Nuances of local consulting market caught Gartner out

Gartner's exit from the regional consulting market in May was because it failed to get to grips with local business, industry watchers say

Gartner’s closure of its consulting arm in Australia and Hong Kong in May should serve as a warning to global players who don’t get intimate with the local market, analyst firms have claimed.

“I assume, being part of a large US organisation, it’s fairly typical of what they do these days. When things aren’t going well, instead of trying to fix the problem, it’s easier to just shut it down,” said IBRS managing director, Nick Bowman.

Bowman believes that Australia and Asia’s unique mix of cultures, and differing practices was, often at odds with the strategies of global organisations that tried to run local operations similarly to how they are run in the US marketplace.

“It’s tough to get a grasp on local conditions, and that’s not made easier when global companies try to run businesses as if they were built for larger marketplaces,” he said. “It all depends how much pressure the head office puts on local offices. We’re a local firm, with local expertise and understanding of the local marketplace, but that doesn’t help if your overall consulting strategy is being driven from another country.”

Hydrasight’s John Brand has a slightly different spin on the situation and believes Gartner’s failure to succeed in the Asia-Pacific consulting market was due to the size of its organisation.

“The Asia-Pacific market is a unique beast, having diverse issues across geographies. They [Gartner] obviously decided that the focus would be on major markets and the rest would be left to more regional plays,” he said. “It’s difficult for large global companies, with big organisational and cost structures behind them, to operate in smaller markets.”

Although both analyst firms were surprised with Gartner’s withdrawal from the consulting game, they felt that, other than freeing up the marketplace and encouraging competition among smaller players, Gartner’s departure would not have a major impact on the local consulting scene.

“There are plenty of consulting companies out there so, from the customer’s perspective, having one less to deal with is a good thing,” Brand said. “A relatively large player like Gartner, leaving this space, regardless of how well they are doing in a particular market, is an interesting signal to the local market and, I think, it will have some impact on the perceptions of the company.”

But whether those perceptions changed for the better or worse, Brand was not sure. What he was sure of though, was that Gartner’s separation of its research and consulting services would have a positive impact on the consulting market.

“I was never a fan of the analyst firms that engaged in both research and consulting,” he said. “I think having the ability to influence the market is a self-fulfilling prophecy and doesn’t reflect the purpose of research.”

Although Gartner cited over-competitiveness in the market as the main reason for closing its local operations, Bowman said it was probably Gartner’s inability to leverage its existing research customer-base, to make better use of its consulting division, that led to its demise.

“It is a competitive market here in Australia, but if you are a research company with consulting skills then you have the advantage of offering consulting services to your existing research customers. That is, of course, if you manage it right,” he said.

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