Good morning, welcome to Gartner Investor Day 2018. Thanks to all of you in the room and on the webcast for joining us today. I know you have busy schedules, and we appreciate your taking the time to be with us this morning. Whether this is your first Gartner Investor Day or you've been following the company for a number of years, we believe you will leave with a greater appreciation for the opportunity we have to sustain double-digit growth for years to come. Before we begin, please take note of our safe harbor statement shown on the screen. Today, you will hear a compelling story of Gartner and its relevance for investors seeking long-term, sustained, double-digit contract value, revenue, earnings, and free cash flow growth.
We will begin with our CEO, Gene Hall, who will describe Gartner's unique business and our powerful history of disciplined execution, applying operational excellence to drive growth and shareholder returns. Peter Sondergaard, our Head of Research and Advisory, will share a compelling view of Gartner's unrivaled content created through the combination of Heritage Gartner and Heritage CEB. After a short break for lunch, Joe Beck, our Head of Global Technology Sales, will demonstrate how we will continue to deliver on our proven track record of sales excellence in the technology space. Chris Thomas, our Head of Global Business Sales, will describe how we are bringing our sales excellence playbook to the full set of enterprise functions. Following the sales discussion, Craig Safian, our CFO, will return to our market opportunity and detail the attractive business model, investments in the business, and capital deployment strategy.
He will translate what you will have heard from Gene, Peter, Joe, and Chris into the financial model that generates double-digit profit and free cash flow growth. Finally, Gene and Craig will answer your questions. Thank you again for joining us today.
Where do we invest first?
Is our benefits program competitive?
What's the right strategy for growth?
How will my team be ready for digital transformation?
How do we change leadership mindset?
How can we manage
These are the questions clients ask more often with greater urgency across the entire C-suite. As technology plays a more pervasive role in every core business function, leaders are looking for answers, and they're turning to Gartner for help. Gartner delivers the information and the insights to help leaders and their teams across every major function meet those challenges and navigate an evolving technology landscape. We empower organizations to succeed. Gartner is serving enterprises of all sizes in every industry, worldwide, across all functions in the enterprise. Welcome to Gartner Investor Day 2018.
Ladies and gentlemen, please welcome to the stage Gartner's CEO, Gene Hall.
Well, good morning and welcome to Gartner Investor Day. Digital business is here to stay. Expectations are high. Industries are being reshaped. Everywhere you look, change is the single biggest constant. Who do enterprises around the world of all sizes in all industries depend on to survive and thrive in this environment? Gartner. For investors seeking sustained double-digit free cash flow growth, Gartner is an unrivaled opportunity. Today, you'll get a detailed overview of our business. I'll share our strategy to create extraordinary value through the CEB acquisition. You'll see how we continue to drive double-digit growth in our key financial metrics over the long term. Now, before I get started, I'll take a minute to introduce our operating committee members that are with us here today. I'm going to start with those who you'll hear from later on.
We have Peter Sondergaard, who leads our global research and advisory team. You'll hear from Joe Beck and Chris Thomas, who lead our global sales organizations. Most of you know our Chief Financial Officer, Craig Safian. The other members of our team that are here are our head of worldwide events, Alwyn Dawkins. Our head of consulting, Scott Hensel. Tim Davis, who leads our global products and services organization. David McVeigh, who heads up our Digital Markets segment. Robin Kranich our Head of Human Resources. Our Chief Information Officer, Mike DiLiberto. Our General Counsel and Corporate Secretary, Jules Kaufman . During our break and after presentations, please get to know our team. With that, let's get started. Gartner has about $4.2 billion in revenues and more than 15,000 associates. We serve almost 12,000 enterprises in 100 countries around the world.
We operate in four business segments: research, events, consulting, and talent assessment and other. Our events segment is about 10% of our business. Our singular mission in events is to make every conference we produce the must-attend event for the communities that we serve.
By combining the outstanding value of our research with the magic of live events, every conference we produce becomes the most important annual gathering for the executives that we serve. As a result of this, the first thing that many executives do at the beginning of every year is to sign up to attend their annual Gartner conference. Last year, our heritage Gartner events attracted about 64,000 attendees from around the world, and that included more than 10,000 chief information officers. We delivered 65 conferences covering IT, supply chain, and marketing throughout the world. With the acquisition of CEB, we added destination events that go beyond IT. We also added almost 200 invitation-only C-level Evanta regional summits. Together, these attracted an additional 18,000 attendees. Consulting makes up about 8% of our business.
The Gartner Consulting segment is an extension of Gartner Research, and it provides clients a deeper level of involvement through extended project-based works that helps them execute on their most strategic initiatives. The Gartner Consulting is highly differentiated. First, we're independent objective. We don't sell software, we don't sell hardware, and we don't do implementation services. Secondly, all of our engagements are powered by Gartner Research, the best content insights available anywhere. Thirdly, we have the largest proprietary database of IT and business performance metrics in the world. As we announced last week, we concluded that talent assessment is not a strategic fit and have reached an agreement to sell this business. Research is our largest and most profitable segment, representing about 75% of our revenues. Our research and advisory segment sits at the core of Gartner's unique and competitively differentiated value proposition.
We have over 2,000 global thought leaders who create world-class insights, best practices, peer exchanges, and implementation guides across every major function. We deliver this value through a cloud-based subscription service and one-on-one interactions with our research analysts and advisors. We have a very strong value proposition. First, we provide our clients world-class insights on how to achieve their most important priorities. For clients who are making major purchases, we offer advice on the best solutions for their needs, and we also show them how to get the best pricing and terms. No leader can be fully effective without knowing the relevant benchmarks. So we provide benchmarks that help leaders understand which parts of their organizations are performing well and which have significant opportunities for improvement. We offer unprecedented networking across peers who have or are facing similar challenges and want to learn from each other.
Finally, we provide clients with the insights that they need to personally be at the top of their game. Each of these are of tremendous value, but collectively, they're even more valuable. Because of our syndicated research approach, where we write insights once and many clients can use them, we offer these incredible insights for a price that's a tiny fraction of the value. Even our largest clients, Gartner is a cost that's almost always significantly less than 1% of their budgets. There is no other place that our clients can get such valuable insights at such a modest cost. That's why our clients stay with us. We renew at high rates and on average, spend more with us year after year. Now, I'm going to give you some historical perspective of Gartner to help explain our business strategy. I joined Gartner in 2004.
In the years leading up to that time, Gartner contract value had been shrinking. The leadership team didn't believe the research business could grow. It was clear that there were substantial opportunities for improvement and strength to leverage to get the business growing. First, a large part of our research content was on topics that weren't important to clients. So we realigned our analysts to write about the topics that mattered most to our clients. We ensured that our advice was relevant, current, and compelling. We call this indispensable insights. Gartner had a lot of talented associates, but many of the most senior leaders didn't have the skills to take Gartner forward. So we upgraded the leadership team. In addition, we made sure that any talent gaps throughout the organization were addressed. We call this developing exceptional talent.
The sales organization was missing many of the elements to be successful as a growth company. Things like sales training, territory planning, and a good CRM system. We addressed these areas, and we call it sales excellence. Even with great research and sales excellence, other parts of the organization are needed to grow successfully. You need a strong sales recruiting capability. You have to continue to develop compelling new products. Finance has to manage invoicing collections and cost effectively. We call this the enabling infrastructure. We put these elements in place as well. We started to build a culture and management systems to drive globally consistent execution of best practices. With these elements in place, we grew our sales force. Our contract value went from shrinking to growing.
Contract value accelerated at a compound to a compound annual growth rate of 10% per year between 2004 and 2009. Even though our contract value growth accelerated dramatically, we know that we needed to continue to improve over time. We also built a culture of continuous improvement and continuous innovation to accelerate our initial success. I'm sorry, to sustain and accelerate our initial success. This chart represents what we call the Gartner formula, that the leadership team used to drive growth. In the middle are the first four elements I just discussed: indispensable insight, exceptional talent, sales excellence, and enabling infrastructure. For all of these, we drive globally consistent execution of best practices and continuous improvement and continuous innovation. These are the elements that have driven our sustained double-digit growth. They also provide a very large market opportunity.
We developed a detailed bottoms-up estimate of that market opportunity. It's based on looking at the actual number of companies, the specific roles within each company, and pricing for the appropriate products for those roles. Using this approach, the market opportunity for technology is about $55 billion. That gives us potential for sustained double-digit growth. At the end of 2009, we entered a new functional area, supply chain. We did this through an acquisition of a company called AMR Research. The AMR acquisition demonstrated that the syndicated research approach was just as applicable to supply chain professionals as to technology professionals. AMR had similar operational issues as Gartner had had in 2004, with the result that contract value had been shrinking in the years before the acquisition. After acquiring AMR, we applied the Gartner formula to the supply chain business.
Because of our continuous improvement and continuous innovation, our formula was even better than what we had applied to accelerate Gartner's growth back in 2004. We continually made improvements to the formula. To simplify, I've represented this as versions 2 and version 3. The result, between 2010 and 2017, the supply chain business accelerated to a compound annual growth rate of 24% per year. By entering the supply chain business, we expanded our market opportunity. Supply chain added an additional $23 billion. Now we had a total market opportunity of about $78 billion. In 2012, we decided to enter another new functional area, marketing. There was an unprecedented amount of change going on for marketing professionals. There was an explosion in new digital media advertising options. You know the names, Google, Facebook, Twitter, Snapchat, and all the others.
Marketers had to decide not just what traditional media to use, but how and when to use these new digital media alternatives. To make it worse, the digital media alternatives were changing on a daily basis. These marketing professionals needed help, and they knew it. Based on our technology and supply chain experience, we knew our syndicated research approach would be the best solution. Our first choice was to acquire a business like we'd done with AMR and supply chain. No suitable candidates were available. We entered marketing from scratch. We built the business organically. We hired analysts to develop our initial research. We turned that research into a product. We hired salespeople to sell the product. We applied the Gartner formula. Of course, we continuously improved and innovated over time.
This Gartner formula was even better than the one initially used for supply chain. The result, our marketing business exploded. From a standing start, contract value grew at a compound annual growth rate of 76% from 2014 to 2017. Even better, it expanded our market opportunity by another $25 billion. We now had a total market opportunity of a little over $100 billion. Of course, while we were entering the supply chain and marketing markets, we still had a large technology business. We applied the continually improving Gartner formula to our traditional technology business. The result, growth in the IT business accelerated to a compound annual growth rate of 14% between 2009 and 2017. We accelerated growth in our original technology business while we entered the supply chain and marketing businesses, both of which grew even faster than our technology business.
