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Fellow Stockholders,

Welcome to Forrester's first annual report. We're happy to have you as fellow stockholders as we work to build a global company with far-reaching influence.

The past year - certainly the most significant in our 14-year history- has brought dramatic changes to Forrester. We're bigger, with innovative new research services, new clients, and new areas of emerging technologies to explore and analyze. We're smarter, with lots of new talent. And, of course, we're public.

But with all this new growth, our goal remains constant: to help businesses thrive on technology change. As always, we do it by analyzing fundamental shifts in new media and IT. Our core research uncovers and creates powerful ideas that allow our clients to increase market share, accelerate revenue, and decrease costs.

The same seven principles that have guided us since 1983 remain at the core of all of our activity. Forrester veterans know them as "4C2Q1S."

Client: strive to deliver the highest value to our clients.

Communication: achieve internal honesty and extend close connections to our clients.

Creativity: continually seek new solutions for our clients' issues and find innovative ways to help them build their businesses.

Consistency: perform at a high level at all times.

Quality: deliver the highest quality possible.

Quickness: achieve excellent and fast service for our clients.

Service: provide unexpected and unparalleled service.

Each year we review this set of values to ensure that they still align with our business.


Financial performance

Our 1996 financial results showed growth at all levels. We measure the business on four key metrics, and all of these accelerated as well.

1) Agreement value (the value of all core research and advisory services contracts in force) grew from $17.8 million at year-end 1995 to $30.0 million at year-end 1996.

2) Our average contract size increased for both core research and advisory services contracts.

3) Our client retention rate improved from 71% to 74%.

4) The number of client companies increased from 799 to 885.


Our long-term goal is to penetrate the largest corporations worldwide - the "Global 2,000." Within these large organizations, there are increasing opportunities for Forrester to cross-sell our products and services between IT groups, marketing, and executive management. In 1996, we also continued to build our base of new media clients.


In 1996, Forrester's research teams made significant calls about the future of the industry. These include:

1) The Full Service Intranet, how large corporations will use Internet standards to build internal systems.

2) Technographics™, a new way to understand consumers better based on their posture toward technology.

3) Personal broadcast networks, how the Internet will move from a "pull" to a "push" media model.

4) The fourth channel, which sees the Internet as a two-way channel for reaching customers, taking its place beside face-to-face interaction, mail, and telephone.

5) Internet Computing, the technology that will replace the dead Web and enable true Internet commerce.

We launched four new research services in 1996 and also broadened our electronic delivery options. Clients now access Forrester thinking through Lotus Notes®, Forrester Internet, and Forrester Intranet. Not only have all of our new services proven successful, but we've also learned a lot more about how to launch new products, a skill that is central to our growth strategy.

A number of experienced and creative people joined our staff, an excellent testimony to our ability to attract top talent. In addition, we instituted a comprehensive and rigorous training program at all levels of research -- an effort that will help us grow faster while maintaining the highest level of quality.


Two themes will drive our growth in 1997. The first is "simplicity."We plan to build clean, fast processes and avoid bureaucracy by finding simple, straightforward ways to do business. The second theme is "quantum leaps." As our operation scales and our client list grows, we will look for revolutionary (and effective) business changes that can yield amazing results. We plan to launch two new services in 1997 -- Entertainment & Technology and Business Trade & Technology. These service launches are indicative of our strategy to broaden our research coverage into new areas, rather than slice existing services into smaller segments.

Events are an increasingly important part of Forrester's business, and we will be hosting several new Forrester Forums in the coming year. These events will expand our geographic influence and expose more clients and prospective clients to the company's ideas and analysis.

At Forrester, we think of hiring as "strategic growth." The search for the best and brightest is part of everyone's job and remains our No. 1 challenge as we grow the company. Incidentally, it's very difficult to be hired at Forrester, especially on the research side. A prospective analyst must navigate multiple interviews, give an oral presentation to the research team, and present a written sample. The really strong candidates welcome the challenge.

A personal note

   I continue to take great pride in being part of the Forrester story. I'm one of those lucky people who is blessed to find a profession that exactly matches my interests and aspirations. In fact, I've often said that I would pay to do what I do. After 18 years in the technology analysis business, it's still endlessly fascinating and wonderfully unpredictable. Plus, leading and managing a fast-growing company of smart people presents new challenges and new learning at every turn. I'm looking forward to meeting you during the coming year. If you have any questions, please feel free to contact me directly -

Again, welcome to Forrester.

George F. Colony
Chairman of the Board,
President, and Chief
Executive Officer
[Photo Of George F. Colony]

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