Gartner Inc

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GARTNER INC.

With roughly 800 consultants, Gartner Inc. is one of the largest information technology (IT) consultanting firms in the United States. Its client base includes nearly 10,000 businesses, institutions, and other organizations which prefer to let outside experts advise them on decisions regarding computer hardware and software, communications devices, and other technology-related topics. In 2000, sales neared the $1 billion mark, and operations spanned 80 countries.

Gartner was established in 1979 by partners Gideon Gartner and David Stein to offer research and analysis regarding the information technology (IT) industry to buyers and sellers of computers and related devices. Six years later, the firm founded Gartner Group Securities, a unit serving the investment community with IT recommendations and information. Sales reached $40 million in 1988, and earnings exceeded $2 million. Britain's Saatchi & Saatchi paid $90 million for Gartner Group that year. However, Saatchi & Saatchi found itself struggling with cash flow problems, and less than a year later it announced plans to divest Gartner Group. Gideon Gartner revealed his intent to buy the company himself, and threatened to resign if anyone else purchased the firm. Gartner Group's managers conducted a leveraged buyout in 1990 with the help of Dun & Bradstreet. The firm was placed under ownership of a new company called Information Partners Capital Fund L.P., and Manny Fernandez was named president and CEO. A few years later, Gideon Gartner sold his stake in Gartner, breaking all ties with the company he had founded.

In 1993, sales reached $123 million and net income neared the $7 million mark. By then, operations spanned 20 countries. Gartner Group conducted its initial public offering, listing its shares on NASDAQ. The firm then used its fresh capital to begin making acquisitions, including IT system evaluator Real Decisions and IT research and analysis provider New Science. Profits more than doubled in 1994 to $15 million, and sales grew to $170 million. In 1995, Gartner Group bought IT market researcher Dataquest Inc. and MZ Projekte, an IT research and recommendation firm serving Germany, Switzerland, and Austria. International expansion continued with the creation of Gartner Group Japan, K.K.

In 1996, Gartner paid $2.5 million for project management software consultant Productivity Management Group Inc. The $4.3 million acquisition of healthcare industry technology consultant C.J. Singer & Co. marked Gartner's first foray into the healthcare industry. Gartner also purchased a 40-percent stake in Web content provider EC Cubed. The Parana Institute of Technology (Tecpar) and the Secretary for Science, Technology and University Instruction worked with Gartner Group in 1997 to establish a research center in Brazil that would work to modify Gartner products and services to meet the need of the Brazilian market. That year, the company acquired a 32-percent stake in Jupiter Communications LLC, a consumer online and interactive industry researcher that would grow to be one of Gartner's largest competitors. Additional acquisitions included Swedish management consultant Informatics MCAB, Singapore-based IT product and vendor database compiler Datapro Information Services, and French IT information publisher Bouhot and Le Gendre. Earnings grew to $73 million on revenues of $511 million.

The firm's aggressive acquisition spree continued in 1998. International purchases included the National Institute of Management Technology, an IT consultant based in Cork, Ireland; AICC Consultores and Technology, an IT and management consultant serving Argentina and Chile; Norbert Miconnet Information Technology Advisors, an IT assessment firm serving the financial services industry in France; and Wentworth Research, an IT consultant serving executives in the United Kingdom and Hong Kong. Domestically, Gartner strengthened its position as a leading IT consultant by acquiring market researcher Griggs-Anderson Research; financial services IT assessment firm Mentis Corp.; online security services provider International Security Association Inc.; and IT cost measurement and analysis software vendor Interpose Inc. Gartner also established an information technology training program in five post-secondary institutions. Both instructors and students were granted access to Gartner Group research.

Several events took place in 1999 that undercut Gartner's performance. The firm's largest shareholder, IMS Health Inc., sold its 47-percent stake in Gartner. CEO William Clifford also resigned to join a fledgling dot-com firm. Perhaps most damaging was the perception that Gartner had lost ground to competitors by not paying enough attention to the emerging e-business industry. As a result, new President and CEO Michael Fleisher announced the firm's intention to invest millions of dollars in developing Gartner's e-business services. To this end, Gartner acquired INTECO Corp., a research firm focused on Internet and e-commerce technology. The company also bought a 70-percent stake in cPulse LLC, which had developed an e-business application that tracked the satisfaction level of online customers.

Gartner hired 441 new employees, including 24 e-business consultants, in the first half of 2000 as part of a $10 million employee recruitment and retention program. Silver Lake Partners L.P. paid $300 million for a 20-percent stake in Gartner. In March, Gartner paid $80 million for TechRepublic Inc., a Web site for IT professionals. Four months later, the firm launched its eMetrix service, a real-time e-business monitor that cautioned IT managers and other executives if a major supply chain problem appeared imminent.

Gartner's Web site upgrade in January of 2001 drew criticism from both industry analysts and clients when several glitches remained unresolved for months. In June, Gartner released Gartner G2, a research service designed to assist non-technology executives utilize the technology they have to grow their business. This new service marked the first attempt by Gartner to target non-technology professionals. While Gartner continued to expand into new areas, it was the firm's core research and analysis that helped it to weather both the dot-com fallout and economic downtown at the turn of the century better than its rivals did.