Our combined contract value grew at a compound annual growth rate of about 13% a year from 2004 to 2017, as you can see on the chart. That is the power of the Gartner formula. As you'll hear from Craig later, our contract value growth converts into free cash flow growth. Free cash flow grew at a compound annual growth rate of 23% per year during the same period. We're living in a time of unprecedented change. Three mega forces are at the heart of this change. First, technology is becoming pervasive across every functional area of the enterprise. Cloud computing and open source tools have hugely lowered entry barriers for application developers. As a result, there's been a tremendous acceleration of innovation in applications. We see it in consumer apps for smartphones, but it's also true for corporate applications.
For example, HR self-service allows HR organizations to provide better service at a lower cost to the company. HR departments are increasingly using analytics to determine which applicants are the best fit for any particular job. The same is true for all the other corporate functions. Technology is becoming an important part of the job in every function across the enterprise. The pace of technology-driven change and impact is only accelerating. Artificial intelligence, machine learning, natural language processing are just beginning. I could go on and on. The second mega force is technology-based disruption. Whole industries are being disrupted by technology-driven innovation. The scope, scale, and economic impact of technology is enormous. It's driving massive change in every industry, every government, in every country around the world. You know the common examples. Online retailing continues to destroy brick-and-mortar retailers.
Online marketing from search engines, Facebook and the like, have decimated traditional media. Airbnb, Vrbo, and the like are threatening traditional hotels. Even a staid industry like automotive is being disrupted. Last year, the market capitalization of Tesla, which is a 10-year-old company, exceeded that of Ford, which is a 100-year-old company. Just last week, Amazon announced they may go into direct competition with UPS and FedEx. In today's world, every leader in every enterprise in every industry must worry about technology-based disruption. The third mega force is sustained macroeconomic and political uncertainty. The rate of change in the global economy has accelerated. Clients want our help in determining how best to adapt to these changes. For example, when Brexit was announced, many of our clients wanted our help to determine how their organizations and strategies should change in response.
The impact of these mega forces represents a huge opportunity for Gartner. Clients in every function of the business need help, and they know it. These pressing client needs come at a great time for Gartner as well. We have the technology expertise to help in every functional area of the business. Outside of marketing and supply chain, we lacked the research and sales team to provide the functional business expertise, that's where CEB comes in. CEB has deep business expertise across the functional areas of the enterprise, HR, finance, sales, product, legal, and the rest. They lack the technology expertise that has become so important. The combination of Gartner plus CEB allows us to address both the business and the technology issues across every functional area of the enterprise. This is going to provide unmatched content that helps our clients address their most pressing issues.
The opportunity that we saw with CEB is analogous to that of Gartner when I joined back in 2004. CEB contract value had been flat to shrinking. Yet they were an ideal candidate for growth. Of course, we're going to apply the Gartner formula to the combined business. This acquisition couldn't come at a better time. We've spent more than a decade continuously improving and innovating the elements of the Gartner formula. It's the best it's ever been. We've shown that the Gartner formula works on supply chain and marketing, generating even higher growth rates than the double-digit growth in technology. We have a deep bench of seasoned, highly capable leaders with the bandwidth to take on this challenge. This is the leadership team that helped develop the Gartner formula beginning back in 2005. They applied it successfully to supply chain and marketing.
They helped improve and innovate on the formula, which resulted in more than a decade of consistent double-digit growth. We're going to apply the Gartner formula to the CEB functional areas. When we do, we expect to achieve sustained double-digit growth. This is going to give us an even larger market opportunity. We estimate that the combined market opportunity for all nine functional areas is almost $200 billion. That compares to today's contract value of about $2.8 billion. With this nice market opportunity, we can grow at double-digit rates for a very long time. We're going to approach the integration of CEB to achieve aggressive double-digit growth while effectively managing risk. As I've discussed, prior to the acquisition, Gartner was in three functional areas, technology, marketing, and supply chain. CEB covered most of the functional areas across the enterprise, including some that overlap with Gartner.
We combined the overlapping areas. We merged the technology salespeople from heritage Gartner with those in the heritage CEB sales team, creating a single technology sales team, as you see on the chart. We also merged the heritage Gartner marketing team into the heritage CEB sales and marketing team. Create a single sales and marketing team, again, as you see on the chart. Having combined the overlapping areas, we organized to maximize growth while minimizing risks. One of the major risks was ensuring that the Gartner technology business continued to grow at double-digit rates uninterrupted. We took the combined heritage Gartner and heritage CEB technology organizations and created a dedicated organization just focused on technology. We call this team Global Technology Sales, or GTS for short. For this team, virtually nothing has changed organizationally as a result of the acquisition.
They get a new enhanced product to sell that combines Gartner and CEB technology research. As I discussed earlier, this approach is working as planned. Global Technology Sales has maintained strong performance. You'll hear more about their performance from the experienced leader of this team, Joe Beck, later today. Second priority was to maximize growth in the business areas by implementing the Gartner formula quickly and seamlessly. We set up a second sales organization supporting all the enterprise roles beyond IT. This includes supply chain. It also includes the combined sales and marketing team, and we included other business sales teams from heritage CEB. This team is called Global Business Sales, or GBS, as you can see on the right side of the chart. It is led by Chris Thomas, who is a seasoned Gartner veteran.
Chris was a major contributor in creating and evolving the Gartner formula, and you'll hear from him later today as well. By including the heritage Gartner supply chain and heritage Gartner marketing in the new GBS organization, we have seeded GBS with experienced Gartner leaders to facilitate implementation of the Gartner formula throughout this team. We completed the reorganization as of January 1st of this year. As a result, we will no longer report heritage Gartner and heritage CEB contract value. They no longer exist individually. To help you understand our business, we will report technology contract value and business contract value. Shown on the chart, if we had reported in this manner during 2017, technology growth rate would have been about 13%, and ending contract value about $2.2 billion.
Global Business Sales would have ended 2017 with a growth rate of 8%, and our ending contract value would have been around $600 million. Of course, the combined growth rate remains the same at about 12%. The CEB acquisition and post-merger integration have gone exceptionally well. We announced our acquisition of CEB in January of 2017. There was uncertainty as to the time required for due diligence, arrangement financing, and the required regulatory approvals. Based on typical timelines, we laid out a plan for completing the acquisition. We satisfied all the requirements and closed the CEB acquisition early April, which is faster than our initial plan. There was also uncertainty as to how fast we could proceed with integrating CEB into Gartner. During due diligence, we determined that we would be able to pursue an extremely aggressive timeline for integrating CEB and preparing for accelerated growth.
Once the acquisition closed, we pursued this aggressive integration. As of today, we have fully integrated the two organizations. This was no simple task, as it involved integrating about 5,000 heritage CEB associates with about 10,000 heritage Gartner associates, all the while continuing to grow our traditional business at 15%. Well, the two research organizations have been integrated. The product teams have been integrated. The heritage CEB Destination Events and Evanta businesses have been integrated into the heritage Gartner Events business. The staff functions such as HR, finance, and IT have been integrated. We have met our expectations on capturing synergies. We determined that the talent assessment did not fit strategically, set up as a standalone business, and have reached an agreement to sell that business. We have also accelerated the investments needed to drive future growth using the Gartner formula. We developed a new set of products.
We introduced improved commercial terms. We strengthened customer service, improving retention. Perhaps most importantly, for the first time in recent CEB history, we accelerated hiring. As of today, we've accelerated growth in our direct sales force from zero to approximately 18% year-over-year. We've also expanded our sales support team by more than 20%. All of these actions and investments were on a much faster timeline than we anticipated when we announced the transaction. They're already having an impact. Heritage CEB contract value went from negative 1% growth in 2016 to positive 2% in 2017, which reversed a declining growth trend. Wallet retention improved by six percentage points, which is a remarkable improvement in a single year.
The rapid closing, aggressive integration timeline, and accelerated growth investments, together with our initial operating results, give us a high degree of confidence that we're well on the way to achieving our strategic objectives and delivering consistent double-digit growth over the long term. In short, the CEB acquisition and integration is proceeding ahead of our initial expectations. Here's what you should take away from my remarks. We know how to successfully grow a syndicated research business. Beginning in 2004, we developed the Gartner formula for sustained double-digit growth. We have a culture of continuous improvement and continuous innovation. We get better, stronger, faster, year after year after year. We've achieved sustained double-digit growth in technology, supply chain, and marketing by applying the ever-improving Gartner formula.
The combination of Gartner plus CEB gives us the capabilities to address critical client needs in technology and business across every major function in the enterprise. It also expands our market opportunity. We have an experienced, highly capable leadership team that has the bandwidth to make the CEB acquisition a success. We've organized our integration approach to maximize growth in both technology and business areas while minimizing risk. We are in the best position we've ever been in to provide sustained double-digit growth across all of our key financial metrics. To deepen your understanding of Gartner and our expanded research and advisory capabilities, I'd like to introduce Peter Sondergaard. Peter's our Global Head of Research & Advisory. He's led Gartner Research since 2004 and has steadily evolved his organization with and as a part of the Gartner formula. He's been with Gartner for more than 25 years.
No one can tell the story of our research and advisory business better than Peter.
Thank you, Gene, and good morning, everyone. This morning, I will show you the details of the Gartner formula that Gene talked about. I will show you how the integration of CEB and Gartner will lead to an efficient, scalable, and unrivaled research and advisory model. Essentially, how we are better together. Secondly, how we will drive substantially higher leverage of Gartner's content, and lastly, enable Gartner to cover an ever-increasing urgency in addressing the issues of functional leaders in every organization. The integration of CEB and Gartner brings together two powerful research models. The heritage Gartner research and advisory organization, based on an analyst expert-led research model serving IT, supply chain, and marketing. The heritage CEB research advisory organization, which relies on a best practice peer network research model serving HR, finance, sales, and legal, as well as two of the functions Gartner also addressed, IT and marketing.
Together, these two organizations enable Gartner to combine the strengths of both research models. First, let me show you how we have applied the Gartner formula to create one research advisory organization with globally consistent practices proven to drive continuous improvement as well as growth at scale. Now, as Gene outlined, Gartner now serves the major functional executive roles and their direct reports in all organizations. As a consequence, this is also how the new research and advisory organization is structured in specific practices mirroring the functions such as our finance practice, our IT practice, our sales practice, and so forth. As you'll hear from Joe Beck and Chris Thomas, Gartner's sales force is similarly organized around these functions. In each research advisory practice, we cover the topics that matter most to the top functional leaders, as well as their direct reports.
To illustrate this, let's look at HR and the roles we cover here. At the center, we have the head of HR or the chief human resource officer. Now, in addition to writing research and giving advice to the head of HR, the HR practice in Gartner also writes research and advises the key leaders reporting to the chief human resource officer. Roles such as the head of recruiting or the executive responsible for comp and benefits, and so forth. Let me then show you exactly how we get better together. The most impactful component of the integration between CEB and Gartner is the ability to create a valuable and far more efficient and scalable approach to creating content and advice. To advise specific roles on their most important issues. Gartner now operates three distinct research models. A research model is a way content is created.
