Four ways analysts must respond to the crisis

The IIAR’s developing discussion on the crisis in AR (reflected by analysts’ declining comfort in recommending solutions) took interesting turn recently. In the the institute’s second conference call on the topic, I was asked to spell out suggestions for how analysts can reverse the falling quality of information sharing by vendors, which is the root cause of analysts’ lowering confidence. These are my four suggestions.

  1. Climb the tiering. Understand how vendors measure analyst impact: by comparing their influence on sales, on the media and on industry opinion. Explain what that impact is to AR teams and to AR services firms who make those rankings.
  2. Give the context. Explain why you need the information. If it’s related to a question from one of the vendors’ clients, then spell that out so they can fast-track the request.
  3. Join the conversation. Often analysts don’t give real insight back to the vendors, and that makes it hard to motivate spokespeople to find the time for the conversations. Even worse, some analysts either love-bomb vendors or focus only on the negative. Only real exchange will get you taken seriously.
  4. Help AR to sell you. Think about what facts, client lists, extracts, comments, web resources and other content you can give to AR people and spokespeople to help them better understand you value.

Many AR people feel that the quality of analyst insight is falling -but few are brave enough to connect it up to declining candour by vendors. These tips will help analysts to get more face-time with vendors, and to get better quality information.

Needless to say, these are not the only tactics. In particular, analysts need to become less dependent on AR teams as a source of information. What else should analysts be doing to improve their reputation and research quality? Let us know your comments.

For a full transcript of the recent telephone conference, IIAR members should log on to huddle >link to the file<.

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7 Responses to Four ways analysts must respond to the crisis

  1. Ludovic Leforestier Monday 25th July 2011 at 09:53 #

    Great post Duncan.

    IMHO, you missed a recommendation though. I would write it this way:

    #5. Do your research.
    Explanation: too often, analysts are waiting to be trickle fed by vendors. Which translate into “No AR, no coverage”.
    Great for AR. Not sure what it means for the research methodology to only write about a self selecting sample.

    On #1, this was one of the basis for Phil’s post but I think AR’s just got better at tiering. Analysts should just accept this and deal with it.

  2. alan pelz-sharpe Monday 25th July 2011 at 13:11 #

    Interesting post Duncan, and though I know our firm has a different business model to most analysts (solely focused on advising buyers and end users), I think the lesson we have learned is that the vendors should only ever be one source of information regarding their products. Oftentimes the most insight comes from those in the throws of implementing the products, and those that have long experience with the vendor and working with the products. Hence in terms of volume we talk to many more SI’s, Consultants and end user Orgs about products than the vendor.
    Focusing all your efforts on the vendor and their AR dept can result in little more than a virtual echo chamber.

    Best
    Alan

  3. Leslie Ament Monday 25th July 2011 at 15:06 #

    Hypatia Research does provide feedback to vendors AND evaluates vendors via its data-driven Hypatia Galaxy chart as well as our vendor drill-down so that end-user organizations are able to rapidly pull together a short list of vendors to consider.

    Thanks for letting us know that our business model aligns with the needs of AR professionals.

    Best,
    Leslie Ament, VP Research & Advisory
    Hypatia Research
    [email protected]

  4. Duncan Chapple Monday 25th July 2011 at 15:19 #

    Leslie, Hypatia’s website says that “We are unique in the world of industry analyst firms in that we do not charge technology vendors for analyst access.” What does mean? No analyst firms charge vendors for coming in to brief them, so does it mean you offer a unlimited and free inquiry service to vendors?

  5. Duncan Chapple Monday 25th July 2011 at 15:23 #

    Alan, I agree with that and, in the article, I say that analysts need to become less dependent on AR teams as a source of information. However, the reality is that there’s an increase in the pace of work in most analyst firms which means that research has to be intensive rather than extensive. Firms like yours, with very deep relationships with end-users, have a double advantage: you have insight into the market, and you’re not forced to follow the vendors’ news flow which (generally) just doesn’t impact end-users that much. But any one source of information has some dangers, and there’s no substitute for an approach which focusses on cross-checking and verifying information.

  6. EQ Friday 12th August 2011 at 14:52 #

    All good ideas and insights. I’d like to suggest what sits at the core of the analyst crisis/malaise:

    Right or wrong, many vendors, and many senior executives at IT vendors, view industry analysts as necessary evils (and based on waning AR budgets perhaps increasingly unnecessary evils). Like all business relationships it comes down to shared value – what we can do for each other. An analyst who demonstrates value up front has a far better chance of tapping deeply into information and budgetary flow. Yes, vendors pay for value, NOT just for influence.

    We had an interaction with an analyst recently, name not to be disclosed but it was a tier 1 firm, where the executive said this to me when we walked away, “Why do we want to waste any time with this analyst [he/she] doesn’t understand our products, our markets, our channel, our strategy. The analyst is lazy. This is one of the reasons I don’t like working with analysts. Too many have an entitled attitude.” As an AR person I am guilty by association, and I know this executive will duck a little lower next time I ask for time. That analyst will not see advisory time. A necessary evil at best.

    Having been a product developer and product manager, and having been on both sides of the analyst relationship equation, I would say this is the single greatest contributing factor to the “Crisis in AR.” The lack of appreciation by some analysts of the work that goes into building IT products and services is palpable. Analysts sit in the chair of third party and quoted critic, that is fine, most vendors and their executives understand and accept this, and know it is a valuable part of the ecosystem. But vendors make the bets, make the investments, do the innovation, listen to customers way more than analysts frankly, battle it out on the open field – and analysts who want to be spoon fed are therefore insulting.

    I am not sure what the number is, but maybe 1 in 5 analysts show up hat-in-hand with nothing to contribute. Then there is the, “I am part of the judging media wearing the clothes of a analyst so you better pay homage” blackmail play, maybe another 1 in 5. Of course, then there is the analyst who knows how to get around AR play, and spams executives with requests. Don’t analysts know that virtually all vendors know this game, and all the emails get forwarded back to AR for handling anyway? Sometimes the forward comes with a “Get this analyst off my back!” C’mon. Do the math – the suggestion is perhaps half of the interactions are pained, a waste of time, conducted under duress, NVA (no value added)

    Do your homework, act and even dress at least somewhat professionally, bring some research to the table, have some insightful questions in your back pocket. Demonstrate some knowledge and value, show a little respect.

    One CEO I worked with attended a paid advisory session with great resistance. But one of the analysts did everything in that paragraph above with aplomb. The CEO at the end told me, “THAT is a good analyst, maybe the best I have ever seen.” Guess what. Budgets flowed for that analyst and that firm. No crisis there.

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