Research firms face threat of "open source research"

An article in the Boston Globe today says that these are difficult times for research analyst firms such as Gartner, IDC, Forrester, and Meta Group. The article points out that corporate customers are scaling back on their purchase of paid research services. But one point especially caught my eye:

Today, cost-cutting executives are known to turn to search engines like Google to glean market intelligence on the cheap. "It's part of the Googlization of America," lamented Forrester's [Brian] Kardon. "People expect great content to be available just through a Web search."

I find this ironic. In the late 1990s, the research firms were trumpeting the threat that the Internet poses to traditional business models. Now the research firms themselves are being threatened by the Internet.

It's not that the research firms are not using the Internet. They already make great use of the Internet to deliver research content to subscribers. But so do the newspapers. And yet, the newspapers have been facing declining subscriptions for years now.

The real threat to the research firms is not the Internet as a delivery channel. It's the fact that the Internet is starting to bring together individual experts with business people that need their specific expertise. All that the individual expert needs is a self-publishing platform, such as a public forum (e.g. Slashdot) or blogging tools (e.g. Blogger, Moveable Type, etc.). All that the businessperson needs is a search engine, such as Google or Yahoo. This is the "Googlization of America" that Brian Kardon at Forrester is complaining about.

I see this every time I post a new article. For example, suppose I write a post on the subject of, say, Walmart's use of RFID. In less than 10 minutes there will be visitors that have been alerted to this post through my XML feed and will start hitting this web site. And, within 24-36 hours, the major search engines will have spidered the post and a second group of visitors will be finding it. If it's a pretty good post, I may then pick up two or three new subscribers to my weekly e-mail version. (Check the right hand column if you'd like to subscribe, by the way).

Why do I do this for free? Frankly, because the good will and publicity is worth more to me and my firm than anything I could possibly earn by charging a fee to access the Spectator.

What's happening today is that research firms are facing the threat of what I call "open source research"⁽¹⁾. Just as commercial software vendors, such as Microsoft, are facing competition from free open source alternatives such as Linux, so also the paid research firms are facing competition from new free public sources of technology information, such as public forums and blogs.

Now, I do not mean to belittle the work of the research firms. I have met a number of analysts, and I think they are smart and insightful. But the point is that, for the businessperson that just wants a piece of information, or a perspective on a certain subject, there are alternatives to paid research. You'll have to dig, and you'll have to take some of it with a grain of salt, but you now have a way to find individual experts without having to buy a whole package of research services.

Is this the death of paid research? I don't think so. The IT research industry won't disappear, just as there will always be a place, even a dominant place, for commercial software vendors. But it's going to be harder to make money.
Because of open source research alternatives, research firms are going to find it difficult to charge the same prices that they've been able to charge in the past. They're going to have to give more of it away for free, or for a nominal price, and save premium pricing for the stuff that only a paid research firm can produce, such as market share studies.

As a result, there is already a consolidation trend taking place among technology research firms, such as Forrester's acquisition of Giga Information Group a couple years ago. As open source research gets better, the trend can only continue.

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Footnotes:
⁽¹⁾The concept of "open source research" is analogous to "open source journalism," a term that appears to have been first used in a 1999 article in Salon by Andrew Leonard. "Open source journalism" was more recently used by Hugh Hewitt to refer to informal networks of news-oriented bloggers that in some cases have been out-hustling the mainstream news media in developing breaking stories. I think that a similar trend may soon develop in IT research, or other types of professional research services for that matter.

Update, Jan 2. Corrected footnote to credit Salon source.