Each research model is unique in the way it provides insight and advice. The first research model is the analysis and evaluation research model. This is the heritage Gartner approach to creating content. A research model that creates advice based on the experience of the analyst, using data and interaction with clients as the input. This is the model that fuels Gartner's double-digit top-line growth and is an efficient approach to advising senior leaders on future trends and current decisions. The second research model is the peer and practitioner research model. This is the heritage CEB approach to creating content. This is a research model that relies on experienced researchers and advisors to extract best practice templates, models, and key insight from member clients. The heritage CEB model is different than the heritage Gartner research model.
It is more effective and more efficient at uncovering best practices and tools and templates. You heard Gene talk about our strong value proposition. Here, we've just strengthened two of them, insights and connecting with peers. Combined, the two models create better client value for all functional organizations that we serve. Equally exciting is that the integration also enabled us to create a third research model, a quantitative research model. One that leverages data analysis tools to extract insight, which is then displayed using visualization tools. It was the size of the combined organization that allows us to create at scale, this third research model. This is a model that includes benchmarking, another of the five elements of our value proposition. Each organization had some benchmarking and quantitative analysis, but our capabilities are stronger now that we bring them together in this new research model.
Each of the functional practices in the new combined Gartner Research & Advisory organization operate all three research models. For example, in the marketing practice, we have content created by analysts, the heritage Gartner approach, content created by researchers and advisors from the heritage CEB approach, and data visualized through our new quantitative researcher model. The output of each research model is combined into one seamless client experience in the new products we have launched and those that we will launch, thereby providing indispensable insight and advice and tools. The ability to combine these three research models allows Gartner to create value for clients that neither organization would've been able to do independently. We achieve scale as one organization. That scale as one organization is pretty impressive. There are now more than 2,000 analysts, advisors, and researchers covering topics important to all major functions.
They are based in 38 countries around the world, serving clients in over 100 countries. In the new Research & Advisory organization, we have applied Gartner formula for globally consistent execution, and we have done that already now by deploying one customer relationship management platform for everybody who interact with clients, one content planning and collaboration platform, and one approach to driving content leverage across all functions. For all 2,000 experts, one platform. There is tremendous power in bringing these brilliant minds together. I'd really like to give you an example of this. Two associates, one from heritage Gartner and the other from heritage CEB, discovered the power of better together. Helen, an analyst from Gartner's team covering HR technology, was looking for a way to test the hype around artificial intelligence in the recruiting space.
She met Dion, a principal executive advisor leading the CEB Recruiting Leadership Council in a research community meeting, and this is where all of our thought leaders join together to compare ideas, they came up with this great little finding. Great things came out of the encounter. Dion contacted Helen and said, "I can help put you in contact with one of the senior leaders in the Fortune 50 organizations who has discovered ways of using artificial intelligence in a very sophisticated manner." Helen was able to test her hypothesis, and Dion learned more about artificial intelligence than he had ever thought was possible. These moments happen throughout the new Research & Advisory organization now. Let's step back and look at how this, in the client's mind, translates into value.
During the summer last year, we surveyed clients to understand their perceptions of the value of the two research models. We first asked them what they need when becoming a client of each organization. As you can see from Heritage Gartner, they got much more of a technology perspective. That should be the result given Gartner's size in covering technology. These clients also get more insight into strategy and trends. Heritage CEB, on the other hand, provides more of a business perspective, better understanding of how to deal with execution and implementation. That would have been expected given the fact that the research model is based on best practices and peer insight and has a significantly higher focus on business issues. On the right-hand side, you see how these needs are met.
From a Heritage Gartner perspective, this is done through analyst advice that anticipates the impact of things, anticipates the future, and provides strategic guidance. From a Heritage CEB perspective, this is provided through peer experience, understanding how others do things, understanding what the best of the best do, and then preparing insight and advice through case studies, tools, and templates. As you can see, the combination of both is much stronger than each independently. Our work now consists of optimizing areas where there's overlap, allowing the most efficient and scalable research model to focus on its strengths. In our second section, let's now explore how the scale of the three research models and the ability to cover the most important priorities of all functional leaders make Gartner unique. How this allows us to take relevant content from one functional area and leverage it across all functional areas.
Essentially, write once, leverage many times. As I said, we cover the topics that are important to all of the major functional roles across the organization. To help functions be successful in those areas require that we provide insight and advice to the critical roles in each functional organization, from the global CXO, through leaders, to expert professionals. Today, we do that in the IT space and have products for each level. As you can see by the blue dots on the slide, we are also well on our way to do that elsewhere, have more to do. This means we continue to have opportunity to expand, to grow the business substantially. Within each of the functional areas, we organize our experts and the way we create the content around the issues that are most important to our clients.
We continuously update this, moving resources to the areas that are most critical at any given time. In fact, every year, we cover and conduct more than 400,000 interactions with senior executives in almost 12,000 client organizations. This is how we are uniquely positioned to detect in real time how things are changing. In today's business climate, they're changing fast, really fast. Some of the content that we create in one functional area is relevant across several or all of the functional areas that we cover. This is true with regard to Gartner's heritage coverage of technology. As Gene said, we're seeing a fundamental change in business as a result of technology. This means technology is important to every functional leader. Gartner's coverage in the technology areas enables us to take relevant content and then move that to other parts of the organization.
An example of this is artificial intelligence. Let's hear from one of our experts as to the importance of that topic.
Artificial intelligence systems improve their own behavior and their own performance over time using the data that they ingest and, in some cases, even the outcomes that they themselves produce. Our clients tell us, "What matters to us is that artificial intelligence makes it possible for us to automate processes that we never could before, especially non-routine processes. AI performs in a way and accomplishes things that up until now we thought only humans could do. We take these insights, and we convert them into immediate responses to customers or to employees or to suppliers or to someone else, to constituents, in a way that we never could before artificial intelligence made it possible to do so.
Whit Andrews is one of many experts we have in artificial intelligence. He's a really cool and bright guy. As you clearly heard Whit say, AI is a critical topic now, and artificial intelligence is important to all roles. We can make the content and advice that Whit and his colleagues around the world create on artificial intelligence available to all functional leaders. In fact, more than 70 analysts and advisors from the combined research organization recently contributed to a large body of research on artificial intelligence, and we made sure that that was done in the context of the specific functional leaders. We made that available across all of the different areas. That's not the only broad topic that is relevant to business leaders. There are many others. Similarly, in Heritage CEB, there are business topics that are pivotal to all roles. One such topic is talent.
According to Gartner's 2017 CEO survey, talent is now among the top priorities of CEOs. That kind of makes it the top priority for all functional leaders. CEB's HR practice has deep knowledge about the best practices, tools, and templates leaders use to create what is called the next generation workforce, what you do with talent. We have, in our new products, made our insight and content around talent available for all functional leaders. Ultimately, as you can see, we have deep understanding in the issues that are important to each functional leader, and where possible, we will make some of that content that is relevant to others available to the entire organization. Assuming, of course, that they are clients. Topics such as digital business, cost optimization, or as I said, talent, are relevant to all. Gartner has substantial depth and breadth of expertise in these and many other areas.
By having all key functional leaders as seat holders of Gartner, we can create a common vocabulary and provide frameworks for leadership teams to become successful and jointly solve the priorities of the organization. As I've shown, the Gartner CEB combination has an unrivaled, scalable, and efficient research model now. I've shown how we leverage expertise in one area that is relevant in others and how this drives an exponential increase in the use of our content and thus value to the client. Write once, leverage many times. One question remains: Is there the same sense of urgency in functional roles such as HR, finance, and sales, as there is in IT? Our third section lets us look at the priorities of selected functional leaders and whether or not there is that same sense of urgency and, therefore, a need for continuous advice.
It is, or should be, now clear to everyone that technology is changing business. Each of these technology areas have a profound impact on business and society as a whole. They impact all functions within an organization. Furthermore, to provide a little extra color, over the last seven years, four technology trends have impacted business continuously. We have called these the Nexus of Forces. In fact, I spoke about these at our 2012 investor meeting. The Nexus of Forces are cloud, which is changing cost and speed of execution of business. Mobile, changing how business and all functions interact. Social or collaboration, which is changing the nature of work. Lastly, data or information, allowing for hyperscale competition. Technology is changing everything, and disruptions from technological breakthroughs are directly impacting every business function. This is no longer just the concern of the CIO.
This obviously, therefore, creates a sense of urgency within IT, but it also changes business overall, and therefore, the sense of urgency within business functions, whether it is sales or HR or finance, marketing, or whatever other functional role. We surveyed a number of business functions late 2017 to understand what their most important issues are now. Let me show you a few of the results. While HR, overall, coordinates the organization's focus around the war for talent, HR has pressing priorities right now. First, coordinating employee interactions at a time when people expect technology in the workplace to be at least as good as what they use in their daily lives. Secondly, how to drive team-based performance management in a world where annual performance management conversations are no longer sufficient. Thirdly, how to digitalize IT.
All three of these priorities have been impacted by technology and involve technology. HR is defined by technology and changes at the speed of technology. Let's hear from a few of our experts around what they see as important in HR right now.
Today's HR leaders face tremendous pressure to create immediate and measurable business impact. Gartner equips Chief Human Resources Officers and their teams to navigate the complexities of talent acquisition and change management in a globalized digital business world.
When we talk to organizations right now, well over two-thirds of them are expecting much more change in the next three years. Right now, what companies really need to do is to make sure that they have a process for managing through that change, not just from a top-down level, but also incorporating their employees so that they can accept the changes that they want to implement in their organization, then go on and prepare for the next ones, which are inevitably coming.
The future of change management is really when we're not using the term change anymore. When we're talking more about the business and the fact that change is a part of business. Perhaps the biggest place where the role of HR executives has been changing is that in some ways, they're no longer the Chief Human Resources Officer. They're much more the chief change officer in the organization as we evolve and grow our businesses to have a bigger impact in the markets that we operate in. Almost every HR executive that we work with is faced with this question of: How do I build a change-capable organization, and how do I manage all the changes that are happening in my company?
The first thing that we do with the organizations that we work with is give them insight to help them kind of stay ahead in terms of what's going on. Second thing that we do is provide a whole set of benchmarking tools to help them better understand where they fit and how they compare to other organizations. The third thing that we do is actually help organizations upgrade their practices.
We're able then to really study what leading companies do and develop best practices, case studies for other companies to follow. Then we build tools off of the back of that to help companies accelerate through the process of their own change management and to get to the better answer quicker.
