After more than a decade consulting to analyst relations teams, and some year before as an analyst, I’m seeing a deep, and deepening, crisis in analyst relations. It’s reflected in hard data from surveys of analysts and, in discussions over the last few weeks with AR colleagues in the hub of that crisis (the USA), I’m seeing it confirmed by the experiences and challenges facing AR professionals.
During the last decade, analyst relations got better, and better resources, year after year. As a result, analyst relations people got better at meeting analysts’ information needs, and at building relationships with them. Firms that did not resource AR well tended to be acquired by those who did (and that M&A wave is back in force). More resourcing for AR also led to more candid and open spokespeople, who enjoyed speaking with analysts more, which also meant there was more quality time for analysts. As everything got better, analysts became more and more comfortable recommending technology solutions.
This crisis is this: that process is now in reverse, and there seems to be no easy way to get it back on track. Over the last couple of years, the general picture is that AR has been cut in many firms, either directly or indirectly, by giving AR people extra work, fewer resources or both. As a result, analysts are not getting the information they need. Since 2009 there’s been a 37% increase in the percentage of analysts who say they need “much more” information from vendors, as shown by Lighthouse’s analyst attitude survey.
Most AR managers see this happening, maybe at their own firm or maybe not, but the AR community as a whole is not connecting its decline with the resulting business outcomes in a way which helps us defend AR budgets. Because analysts are not getting information they need, they are not as comfortable as they were in recommending firms. That’s also shown by looking at data – surveys show a substantial decline, especialy in North America. Around 60% of firms now face the position where a majority of analysts are less likely to recommend the firm onto a shortlist than they were two years ago; and there are more or less no firms where a majority is more likely to recommend them. It’s also reflected in the grumbles and concerns of industry analysts.
This problem is especially acute in the US, so over the month I’ve been in the US to discuss with analyst relations professionals and with analysts on both coasts. AR certainly suffered in Europe in 2009, but the recovery that people feel in the UK, Netherlands and Germany is much less visible in US tech companies, which are still managing their results carefully. I spoke to AR professionals who are still unsure that the budget for AR will be retained; I even met one AR head who feared the whole team might be cut.
That’s not the mood in Europe or Asia, but it has a global impact. The US is the world’s most valuable high tech market, and analysts there have a uniquely global audience. So it’s dangerous that, for example, analysts in the US tell us it’s harder to get strategic information than analysts elsewhere do. According to analysts, AR teams outside the US seem to be substatially better resourced than those inside the US. In one study we did earlier this year, looking at AR in the telecoms and networking market, three out of the four best-resourced AR teams were non-US headquartered firms. That’s a big turn-around from two years ago. And it’s a big problem because analysts in the US have the most influence worldwide.
Even when AR resources are the same, we’re seeing that many companies are failing to punch their weight because it’s harder get time from spokespeople and data from corporate colleagues. That makes firms look less candid, and it especially limits their ability to talk about strategy and go-to-market tactics.
When we ask analysts how they feel about AR, we get some really mixed comments. It’s obvious that the experience of top-tier analysts is increasingly different from those in the second and third tier. If you’re at Forrester, Gartner or Ovum the AR person will more likely return your call — but the other firms are getting often worse service: more webinars and newsletters, but less quality time for conversation. Analysts tell us: virtual events don’t work; AR guys are stretched too thin; AR doesn’t keep me informed; AR is more frosty and arrogant; works hard but needs more resources. As one analyst told me: “Roller coaster all the way. Some times they give you more than you could ever want or need, others it seems they can’t find out anything for you.”
As marketing budget start to return, AR managers face some stiff choices about how smart they are in the struggle to extend their resources. Working as a community, we need to develop a stronger business case to show how the reduced investment in AR is decellerating the sales cycle, and reducing sales overall, because analysts are less comfortabe than they were in recommending vendors and solution providers. If we don’t make that case powerfully enough, the budget will flow into social media and marketing, where professionals are more than happy to take budget from AR.
Needless to say, the crisis of AR also has an impact on analysts. The demand for analyst support is rising, and the doubling of Gartner and Forrester share prices over the last year shows that analyst are turning that into cash. But buyers are more cautious, and analysts are struggling to find the time and the insight to meet analysts’ needs. That means analyst firms are shifting in the value they offer.The old model of analyst firm is being transcended, and Gartner and Forrester have moved most decisively onto a firmer footing. How will the rest of the analyst industry mutate?
Phil Ferst (@pfersht) and I (@DuncanChapple) will be discussing that in a IIAR members’ teleconference on July 13th. The CEO of HfS Research caused a huge storm with his article: Will the industry analysts be dead in five years? He wrote that “the world has changed so much these past five years, that it gives me real concern whether there’ll be much of an “industry analyst” business left in another five.” That articles caused an outpouring of frustration from users of analyst firms. Are analysts any better than bloggers? Not according to Dennis Howlett (@dahowlett), a full-time blogger, over at CNET he comments that instead there is “a genuine need for people to act as kingmakers – connectors if you will among different groups at different points in time for things that important.” The discussion remains open.
IIAR Members can register for the July 13 teleconference, which will be at 11am Eastern time (4pm UK time/17:oo Central European time) please email info at analystrelations.org.