I want to point you to Vinnie Mirchandani’s Deal Architect blog, for a clear and refreshing narrative on analyst influence in the real world.
Lately, there has been a growing emphasis on industry analyst influence — how to influence analysts, how to measure analyst influence, which analysts to influence, what analyst influence matters, etc. The implication is that influence is a major part of the analyst business. I disagree. I contend that influence — and its ugly cousin, message testing — is not the point of the analyst business. At best, influence is a by-product of a successful analyst business.
I’ve always maintained that vendors profit the most from the industry analysts by making them part of fact-based decision processes throughout the vendor company. That means tapping the right analysts to participate in decisions and discussions within the right parts of the vendor organization and at the right time.
I wonder if we’re reaching a point where there are two types of vendors: those who value analysts as part of ongoing business and operations decision processes, and those who value analysts as part of marketplace influence and spin.
Bringing in external advisors — analysts, consultants, integrators — is always messy.
But so is devising vendor-analyst relationship programs based solely on multi-tier, dynamically weighted, bifurcated, theoretically validated models of analyst influence mojo.
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December 14th, 2007 at 8:40 pm
Great point, Barbara!
I’d *like* to think that there are two types of vendors. But in 20+ years as an analyst (IDC, Info-Tech), I feel like the vendors in the first camp are few and far between - and even where they do exist (IBM, Microsoft, Cisco), they have at least one foot in the other camp as well.
What is really fascinating to watch is the response of the analyst community, with new blog-driven models combining more overt participation in communications with (hopefully) deeper dialogue internally (i.e., between subject matter experts and vendor execs). I was speaking to a major vendor the other day who told me that they weren’t certain that they approve of this trend - but really, their approval is irrelevant - the mutation of media and analyst business models is underway.
In many ways, this is just a more transparent version of what sell-side analysts (IDC, some of Gartner) have been doing for years. In others, though, it represents a real change - the analyst as a direct resource to the vendor decision-makers, rather than part of a larger system of management by the branded analyst firm, through the AR department…
December 16th, 2007 at 2:04 pm
Michael,
Thanks for sharing your perspectives. I too have heard from many vendor employees that they are either uncomfortable with analyst-written blogs, portals and wikis such as yours in general — or are uncomfortable with anyone from their company participating spontaneously in the analyst social media sites. That’s certainly not been my experience with IT clients of analyst firms.
In addition to the impacts of open/social transparency you bring up, I think in 2008 we’ll see the first signs of what you might call “real change” stemming from another factor: private/client “role-based” services introduced by Gartner, Forrester, IDC, Burton Group, and some others.
December 17th, 2007 at 10:06 am
This is so true, Barbara. In my experience, 95% of the vendors view analysts solely as another sales/marketing channel. It is evident from their organizations and how they approach analysts in briefings and other interactions. Many vendors have told me they pay for the big analyst services not because they like them but because they feel they must to play the game. And they think they are buying influence. Then they get angry when the analyst firm says or writes something that “hurts” them somehow.
The real value of a good analyst to a vendor comes not during the sales cycle but during the product and marketing planning cycles. That is when vendors can learn from experienced analysts what real customers need. It is also a time vendors can gain independent validation or questioning of their ideas.
In my view, technology analyst relationships with vendors will remain a sticky conundrum until there are some mandatory disclosures as there are now amongst financial analysts. Without that it will likely remain a game where, for the most part, size (and perceived influence) rules rather than open communication, good ideas, sound analyses, and solid execution.
Ron
December 17th, 2007 at 3:14 pm
Ron,
Thanks — clearly put, and you raise two sticky wickets. First, “pay for play” — which is vendors intent on paying for influence, rather than paying for and using research and consulting services. Sensitivity to pay for play eventually resulted in some people calling for mandatory disclosures. These fundamental integrity issues are clearly part of the reason that vendors place more and more emphasis on influence over substance.
And, you have to ask, on mandatory disclosures for the industry analysts: isn’t it basic common sense for each research firm to adopt a policy regarding disclosure of stocks and other equity shares/stakes owned by analyst firm directors, owners, employees, etc.?
Likewise, wouldn’t every firm would want to adopt a disclosure policy regarding content and events produced under contract, sponsorship, etc?
There are great examples out there — but not every where.
On the other hand, I’m not a fan of disclosing clients. I think it’s both misleading and impractical. Some firms have only a few paying clients, some have thousands, some have clients that pay way more than others. Plus, all the other aspects of the analyst business that are materially different than the investment analyst business: the shelf life of the research, what constitutes a “client” and ways to “profit” from published opinion about them (or their competitors), NDA situations (many vendors refuse public disclosure of services contracts per corporate policy), and so on.
December 18th, 2007 at 9:51 pm
I certainly understand that vendors have limited budgets and want to get their money’s worth; I’ve been there. The issue is: What are they paying for? Competitive intelligence? Market knowledge? Their bosses generally expect them to be able to do these on their own. The way most justify analyst expenditure is sales influence.
Not all analyst firms have policies. Some believe they are not necessary at all for industry analysts. Nor are there any standards or guidelines for such policies. Perhaps there is a study for Tekrati to undertake to determine what’s out there in terms of policies. Regardless, this industry is self-governing so has no one to answer to except clients who may or may not know or care.
Disclosures are difficult. What influences an analyst? Is an analyst more tainted because he or she owns stock in a company covered than if that same company is a paying client? In my opinion, these are both potential conflicts of interest. Is one more of a conflict? This is the sort of ethical dilemma and governance issue the industry has avoided tackling in any meaningful way.
Will it ever change? It took tremendous political and public pressure to change the financial players’ rules. Are the stakes high enough here to pressue this industry to change? Only the paying clients can decide.