In HR, change is accelerating. In HR, technology is escalating that pace of change. Let's look at finance. Leaders, including the CFO, are being challenged by technology. Some of the top issues of finance leaders are cost optimization, especially leading those efforts across the organization. Mastering disruptive new weapons to achieve business growth. Essentially, technologies such as analytic tools, algorithms, and artificial intelligence. Lastly, talent, the issue shared by all leaders, as I outlined earlier. Again, these three priorities for finance leaders are directly impacted by technology or are issues that are business-related and shared with other functional leaders in the organization. Talent is also the top priority for sales leaders.
While the two other priorities that you see here at the surface don't reflect the importance of technology, the solution to both lies in using emerging technologies to drive new customer acquisition and existing customer retention and account growth. As you can see, all functions are impacted by technology and a series of other shared business challenges such as talent. There is a sense of urgency and speed of change to all functions. That is why our market opportunity is so large. Gartner's research business model of continuously working with senior leaders is therefore the most efficient model to address these issues. As Gene outlined, these issues are addressed by Gartner's strong value proposition. Gartner Research addresses all elements of the value proposition. Best practices to solve today's problems and address future strategic questions.
The ability to manage costs effectively, to benchmark their performance, to learn from peers, and continuously stay abreast of new trends. Working with Gartner is by far the most efficient, agile, and cost-effective way to address these five needs. You can see how research and advisory is part of the Gartner formula. We're responsible for creating the indispensable insight that Gene talked about, insight that is unrivaled. That insight is unrivaled because of the CEB-Gartner combination. We are truly better together. The insight is unrivaled because we're leveraging across the enterprise, write once, use it many times over a broad array of leaders. Finally, that insight is unrivaled because we understand what is most urgent and most relevant to senior leaders today. Humbly, who else in the marketplace can say that?
Well, thanks, Peter. You just heard how our combined research and advisory segment provides senior leaders in all major functions across the enterprise with indispensable insights, advice, and tools. These indispensable insights are at the core of the Gartner formula for driving long-term double-digit growth. We're now going to take a short break and we're going to serve a light lunch. When we return from the break, you'll hear how we've set up our sales teams to drive double-digit growth. Thank you.
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As technology plays a more pervasive role in every core business function, leaders are looking for answers. Gartner is serving enterprises of all sizes in every industry worldwide across all functions in the enterprise. Welcome back to Gartner Investor Day 2018.
Ladies and gentlemen, please welcome back to the stage Gene Hall.
Welcome back. I hope you were able to take advantage of lunch break to meet some of our operating committee members and also network with each other. Now I'd like to introduce you to Joe Beck, who runs our Global Technology Sales organization. As I described earlier, this team is composed of heritage Gartner and heritage CEB technology sales professionals. Joe came to Gartner through an acquisition back in 1997, and in the 20-plus years since then, he's held various roles of increasing responsibility in sales. He's led and evolved with the Gartner formula for growth, and he knows how to drive globally consistent execution of our sales excellence playbook. Joe's going to talk about our sales capabilities to capture our opportunity in the technology market. Joe.
Thank you, Gene. Good afternoon everyone. In my role as EVP of Global Technology Sales, GTS for short, I have the privilege of leading a strong, passionate, and best-in-class sales organization that knows how to leverage our proven practices to drive growth. Global Technology Sales has $2.2 billion contract value and is comprised of roughly 2,700 sales professionals who sell our indispensable research into nearly 12,000 enterprises in more than 100 countries around the world. As a result, we've delivered a sustained track record of success.
Building upon what you've already heard from Gene and Peter, I'll give you a brief overview of the large opportunity we have in GTS, the effective strategy we are executing upon, and our unrivaled capabilities as an organization to continue our trend of double-digit growth. Our strategy is and has been to sell to and serve every level of the IT organization by understanding the business priorities of the team and every individual on that team. Starting with the CIO, our salespeople work diligently to align our IT expertise to their specific business objectives. We expand to members of the CIO's direct team, broadly into the IT organization to help them execute. This seat-based model enables us to deliver incredible value to individuals and their teams while expanding our overall opportunity within the account.
I believe that every existing GTS client can and should be growing at double digits. That's just with our 12,000 enterprise accounts that are clients today. We've identified over 138,000 enterprises that can and should be our clients. We've captured less than 9% of these available enterprises, which means our market opportunity in GTS is huge. We know how to capture this opportunity. We've honed and refined our practices over the years. We execute those practices consistently across the globe. As you heard from Gene, our clients are being impacted by three mega forces. All are being impacted by technology. IT is changing the game. We know how to help our clients harness the power of technology.
Our technology insights, advice, and tools are currently being used by IT leaders and their organizations to manage through these mega forces, whether their companies are being forced to cut costs or fueling growth. Let me illustrate. Some companies are being forced to cut costs. If they ever want to recover from this position, these companies have to cut the right costs. They shouldn't just randomly cut 10%-20% of their budgets across the board. We know how to work with these clients to identify opportunities to drive efficiencies in their business. We show them how to leverage technology to reduce costs. We help them purchase the right technology for their environment at the optimal price, and we continuously work with them on their priorities to return to growth. On many occasions, companies pursuing cost-cutting increase their spend with Gartner in order to achieve these objectives.
On the other end of the spectrum, we have companies that are in the growth mode. They want to leverage technology to get ahead of the competition or even disrupt it entirely. One of our clients, a major retailer, is tasked with digitizing their processes and moving to the cloud so they can expand their market opportunity and drive revenue growth. The CIO and each of her team members is actively leveraging Gartner insights from strategy to execution. In another instance, a manufacturer is embedding software intelligence into its heavy machinery to continuously monitor performance. This way, they can fix breakdowns remotely as they happen and ultimately solve problems before they even occur, which will create a significant advantage for them. This CIO and his direct reports are leveraging Gartner insights around predictive analytics, mobility, AI, and more.
As you can see, we can assist our clients in cost-cutting or to fuel growth. With most of our clients, we're helping them with both. We have solutions for every environment and every role of an IT organization, from the CIO and their direct reports down into their organization. We know how to help those individuals with their business priorities. We've trained our sales teams to understand whether a client is in cost-cutting or growth mode, and they know how to align our resources and our value accordingly. Now, with the integration of technology from Heritage Gartner and Heritage CEB, our products have never been more powerful. Last August, we launched a team-based product that incorporates the best of both, and it already has great traction, and our sales leaders and their teams are really excited about it. Let's take a closer look.
In August of last year, we launched a new product that incorporates best of both content. Our teams and our clients are elated about what has come. They have said, both sides, that this is the best product they've seen. They've incorporated strategy and peer-to-peer insight, which has really driven how to execute and come to Gartner as their true partner. From a product perspective, since the acquisition, I have seen huge excitement, not only from my sales teams but from our clients. It's provided our sales teams with additional avenues of opportunity. It's given our clients additional value from combining Heritage Gartner and Heritage CEB, and we've seen a robust change in the way we can work with our clients.
Erin is a world-class sales leader with a world-class sales team. To support Erin and hundreds of sales leaders like her throughout our organization, we leverage our enabling infrastructure and place a heavy emphasis on recruiting, training, tools, and best practices that will lead to ongoing success. We start by recruiting top talent. Gartner has invested in a robust recruiting engine that is hiring tenured sales professionals as well as recruiting from college campuses. We steadily have grown head sales count 15% annually, and to ensure we nurture and develop that talent, we offer best-in-class training. This includes a six-week sales academy, which focuses on the sales excellence playbook for both driving retention and growth. By the time our new salespeople take on a quota-bearing role, they understand the economics of our business and how to execute.
They've been trained on proprietary tools and best practices, and our sales leaders know how to coach these individuals to identify opportunities in their territories and prioritize those opportunities so they become productive as quickly as possible. We have a strategy to meet our clients where they are. That is, we hire salespeople in those geographies where the opportunities sit. We ended 2017 with a sales team three times larger than it was 10 years ago. We're a diversified group, with nearly 50% of our salespeople based outside of North America. They call on all industries in every region of the globe and every size enterprise. This gives us the ability to drive deeper levels of relationships and engagement with our clients. We have agile territory planning capabilities. We know the skills and traits that lead to success in sales. Things like work ethic, perseverance, and having a no-limits mindset.
The Gartner culture is unparalleled. Our teams are true professionals. They build strategic relationships. We have a highly collaborative culture that supports the use of leading-edge tools and best practices. We have innovative products, and there are tremendous upward mobility opportunities. All this makes Gartner Sales a highly sought-after place to build long-term sales career. With market-leading compensation, the ability to interact with the C-level, and work alongside some of the brightest minds in technology. With that, we are regularly recognized as a best place to work. In closing, what you should know about Global Technology Sales is that we are a strong, passionate organization. Every year, we get better, stronger, and faster. We have tremendous opportunity ahead of us, we know the right things to do to capture that opportunity. We wrote the sales excellence playbook.
We're driving globally consistent execution of those plays, we deliver incredible value, whether clients are in distress or harnessing technology to drive growth. We have the opportunity and the capability to continue to grow at double-digit rates over the long term. Thank you.
Thanks, Joe. Joe just described how we build the strong sales capabilities that are fundamental to the Gartner formula, and also how execution of these capabilities will continue to drive double-digit growth for years to come. I'll now introduce you to Chris Thomas, who heads our Global Business Sales team. This team works with the functional areas beyond technology. Chris has been a member of our operating committee since 2013, and he too has a long history with Gartner. He's been with us for 18 years. Throughout his tenure, Chris has held various roles of increasing responsibility in our sales and service delivery teams. Chris helped write the Gartner Sales Excellence Playbook, and using that playbook, he's led technology, supply chain, and marketing teams to double-digit growth. Chris is going to talk about how his team is leveraging the Gartner formula to accelerate growth in GBS. Chris.
Thank you, Gene. Good afternoon, everyone. You just heard from Joe that Global Technology Sales has the opportunity, the strategy, and the capabilities to drive sustained double-digit growth over the long term. Leveraging that same sales excellence approach and accompanied by relentless execution, I am confident Global Business Sales can and will grow as fast as Global Technology Sales. We've been on the journey of building and applying the Gartner formula before, as you've heard today, I was part of that as a leader growing the technology supply chain and marketing businesses. Our journey now is to apply that same Gartner formula at an even faster rate. Let me share in more detail why I'm so confident Global Business Sales, or GBS for short, can accelerate our growth rate over time to that of Global Technology Sales. It's a three-part story. Who are we?
How have we reset the foundation? How are we applying sales excellence to drive accelerated growth? Who are we? Today, Global Business Sales represents over $600 million in contract value, selling into all functions in the enterprise beyond IT. These include sales, marketing, supply chain, HR, finance, legal, and others. GBS currently has a little over 700 quota-bearing salespeople across all of these practices.
