CIO —


Question: What are you doing about spending on IT analysts and research?
Answer: "We’ve reduced costs on IT advisory services by 40 percent," says Greg Smith, vice president of IT and CIO of the World Wildlife Fund, "and we haven’t seen a difference. We execute the same as we always have, just at a much lower cost."

"Our spending on analysts is down 50 percent," says John Halamka, CIO of CareGroup Healthcare System, a network of prestigious hospitals affiliated with Harvard Medical School. "The role of the analysts as information navigators is not as relevant anymore."

"We cut [Meta] right out three years ago," says Jean Wilson, vice president of information services at L.L. Bean. "I don’t think saying to our executives, ’Well, Meta says X,’ carries a lot of weight at this point."

Outsell, a company that tracks the analyst industry, echoes this sentiment in its 2003 report "Competitor Assessment: Watching the IT Watchers?A Segment in Turmoil." From 2002 to 2003, the average per company spending on IT research, reports and services declined 41 percent, from $127,905 to $75,786. Outsell predicts it will fall another 11 percent this year, to a relatively meager $67,434, saying, "The math points to little or no growth, or even declining growth, for the foreseeable future."

More bad news for the influence industry: CIOs who signed multiyear contracts two and three years ago now want out. "We’re under contract [with one of the large IT analyst firms], but we’ll be rethinking that spend," says a CIO who requested anonymity.

Even IT executives who haven’t yet reduced spending sound like they might. "We can afford to keep our subscriptions," says Anne Rogers, director of information safeguards at Waste Management, "and we still get some good information. But the influence the analyst firms have is waning. Their information is somewhat more questioned. I’m not sure they’ll ever hold that pedestal position anymore."

Every one of these CIOs say that analysts provide a service they need, but they are no longer willing to pay what the companies want to charge them and, more important, they don’t want to pay the way the analysts want them to?by subscription.

The consequences of this disconnect are clear: painful rounds of layoffs, property sell-offs and other cost-cutting indignities. Giga simply surrendered a year ago this month and was acquired by Forrester. Then, in December 2003, Gartner, the industry’s dominant player, with an estimated 43 percent of the market, cut 5 percent of its workforce and took a $30 million restructuring charge.

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