with the acquisition is that CEB comes with a stable of technology products and services that the company was struggling to fit into its current business model. CEB recently purchased Wanted Analytics (a labor market data company), and Sunstone Analytics (a resume screening company). Rounding out the purchasing spree was a huge investment in SHL, the largest assessment / measurement company. These companies offer for sale services that create a challenge to CEB’s claim’s of objectivity.

It’s hard to deliver freedom from bias when you recommend specific products or your own service offerings.

The acquisition will amplify the problem that is growing within Gartner. When you are a solution recommender, you sacrifice credibility when you recommend your own products. When you are an industry analyst, it’s bad form to recommend (or score highly) your own products. Although the large accounting firms routinely recommend themselves, it’s unlikely that the market of data and analytics will sustain that sort of self-dealing.

For years, Gartner’s evaluations have been more or less limited to paying customers. Anyone who couldn’t afford the service understood the bias. The acquisition of CEB takes Gartner into risky territory. The rationale will certainly be, “These data products are directly in line with our ongoing services.” The reality is that delivering WantedAnalytics data, for example, makes it impossible to objectively assess other HCM data and analytics providers.

Meanwhile, the question of how research into the execution of great HR happens is an open discussion. SHRM can’t (or won’t) keep up with the rapid evolution of the profession. It looks like it’s time for some new entity to emerge. The Sierra-Cedar annual industry survey comes closest because it uses data exclusively from customers.

A fair question to ask at this point is whether the structural weaknesses pointed out in this article will actually matter. The appropriate question is ‘Does HR care whether its sources of insight are biased?’ A more basic question is “Can they tell?” There is even less money in noticing the problem than in having it.

It is not possible to develop a perfectly objective picture of the HR Tech landscape. There are too many complex products being offered by too many vendors. There are over 500 Applicant tracking systems, for example (most of them profitable and small). There are vendors in HCM who track over 2,000 competitors.

Both Gartner and CEB are sizable, complicated entities. It will be many years before they are forgotten. Expect more M&A as they try to apply 20th Century solutions to 21st Century problems.



 
Read previous post:
HRx Big Ideas Radio: Episode #3: Culture with Charisse Fontes, CEO of The Culture Circle

John Sumser sits down to talk about building strong cultures with Charisse Fontes, the CEO of The Culture Circle.

Close