As a reminder, this compares to roughly 2,700 GTS salespeople aligned to the IT function alone. The GBS team today is concentrated in the U.S., where 73% of our salespeople are based. Not only do we have an opportunity to significantly grow our teams here in the U.S. for many years to come, but also to accelerate growth globally. Fueling our global expansion will be the existing Gartner client base and our in-country infrastructure and expertise. Leading these teams, we have the best of both. Business-savvy, tenured professionals from heritage CEB, combined with some of our very best heritage Gartner leaders, with proven expertise in executing our sales excellence playbook. Together, they know how to lead these teams to deliver sustained, accelerated growth. They understand that we need to first reset and execute on a number of disruptive, yet important changes to build a strong foundation for growth.
These changes create the right conditions to then overlay our sales excellence approach to create strong momentum. This reset began last year with creating organizational simplicity, as Peter talked about. This is about the power of alignment with salespeople dedicated to a single function. We then refocused the sales team on the most profitable part of our business, research growth. Our research growth is fueled through seat-based solutions versus enterprise agreements. We accelerated this transition as well, introducing seat-based offerings across all the major functions. Along with these product changes and the additional value they offer, we eliminated discounting. We then established a rhythm of consistent price increases. All of this is a familiar story for me. As over my 18 years here at Gartner, I've led sales teams through each of these before in our technology, supply chain, and in our marketing businesses.
In each case, they created a foundation for sales excellence and accelerated our growth. They will now do the same for us in GBS. Just to go a little deeper into one of these areas, I mentioned the shift from enterprise licenses to seat-based solutions. I want to return to that story because it shows how just one reset can have such a profound impact on the success of our business. Back in the days when we were selling enterprise licenses to our IT clients, we knew there were many individuals within our enterprise clients who needed our help. With an enterprise agreement, they all had access to our content, but very few actually leveraged that access. We discovered that those who used our content most were almost always located in the same division or geography as the person who signed the contract.
Beyond that, many never even knew they had access. Even worse, because there was no contract value growth potential once an enterprise agreement was sold, Gartner salespeople were not motivated to support these clients locally, even though they needed our help. Moving to seat-based solutions dramatically increased our ability to deliver greater value to our clients while also accelerating our growth. Our opportunity expanded exponentially overnight. In previous conversations with my sales teams, I'd asked them at that time how many prospects they had. Before the change, they were giving me a count of enterprise prospects, 10 or 20. After the change to seat-based, they were able to give me names of individuals in each of those enterprises that now numbered in the hundreds.
This transition from enterprise to seat-based was game changing for us back then. It is game changing for us now in GBS, representing new business, migration, and retention improvement opportunity. Executing rapidly and resetting around these disruptive, yet foundational changes positions us well to now apply the key elements of our sales excellence approach to enable accelerated growth. We know that to succeed, we need to drive toward building the right team, focusing on the right opportunity, recruiting to achieve the right sales capacity, creating the right capabilities, and relentlessly executing sales best practices. I am so excited because we are well on our way with each of these. Let's start with the right team. The GBS team has responded better than I could have ever hoped for as we combine the two organizations. It now firmly believes our business can and will grow faster.
Let's hear from three of our heritage CEB sales associates as they share their thoughts on Gartner and the opportunity ahead.
It's been fantastic to join the Gartner family. First and foremost, you can tell that you work for a sales-driven organization, and that sales sits in the middle of everything we're trying to do, which is grow the business in a healthy and sustained way.
This is a company that has proven itself to be a sales-oriented company that's grown at a high clip for 30 quarters straight, which to me is awesome.
In sales, there are limitless career development opportunities for folks like me and other sales professionals across the team. It's fantastic we get to interact with clients at the highest levels.
My team is excited this year. They're being given a chance to sell more complex, strategic, frankly, high price point deals. Deals that get us to the six-figure range for the first time in my program's 10-year history. I'm excited to have my first conversation represent a $100,000 price tag to a CMO and not have them flinch because it's worth that.
Gartner's been investing in our growth, both as individuals and as a sales team.
I feel like I receive so much coaching from our leadership coaches, from my boss, to make myself a better, stronger leader. I feel like I grow each day in the business.
What's even more exciting is we have a set of proven practices and tools that will enable us to be successful and world-class at what we do.
As you heard there from Peter, Gail, and Crispin, they see the opportunity. They are highly motivated, engaged, excited, and open to change. The same is true across the entire GBS sales team. Sales attrition, as an example, through 2017, was down over six points. The impact, fewer open territories. With fewer open territories coming into 2018, we have a great opportunity to leverage our engaged and more tenured associates to help drive our growth. We have a great team today, and we are building the team for tomorrow. Let's now turn to the scope of our opportunity. Quite simply, it's enormous, and I am confident that you will conclude that it's not about future runway. It's about how fast we can hire to capture it. Gene and Peter discussed the pace of change and the impact of technology, creating urgency for all functions in the enterprise.
Leaders in every function, in every industry, in every geography, need help. We are uniquely positioned to offer that help. I attended a Gartner supply chain event last week focused on the complexity and pace of digital business transformation and its impact on supply chain. Rapid transformation was at the core of almost every presentation and conversation throughout the event. Driving that transformation, technology. Yes, technology dominates the word cloud because it's changing the role of every supply chain professional at an unprecedented rate. It's not just supply chain. Technology is central to all the roles we serve, creating opportunities as we shift to selling to individuals with seat-based solutions at all levels and within all functions. Let's hear now from Margot Aronson, an account executive in Arlington, as she talks about this same opportunity.
I am currently on the HR practice, but I was previously on the finance practice. Before the acquisition, there were a couple of barriers that I faced when selling to business leaders. The first being that the role of the CFO and CHRO are constantly evolving. There's much more complexity in the work environment. Technology literally is impacting everything that we do. Business leaders are literally required to leverage technology now in order to make the right decisions for their organizations. In the past, when a CFO would ask me if we had any resources related to making that decision, those conversations would end in, "Talk to you in a year." We would have to literally walk away on these deals because of it. With the seat-based product, I have the opportunity to learn more about the challenges that business leaders are facing.
In understanding their challenges, I can direct them to the content that will help them the most, which will have significantly more value on an individual basis. With Gartner for HR Leaders and Gartner for Finance Leaders, we are able to provide not only the role expertise, but also the technology expertise to support those really important decisions.
We have thousands of addressable enterprises and even more organizations, divisions, and functions within each to target. Currently, we have only 700 sales associates. The growth opportunity is before us, only if we apply the Gartner formula and consistently grow our sales headcount. Let me share just one example to give you a feel for the magnitude of the opportunity we have in growing sales capacity. Because this example is so compelling, let me ground you in the fact that consistent with our track record of success, we will grow methodically, deliberately, and in alignment with the capacity of our sales leaders. This example considers the opportunity in the sales function alone. Let's say we only sell sales solutions to the 12,000 enterprises that are existing GTS clients today.
Let's assume, to be hugely conservative, that we achieve only half the average contract value per client as in GTS, around $90,000, or just two or three seats per enterprise. This would equate to over $1 billion in contract value in the sales practice from less than $100 million today. This is just selling to existing GTS clients alone at only half the average contract value per enterprise. Clearly, our opportunity is even greater than this as we expand our product set and our sales capacity, allowing us to further increase the CV per client, sell to all enterprises, and replicate this opportunity across all major functions. Thanks to the success of our rapid integration, we are off and running already. We've already added over 80 highly qualified salespeople to our team.
As I mentioned, we will continue to add sales capacity consistent with our ability to deliver on the Gartner formula. The right team, an enormous opportunity, the right sales capacity, essential elements of sales excellence. Without exceptional capabilities, we won't realize our growth objectives. We have unrivaled content, products, and service to deliver value across all levels of the organization. Peter shared a compelling story of how we're combining the best of Heritage CEB research, products, and service with the best of Heritage Gartner, and they are delivering. We are already seeing the early impact of this indispensable insight and support, with wallet retention up six percentage points in 2017. That brings us to best practices, our real secret sauce , Gartner's Sales Excellence Playbook. It is a true differentiator and drives our economics, so much so that our investors will appreciate we hold it close to the vest.
Suffice to say that our proven practices are based on years of success. These are evidence-based, successful practices disseminated across the organization and to every member of the team. The Gartner Sales Excellence Playbook, driving recruiting, training, tools, and best practices, delivers in GTS. It drives success in marketing and supply chain. It works in global, large, and mid-size enterprises. It works across regions and industries, and it will work within Global Business Sales. Our progress on this has been immediate and measurable. We are fully leveraging Gartner's enabling infrastructure. Every hire we're making in GBS is now leveraging the same sales recruiting team and proven practices as GTS. Sales training and academies for new hires, tenured associates, and managers is being led by our sales training center of excellence. We've moved the entire GBS team over to the Gartner sales compensation plan.
We've launched seat-based products across all major functions. We've eliminated discounting, and we've implemented numerous proven practices behind improved retention and accelerated growth that are already bearing fruit. This is just the beginning. There is much to be done, and execution is the watchword. I'll close by returning to our goal, sustained long-term double-digit growth for Global Business Sales. We know what sales excellence looks like. Building the right team, focusing on the right opportunity, recruiting to achieve the right sales capacity, creating the right capabilities, and relentlessly executing sales best practices. We are well on our way with each of these. Driving this change will not be easy, and it will take time, but we know the right things to do and how to get them done. I am confident that Global Business Sales over time will grow as fast as GTS. Thank you.
Thanks, Chris. As you heard from Chris, we know how to be successful selling syndicated research. We've invested in the Global Business Sales team, and we're confident it's going to grow at double-digit rates over the long term. Our Chief Financial Officer, Craig Safian, will walk you through the fundamentals and economics of our business, including our strategies around sales and how we've rationalized CEB from a finance perspective. Craig's been with Gartner for over 15 years. Prior to becoming our CFO, he led strategic planning, corporate development, and our corporate and business unit finance functions. Craig brings a unique combination of strategy, a deep understanding of our business and its economics, and finance and accounting leadership. He's uniquely talented, both strategically and operationally, and his contributions to Gartner have continued to expand since he took over as our CFO three and a half years ago. Craig?
Good afternoon, everyone. Every presentation today demonstrates the power of Gartner's winning formula, from our indispensable insight and exceptional talent, to sales excellence and enabling infrastructure. What happens when we bring this winning formula to a larger market opportunity, make smart strategic investments, and drive the results through Gartner's attractive business model? We generate long-term, sustained double-digit growth. Double-digit % growth in contract value, revenue, earnings, and free cash flow. My role today is to help you understand in more detail the opportunity, Gartner's business model that allows us to maximize the opportunity, and the investments we're making to ensure sustained success. The Gartner formula, combined with the Gartner business model, have consistently delivered double-digit growth. We believe the same formula and the same model, now applied across all enterprise functions, will deliver double-digit free cash flow growth long into the future. Let's get started.
Prior to the acquisition of CEB, Gartner already had a significant opportunity in front of us. With CEB providing the ability to serve every other major business function, that opportunity is even greater. Let's drill down a little further on what that looks like. There are essentially two main components to our market opportunity, and as you'll see, we're under-penetrated on both. First, let's walk through the details of our calculations of the addressable market. As we've done detailed work in understanding the opportunity in the 100-plus countries in which we do business, we've built a robust territory planning and management data set. In our planning systems, we've identified 138,000 enterprises around the globe who are large enough and have enough budget to be Gartner customers. These 138,000 enterprises, they're not hypothetical. We know the names and addresses of each and every one of them.
Many people ask, how can that number be so large? It comes back to what we do and the roles and functions that we serve. The indispensable insights that Peter's team creates, they matter to an enterprise whether they are a Global 500 company or one with $100 million in revenue. Those insights are important whether you are located in the U.S., Germany, Dubai, China, Brazil, or Australia. The insights are of value whether you're in the financial services, manufacturing, media, or energy industries, as well as the public and not-for-profit sectors. It's why our addressable market is so large and puts us in a unique and enviable position. We've done detailed analytics on how each of these functions we sell to is organized within an enterprise. As an example, let's look at the technology business.
We start with understanding the C-level, in this case, the Chief Information Officer or CIO. The same logic would apply across all the functions we serve. Just about every enterprise in our addressable market has a CIO. In fact, many global enterprises have more than one. We look at how many direct reports that CIO has, how big their teams are, finally, how many frontline professional teams there are to sell to. We look at our products that are actually targeted for each of these roles and our current pricing. Our CIO products are priced higher than the products for the C-level direct reports, so on down the chain. We simply multiply the number of roles by our product price points. That's how we calculate the addressable market, which as you saw earlier, is $55 billion in the tech function.
We've done the same math for all the functions that we now serve. As we develop new products for each of those functions, it will potentially further expand that market opportunity. As I mentioned earlier, we are under-penetrated on the two main components of our addressable market. First, as we just detailed, there are roughly 138,000 enterprises globally that are large enough to get value out of Gartner offerings. We currently do business with about 12,000 of them. In fact, only another 30,000 of those enterprises are even in a Gartner salesperson's territory, which means there are 96,000 enterprises that we're not even talking to. The reason we're not? We don't yet have enough salespeople to cover that market. In the tech space, we only have around 2,700 salespeople and need a lot more to adequately cover the opportunity.
Across the other functions now served by our Global Business Sales teams, we only have roughly 700 salespeople. That alone amounts to an impressive opportunity. That is why we continue to add more salespeople to capture the addressable opportunity. As you can see here, we've been able to add several hundred net new enterprises per year over the past five years. We've been making steady progress on that side of the market opportunity equation. The second component of our addressable market opportunity is further penetration of our existing enterprise clients. In our technology practice today, we have 12,000 enterprise clients spending an average of just $181,000 per year on Gartner research. Over the last several years in GTS, we've been expanding our penetration within those enterprises in addition to expanding the number of enterprises we sell to.
In fact, two-thirds of our growth has come from price and existing clients through upgrades, additional seats, and additional buying centers. The other third of our growth has come from brand-new enterprises. Another compelling aspect of our opportunity, growth within the enterprise. The average CV per enterprise has significant room to continue to expand across all the functions that we now serve. To put that into perspective, let's focus in on the tech space, where we are actually much more penetrated than in the HR or finance space, for example. That average CV of $181,000 could represent as few as two seats or as many as 10. On average, it's between five and six seats. That might sound okay, but in the context of the addressable market, it's a tiny sliver.
We know that our clients have significantly more than five or six technology professionals that we can sell to, and that's just technology. In the other functional areas, we are just getting started. The market opportunity is one of the reasons we've been able to drive consistent double-digit top-line growth in the Heritage Gartner Research business. It's why we know that Joe's team will continue to drive accelerated CV growth in GTS. Now Chris's team is leveraging the same elements of the Gartner formula for GBS, so they can run the same play across the business functions that they serve, where there's even greater opportunity given the lack of penetration and the sheer scope of the market. Chris shared a pretty compelling opportunity. He took one function, sales. He assumed we sold just to existing GTS clients.
He assumed we do just half the average CV per client, and that resulted in $1 billion of contract value in the sales function. That is just one role. The market opportunity will continue to be both a combination of getting new clients and further penetrating our existing base. What that all means is we'll continue to grow our sales force in technology and business sales, focus on productivity, and capture that opportunity across all functions in the enterprise. This is why we're so confident in our ability to drive sustained double-digit top-line growth. The opportunity is vast, it's measurable, and we know how to get it. Once we capture that opportunity, we convert it into incremental contract value. We have a simple, successful, and highly effective financial model that generates significant amounts of free cash flow.
Let's look a little more closely at those economics and what makes that model so attractive. As a reminder, 75% of our business is a recurring revenue business. Gartner Research, of course, is at the heart of that, so I'll focus on that model. Research has a lot of very attractive attributes. It's a recurring revenue business with very high renewal rates. It's a leveraged business with high contribution margins. We write a piece of research once, and we sell it over and over and over again. Perhaps most importantly, it's a cash flow machine. We invoice and collect upfront, producing a negative working capital dynamic. Put simply, we collect fees well before we recognize and deliver the services. The business inherently has low capital requirements.
As Gene pointed out earlier, we also have a world-class events and consulting business that directly complement and fuel our research business. At a high level, our model is relatively simple and very compelling. We sell the great research that Peter talked about. Clients buy and renew it because of its unrivaled value to them. It shows up in contract value. We invoice and collect the cash upfront, and it converts ratably to revenue over the life of the contract. Gene talked about the strategic merits of bringing Gartner and CEB together. One of the biggest advantages is that the heritage CEB research model has the exact same financial characteristics as the Gartner research model. Exactly the same. Traits, by the way, that are only amplified by accelerating growth in contract value, which accelerates growth in revenues.
Thanks to the fundamentals of our financial model, we've historically delivered free cash flow well in excess of net income. In fact, if you look back, we've consistently delivered year-over-year free cash flow growth roughly in line with our revenue and EBITDA growth. For 2018, the midpoint of our guidance, which is shown behind me, is to again deliver double-digit growth to revenue, EBITDA, and free cash flows. In 2018, the midpoint of our free cash flow guidance calls for $471 million. We expect to continue this growth trend into the future. It's important to understand how our financial model operates, from contract value to revenue, all the way through to free cash flow. Let's start with an illustrative example of how we generate contract value growth for the Heritage Gartner Research business. We start a year with $100 of contract value. Our client attrition runs at 16%.
We drive growth consistently in three areas. First, we raise our prices each and every year. Second, we're able to further penetrate our existing clients through upgrades, selling additional seats, and finding new buying centers. Third, we've added several hundred new enterprises every year. Again, two-thirds of the growth comes from existing enterprises and one-third from new enterprises. That's how we've delivered 15% organic CV growth for the Heritage Gartner Research business in 2017. It's the way we'll do it across both GTS and GBS going forward. The contract value we create gets recognized ratably over the life of the subscription, whereas revenue is recognized as delivered for the events, consulting, and TA and other segments. As we've discussed in the past, the target gross contribution margin for our research business is 70%.
This ensures we have the right analysts, product innovations, and services in place to deliver value to our clients. Our other business segments have strong contribution margins. They don't compare to the combination of the size and absolute margins of our research business. When you combine all of our business segments, the all-in gross margin is roughly 63%. Our SG&A expense is roughly two-thirds selling and one-third G&A. Historically, the selling expense portion has grown faster than revenues, while G&A has grown modestly slower than revenues. Our largest incremental investment consistently has been around growing our sales capacity. This also includes ensuring that we have all the right enabling infrastructure to support our growth, including things like recruiting and training capacity, the best technology, world-class office environments, and all the other important sales support functions.
Over the last several years, this equation has netted EBITDA growth consistent with revenue growth. The EBITDA we generate converts to free cash flow with impressive efficiency. This efficiency, which applies to the adjusted net income conversion as well, is a function of the modest capital required to drive growth and the attractive negative working capital model we talked about earlier. Over the long term, we expect free cash flow to grow in line with our revenue and EBITDA growth. We walked through the market opportunity, how it's so large and there for us to capture. We also talked about all the attractive attributes of the Gartner business model. Let's talk about not only how we continue to drive sustained double-digit growth on the heritage Gartner side, but also how we migrate CEB over to the benefits of the Gartner growth model.
Those of you who know the Gartner model know that we are consistently investing in the capacity of our sales force, which is our most powerful lever for driving growth. When we hire a new salesperson, there is an economic lag to the benefit. When we decide we're going to grow, we have to line up the other enabling investments to hire, train, and deploy the best talent. That means we have to make sure that we have hired the right number of recruiters, have the appropriate number of world-class trainers ready to train them, and have the best space to accommodate that growing organization in the right places. That's all part of the enabling infrastructure from the Gartner formula that Gene mentioned. We recruit and hire great salespeople.
We get them trained, which entails six to eight weeks of world-class training on Gartner's best practices, our value proposition, our products, all the things that comprise our sales excellence playbook, another component of the Gartner formula. We get them in territory. On average, it can take about four months for them to get their first sale. In their first year, they're about half as productive as the average salesperson. In their second year, they're about the average. In their third year, they're at full productivity, and they're highly profitable, and the benefit accumulates into year four and beyond in terms of even greater profitability. This is because of the lifetime value of the recurring revenue that they're selling. This productivity curve has been one of the major ingredients for Gartner's growth and success over the last decade.
With the rapid integration of CEB and the large market opportunity, we saw the potential to more quickly leverage the Gartner formula to accelerate the growth of that business. From a P&L perspective, it is a jolt because CEB hadn't grown their sales force in years, and we very rapidly added 18% growth. We expect the new GBS hires to follow the same productivity curve that we've experienced historically. As you can see, based on that productivity ramp, the investments begin to yield really attractive returns in year three and beyond. That's why we're making those investments. It's all about driving sustained double-digit growth rates to our top line. We applied this formula successfully for the last decade serving technology professionals. We applied it successfully for supply chain professionals with even higher growth rates. We applied it successfully for marketing with even higher growth rates.
Now we're going to do exactly the same for HR, finance, sales, and all the functions across the enterprise. The investment we're making in sales is crucial, and if we expect to maximize the return, we have to be willing to make investments in enabling infrastructure to support it. I touched on a few, like recruiting, training, and facilities. Beyond that, we have to equip sellers with all the supporting pieces to help them succeed. For example, we've invested in and built a CRM tool with artificial intelligence that prioritizes actions for our sales and service people. We've built technology and deployed a team, which we call Deal Hub, which eliminates administrative tasks for our frontline sellers so they can spend more time with their clients selling.
We've invested in and built regional and global centers of excellence so that certain processes are done more cost efficiently and more productively. In GTS, we've developed a highly sophisticated, highly efficient engine of support. Proven practices with a focus on continuous improvement. They've been key to our ability to hire, train, deploy, and grow the productivity of our sales force, and we're already bringing that to bear for GBS. This is how we do it in sales, but we apply the same investment philosophy and best practices across all areas of our business. As you heard from Gene, we have fully integrated and transitioned our go-to-market structure and strategy from a heritage Gartner and heritage CEB split to now looking at global technology and global business roles. Going forward, this is how we'll report our contract value metrics on a quarterly basis.
This was just a natural evolution as we rationalized the overlaps. In the appendix, you'll find the quarterly details of how the updated technology and business roles performed if reported as GTS and GBS. At the highest level, we ended 2017 with $2.8 billion of combined contract value. That would be 12% growth for the full year 2017. GTS grew 13% in 2017 and represents 79% of the total, and GBS grew 8% in 2017 and represents 21% of total CV. Over the next few years, given the market opportunity and the investments we're making, we expect GBS to achieve double-digit growth rates in 2019 and to grow between 12% and 14% in 2020. Over the longer term, our objective is to grow both GTS and GBS at a rate of 12%-16% annually. This would represent significant acceleration of the GBS business.
From a total company perspective, this would equate to double-digit growth in revenue and EBITDA with steady margins. Because of our low capital intensity and negative working capital model, we'd expect to grow free cash flow at double-digit rates as well. Gartner is a growth company. The Gartner formula and the Gartner business model are geared for growth, particularly around free cash flow growth. Cash flow that we will use to reinvest in the business and deliver value to our shareholders. Since closing our acquisition of CEB, we've reduced our gross debt from around $3.6 billion to $3.3 billion. In January, we repatriated around $250 million, which we used to further pay down our outstanding debt balances. Going forward, we will also have the ability to deploy foreign generated cash due to tax reform.
With the signed agreement on the talent assessment business, we'll be able to utilize those proceeds to additionally reduce our leverage once that deal closes. Assuming a timely close, we will be approaching our gross leverage target of 3 times EBITDA by the end of 2018, ahead of our original schedule. Our long-term view has always been that debt should be a permanent fixture on our balance sheet. That means we will be able to return to our longstanding capital allocation strategy. Like our relatively simple model to drive double-digit free cash flow growth, our capital deployment strategy is also simple and has been consistent over time. After ensuring that we have appropriately invested in our business to sustain long-term double-digit growth, we use our free cash flow and available balance sheet flexibility for strategic value-generating acquisitions and to return capital to our shareholders through our share buyback programs.
As you've heard throughout the day, Gartner has a formula for growth. With our ample market opportunity, we can continue to run that formula in the technology, supply chain, and marketing spaces for a very long time. Now we serve all the other functions across the enterprise, providing even more runway for us to apply that formula for accelerated growth. Accelerated growth that will flow through our very attractive business model with recurring revenues, with high renewal rates, and high gross contribution margins that structurally generate huge amounts of cash flow. To support sustained growth, we are going to continue to invest in our business. That means expanding sales capacity, but also investing in all the enabling infrastructure and talent acquisition that we know is required to support our growth.
By following the Gartner formula and harvesting the benefits of the Gartner business model, we expect to drive double-digit growth to revenues, earnings, and free cash flow. Thank you. Now Gene will join me back up on stage, and we'll be happy to take your questions. David Cohen will be facilitating the Q&A.
If you have a question, please raise your hand. I see some of you are already doing. We'll bring a microphone over, and we ask that you wait till you have the microphone to ask the question. With that, is that Mana? We'll begin.
Hey, guys. This is Mana with Barclays Capital. My first question is, early in the slide deck, Gene, you had that nice illustrative shot showing the accelerated timeline versus the original timeline. I was hoping you could just put some numbers around that, because when you obviously first pitched the deal, you said double-digit accretive, $50 million synergies, and then double-digit growth. It sounds like all of today was about the growth. What happens to the other two pieces?
Again, as I said, once we got into the acquisition and we did due diligence, we found that we could move faster than we thought we would originally be able to move to get to capture this huge op market opportunity we have and get to double-digit growth even sooner as well. We chose to take the investment in things like accelerating the growth in sales force and building the enabling infrastructure as Craig talked about, things like recruiting capacity, training capacity, things like that, sooner than we otherwise would have. That's kind of what happened in that piece of the strategy.
Okay. Going forward, should we just assume that with the productivity, there should be inherent margin improvement? You reinvest all that margin improvement for the growth, maybe, Craig, if you just address free cash flow conversion, generally speaking.
Sure. You're spot on the margins. We are a growth company, and we're going to continue to make sure that we make the right level of investments to support and drive sustained double-digit top-line growth well into the future. In terms of the cash flow conversion, again, what we've seen historically with our model is that revenue, EBITDA, free cash flow grow at roughly the same rates. As we de-lever, we obviously have more opportunity to drive more free cash flow, which is a great benefit of our model. Over time, as we've talked about the net income or adjusted net income to a free cash flow conversion, obviously, it's a little bit lower now given the CEB acquisition, the significant debt service. Again, as we de-lever, we do expect that conversion rate to get back to roughly where we've been prior to the acquisition.
Again, the primary driver of that will be acceleration to the heritage CEB, now GBS contract value, which will really get that negative working capital benefit flowing through and support increase in that conversion rate.
I think Tim has a question.
Hi. Just to follow up on the target for Global Business Sales, I guess, low double digits next in 2019, and I think, what'd you say, 12-14? It's a different target than what you talked about before. It looks like adding in supply chain and marketing gave you almost 6 points of growth for 2017. If we applied that same math to 2020, I guess, help us reconcile versus the prior commitment for double-digit growth in CEB in 2020, because it would seem like you could get there without necessarily reaching that.
Yeah. Thanks, Tim. What I'd say is that of that GBS portfolio, still 75% of it is made up of the heritage CEB contract value. Any move upward is still a pretty significant acceleration in that heritage CEB contract value.
Okay. Just the long-term target, I guess, relative to free cash flow even there, the fact it's not growing faster. Why wouldn't, if you're paying down debt, buying back stock, deploying capital, and if you expect the conversion to improve, why wouldn't it grow faster than revenue?
Well, everything we're doing is about accelerating the top-line growth as well. Again, if you think about the ranges we gave, we expect the revenue, EBITDA, free cash flow year-over-year growth to be in that same 10%-14% range. There is the opportunity potentially as we really accelerate the GBS business and actually get continued great growth and/or acceleration on GTS for that potentially to grow a little bit faster. As we've experienced with our model over the last decade, generally speaking, revenue, EBITDA, free cash flow have moved roughly in tandem.
Okay. Toni's got a question, I think.
Yes. Peter mentioned AI a lot in the presentation. I was just wondering if there were areas within your business that you've been able to either use AI or leverage other research insights within technology to maybe either expand margins already or areas where you could expand margins using that in the future.
Being a technology company, we want to make sure that we use technology fully in our business as well. We do use artificial intelligence in a number of areas. One example, advise our salespeople on what the best actions that they should take to maximize sales in their territory. Similarly, for our service people, we have a tool that does a similar kind of thing, which is it uses artificial intelligence to say, when a service person comes in in the morning, what are the most important things they should do? Which client should they call first? When they call those clients, what are the things they should talk about? Then also, what supporting information pulled in from wherever it is in the world, pull that information, have it right up for them.
We also use things like natural language processing where we have a tool that actually uses both natural language processing and artificial intelligence for scheduling our analysts. One problem we have is we've got over 2,000 of analyst and advisors. Clients who have the entitlements can talk to them, and we have to match the client with the right advisor in the right time, in the right time zone, et cetera. We have a system that uses both natural language processing, so that a client can type in a request in their natural language, and then uses artificial intelligence to figure out which is the right analyst that would be available at the right time and in the right language to answer the specific question they asked in the way they asked it.
There are many other examples, but we're very keen to make sure we fully utilize all the capabilities of technology in our business.
Just as a follow-up, I was hoping you could give some color on trends in sales force retention, both for the legacy CEB as well as legacy Gartner, and how you expect those to trend going forward.
As Chris Thomas mentioned, for our legacy CEB sales force, their attrition before the acquisition was a bit higher than ours. As we announced the acquisition, we talked to the heritage CEB salespeople, and they understood what it's like to be a salesperson at Gartner. That retention dropped by 6 percentage points, 600 basis points, which is pretty striking. It'd been high for quite a while. The Gartner sales retention has been about the same it's always been, which is low for a direct sales force. I think Jeff has a question in the front.
Yeah. Thank you. Jeff Meuler from Baird. Can you just help me understand the CEB sales force post-acquisition? How much of their time was spent not selling? Were they going through the Gartner training programs for a period of time? Or is it more about just the disruption to them from needing to learn the process of selling a seat? Is there a parallel to when you acquire the supply chain business? How long does it typically take for people to learn to sell under your approach?
With CEB, one of the choices we made, and Chris mentioned this in his, is we wanted to get as many of the disruptive changes done in 2017 as we could. We couldn't get all of them. We wanted to get as many as we could in 2017, so that as we went into 2018 and beyond, we had a pretty clear runway. They went through, the heritage CEB salespeople went through a lot of very difficult changes. For example, they used to be able to discount, and the way we approach clients is, we have a high-value product. There's no need to discount. That's different if you've been selling using that approach. Chris went through and talked about how, and Craig did as well, where they used to sell enterprise agreements.
That's a different talk track, which says, "Hey, if you buy it, you get it for the whole company," versus saying, "We're going to sell each person one at a time." That's a very different kind of a sale. At the heart of it too, the way that we sell, the sales execution playbook that Chris talked about, is also very different. Compounding that, the compensation systems were different. We have what we think is a compensation system that really drives high performance as a core part of our sales execution playbook. We had to educate them on that. They had both a number of actual changes in how they do selling that they had to go through and adapt to. In addition to that, we did have to take them offline some for training.
We haven't done it so much as With a new salesperson, we train them six or eight weeks before they start on the job. Here we've done it in a more piecemeal fashion, where we've taken elements of time and trained them for two reasons. One is so that we wouldn't have our sales crater in a six or eight-week period because everybody's in training as opposed to selling. Also so that people could absorb what they're learning in bite-sized chunks and then apply it as they go through their selling process. As I said, most of that disruption we got through in 2017.
We have really one other major disruption that we're going to have in 2018, which is we weren't able to get all the systems conversion done, so we're bringing all of the heritage CEB salespeople onto this incredible AI-based system that I talked about a moment ago, which is actually really terrific. They're dying to get on it. We're moving them over as quick as we can. It'll take a couple more months before they're all in that system. Again, the majority of the change, majority of the disruption happened in 2017. There's still a few follow-on things that they're going to have in 2018. In addition, just because we had them stop discounting in 2017 or had them stop selling enterprise agreements doesn't mean that after two months of doing that, they're up to 100%.
It's going to take probably a year for them to get to 100% confidence in taking the new commercial terms, the new selling approaches that we have.
Okay. As you combine the best of Gartner with the best of CEB from a product perspective, is it just that there's new products that you can drive cross-sell or upsell to that drives increased pricing, or does it also result in greater than historical average pricing increases just across the business?
For like-to-like products, our price increases are going to be traditional of what we've done. On the Global Technology Sales side, we have a new product, which Joe talked about, where we've taken the Gartner technology research and combined it with the CEB technology research, and it incorporates the different research approaches that Peter talked about. We've made a new product. We've priced that new product at a premium, and that new product obviously is for sale to new clients. In addition, we're going back to 100% of our existing clients and asking them to upgrade.
We think that we started a good path with upgrades already, and we expect that those upgrades will continue over the next probably three to four years, because it takes time for all the contracts to come up for renewal, as well as to get to all the clients and explain to them the values of the new product. It's a really great new product, and when the clients understand the value, the take rates are very good.
That's what Erin had talked about during Joe's presentation, was really the power of bringing those two products together and how excited our clients were about it and our salespeople were. The other thing I'd add, Jeff, just on the GBS side, essentially, we are turning everything into seat-based products that are combining the best of the heritage CEB research for finance professionals, HR professionals, sales professionals, et cetera, injected with the right and relevant heritage Gartner research that Peter talked about in creating new products, Gartner for Finance Leaders, Gartner for HR Leaders, and so on and so on. We have the benefit of the better product on the technology side. We absolutely have the benefit of the better product on the GBS side. Again, it's going from converting what used to be an enterprise license product to a more traditional Gartner-style seat-based product.
Gary, second question in the middle.
Yeah. Thank you. Gary Bisbee from RBC. I appreciate all the positive forward-looking commentary. I can't resist going back to last week's earnings for a question. When we go back to April, when you first gave guidance, including CEB, and then we look at the final 2017 results, SG&A was $80 million higher, run rate certainly north of $100 million higher than what the model had anticipated at that point. We'd love to get some color. What are the key components of that? Where did that come from? Really, the thought process in asking the question is, how much of it is sales related that you will expect to get a return on, presumably in the near term?
Maybe that's more 2019 sales than 2018, versus how much was backfilling under-investment by the prior CEB team, and are there other big buckets other than those two?
Absolutely, Gary. No problem. There were three primary factors. One, I would put as a challenge category, and two actually representing positives or opportunities. First, we were really challenged by underperformance. Underperformance in our events business, in consulting, a modest decline in Heritage CEB research revenues, and continued declines on the talent assessment business. As we mentioned on the Q4 call, advanced bookings for events are up, so that's positive as we head into 2018. Backlog in consulting is also up nicely, positive 2018. CEB contract value growth has actually reversed its trend from declining to actually growing 2%, as Gene mentioned. We're selling the talent assessment business. That's category number one.
Category number two, which was good news, is Joe's sales team had an amazing fourth quarter and exceeded our expectations, and there were additional incentive expenses that we had to book in the fourth quarter of 2017. Finally, category three is we made a number of conscious investments to support sustained double-digit long-term growth. In GTS or Heritage Gartner sales, we invested in reducing the level of open territories, and that's why headcount growth for the full year was 16% as opposed to the 12 or 13 we had guided. In GBS, we invested in jolting them with growth and growing 18% where they previously hadn't grown. In Evanta, which is part of our events portfolio, we had to rebuild and strengthen the leadership team.
Finally, we had to make all of the enabling infrastructure investments to actually be able to support us on an ongoing basis. Things like sales recruiting and sales training and things of that nature. If you think about the three categories, those are the three categories. I gave you a laundry list. Each of them had an impact on that 2017 and 2018 run rate result.
It sounded like that third category was really the one that flows over more into this year. As we look at the SG&A, there doesn't appear to be any step down or slowing in growth. It continues to be charging ahead. I guess two questions. What is the timing of getting a return on all this investment today? Should we think acceleration more in 2019 because of this? Following another question, the 8% GBS CEB growth last year to double digit next year, that's just not much improvement. I suppose double digit could be a lot more than 10, right? It just doesn't feel like we're getting payback on a big piece of this significant investment that you've made in the last nine months.
I'd say two things and then feel free to jump in. One is, I think I mentioned during Tim's question, again, 75% of that GBS portfolio is Heritage CEB. We had a great year on the supply chain and marketing businesses within Gartner, and we expect that to continue. To get from 8% to 10%, you have to have significant acceleration in the Heritage CEB functions that we're serving as well. It definitely requires a pretty big step up. Again, we think we're on a really great path there in terms of the retention rates that Chris mentioned, as well as all the other investments we've made to actually support that so that it's not a one-time step up, it's actually sustained double-digit growth. The one other thing I'd add, Gary, is the investments are across the board.
I know it looks like CEB-related investments, as I mentioned, in GTS going from 12% or 13% growth to 16% growth on the sales force, there's a cost associated with that. There should be huge long-term benefit from that as well.
Maybe ask the next one.
Hopefully, what you were able to take away from today is we're a growth company, and we've got that great giant growth opportunity to go after. That said, we need to make sure we're continuing to invest to go get that opportunity. We actually fundamentally believe that over the long term, we can drive more shareholder value by investing to drive sustained growth than in trying to chase margins. Fundamentally, growth story and investing to support sustained long-term double-digit growth.
You want me to take?
Yes.
Hopefully, what you were able to take away from today is we're a growth company, and we've got that great giant growth opportunity to go after. That said, we need to make sure we're continuing to invest to go get that opportunity. We actually fundamentally believe that over the long term, we can drive more shareholder value by investing to drive sustained growth than in trying to chase margins. Fundamentally, growth story and investing to support sustained long-term double-digit growth.
Okay, on the second question that I have, you talked about how CEB sales force never asked for price increases or I'm not sure if that's accurate. You can describe for me what happened there. Maybe they gave discounts. Gartner's product had always gotten a price increase. My question is, what's the true difference between the two products, and why wouldn't that company be asking for price increases if their product was at par with yours or perhaps better?
My comment was not about price increases, it was about discounting. When we go to a client, we've had a policy, since shortly after I joined, of no discounting. The reason for that is that it's a sales tactical decision. The reason we did it is not just because of the additional revenue we get from it, but it forces the discussion with a client to be about the value you're going to provide. That's really the even bigger impact than the incremental revenue you get, is the only thing you discuss with a client then, for a salesperson, is how we're going to provide value. What happens if salespeople can discount, first, there's a lot of internal energy that goes around deciding how big the discount should be.
Secondly, when the salesperson is opposite the client, there's a lot of discussion on how big the discount should be. We want our salespeople talking about the value we're going to provide, because that not only helps facilitate the initial sale, it also means higher retention down the road. If you don't discount, you get more revenue up front, you get a client that understands the value, who's going to stay with you longer, and you have a discussion that's about value, not about price. There are a lot of companies that discount. In our particular product, understanding what we do, there's no need to discount. Before 2004, Gartner did as well, and this is a management decision. It's not about the product. It's a management decision for our market. Gartner didn't have to discount, but they did.
We stopped that, again, as a tactical sales decision, so that the discussion with a client is all about value. That's exactly what happened. Part of the reason that our growth picked up, our retention picked up, et cetera, is our salespeople were talking to the client about value, not about the pricing discount.
Oh. Hi. This is Catherine from BlackRock. I had a question on how we should think about I see how the value of the product grows over time, just given the trends in the market and what you guys are doing. There's a lot of potential for growth. I think what I'm hearing is that it wouldn't actually be unreasonable to see margins go down, maybe for a couple of years, just because you could have accelerating revenue growth. It could even be, I don't know, 12%-14%, or depending on productivity, sales force growth. If you're kind of hewing to double-digit free cash flow growth, call it 10%, and there's so much runway, mathematically, that would get you to margin declines. Is that something that we should kind of expect, given our eye is on the prize, so to speak, five years out?
Just to set expectations. Thanks.
Yeah. The way that we determine how fast to grow is based on our operational capability. We look at each of our first-line sales managers in our sales forces, and there's about 300 of them. We look at it individually and say, given those sales managers, what's their capacity for growth? How many could they take on extra salespeople? We also have new sales managers. We promote people, and they're brand-new sales managers as well. We have to assess their capability for how much growth they can have. We do an assessment, and we do this continually. This isn't just once a year. We do this continually. We're assessing what's the capacity for, especially the 1st level of management team, to absorb additional growth. We basically set our growth plan based on what the management capacity is.
The reason we've grown the Global Technology Sales team in the range of 15% over the last few years is that's the rate at which we saw the management team could absorb it. If you look at marketing, you saw it grew much faster than that, and that's because we were able to set it up in a way that we could actually have more management bandwidth and could grow faster. The same thing was true of supply chain. Based on what we know today and the management capacity, we think that our margins as we have them today are totally adequate to fund the ongoing growth that we see based on the management capacity we have. I wouldn't expect margins to deteriorate.
Thank you.
I think we're just about out of time. Please note, we'll have a survey that you'll receive via email from Gartner Finance Practice after the event. The replies will only be made available to us on an aggregated basis. We appreciate you taking the time to complete the survey to help us improve for the next Investor Day. With that, Gene will make some closing remarks.
First, I want to thank everyone for joining us today. We hope you found this session valuable in deepening your understanding of Gartner. We get better, stronger, faster, year after year after year. Beginning in 2004, we developed the Gartner formula for sustained double-digit growth. We continually improved and innovated. The combination of Gartner plus CEB gives us the capabilities to address critical client needs in technology and in business across every major function in the enterprise. It expands our market opportunity. We have an experienced, highly capable leadership team that has the bandwidth to make the CEB acquisition a success. We've organized our integration approach to maximize growth in both technology and business areas while minimizing risk. We are in the best position we've ever been in to provide sustained double-digit growth across all of our key metrics.
I look forward to reviewing Gartner's progress at our upcoming earnings calls throughout the year. Thanks again for joining us today.