In the first part of this post, we challenged an urban myth that small analyst firms are threatening the Gartner and Forrester Research business models. We as yet see no compelling evidence. What we do see is many small advisory firms performing vital roles in the IT ecosystem, a few experimenting with business models, and many preferring their small businesses to the bureaucratic ways of large organizations. More than 25 analyst entrepreneurs shared insights on their businesses and philosophies, plus a handful of analyst clients shared their views — creating an unparalleled conversation! You can read the discussion here.
We’re picking up with the question, is it possible for small/new firms to shake up the Advisory industry? We think so. We’re not ready to concede the future of the advisory market to the current Gartner and Forrester business models. The question is, how?
In our view, firms wishing to disrupt the Gartner and Forrester models must have two particular attributes. First, they need a significant differentiator. It can be in specialization, the business model, service delivery or other areas. Equally importantly, they must be able to scale. That means substantial funding, an effective sales operation, well-honed M&A skills, or a combination of all three.
One of the potential differentiators getting attention lately is “open source research.” In theory, it follows the open source software model: research is developed openly and collaboratively with a marketplace and published under a Creative Commons license. Benefits include lowering research costs while driving consulting and other revenues. Challenges include quality control and the prerequisite of building a large and engaged community of collaborators that will be equally accessible to competing Advisory firms.
We see several other possible examples of disruptive behavior. In a recent conversation with Louise Garnett from Outsell, we came up with a short list of firms, past and present, innovating at least one aspect of the Advisory business model. Highlights, in no particular order:
1. Springboard Research: It claims to have a low-cost/high-quality reputation using low-cost research from China and India. Plus, Springboard built leadership in Asia Pacific markets while U.S. firms were reducing international presence. It’s a good example of specialization.
2. Altimeter Group: This small but growing top-rated analyst group seems to some as more a consultancy than an Advisory firm. Its analysts retain personal branding and independence while obtaining generous splits from their loyal clients from past relationships. The tactics are paying off, generating momentum. Founder Charlene Li’s increasing number of innovative ideas have been well recognized but to become a true disruptor to G&F the firm must (and might well) find a way to scale, and to accelerate its introduction of deliverables.
3. GigaOM Pro: Disruptors can emerge from outside the Advisory industry. Om Malik is incubating this research startup within his media network. This means ongoing exposure to 5 million unique visitors each month — far outpacing any Advisory today. It achieves low-cost/high-quality by using a network of on-demand subject matter experts (38 currently, all in emerging tech) and enforcing quality standards, from vetting experts to producing research. The experts negotiate and retain all Advisory fees resulting from participation in GigaOM Pro.
4. Giga Information Group (background): Funded as it grew, Giga’s model included innovations such as a single service priced by the seat and an expert network backing up its strong staff of analysts. It also made significant ongoing investments in building a salesforce and creating a brand. As with Altimeter and GigaOM Pro, it benefited out of the gate from the strong reputation of its founder. All of this resulted in annual revenues of over $70 million in annual contract value in less than 5 years.
5. Spiceworks: Another disruptor from outside the Advisory industry, Spiceworks is a systems and network management software vendor with an active community of 1 million users, all in IT management jobs in small- and medium-sized businesses. Spiceworks gives away its software to qualified users in exchange for real-time insights into their product deployments and participation in the online community. Sponsoring vendors conduct research and communicate directly with the community. Currently, its equivalent of “Advisory” is a simple question/answer service leveraging peer-to-peer and vendor evangelist interactions.
Firms that want to catapult to the top need to use innovation to their best advantage. Say for example, a smaller Advisory wants to specialize and provide research advice which exceeds Forrester’s in quality. The firm needs to find a way to actually demonstrate that it has a higher ratio or a larger magnitude of knowledge/information in at least one very specific market segment in order to improve its market share in the appropriate space. Invoking the idea that it exceeds Forrester in its specialty areas is one thing, but proving such specialization is something else again.
One example of a way to develop and demonstrate the above thesis qualitatively might be to assume the number of Forrester analysts (excluding consultants, juniors, management, etc.) and remind the reader of some claims that the old 80/20 rule still prevails (80% of analysts providing 20% of the value), perhaps reducing the ratio to 75/25. There’s no reason small competitors cannot focus on recruiting more senior and recently specialized people-power to build a claimable ratio of 70/30 or even 60/40.
Scale is perhaps the greatest challenge facing would-be disruptors. Sound growth strategies and financial management are vital. M&A can play a key role, as proven by Gartner and Forrester. Recent activity among smaller firms runs the gamut, from iSuppli acquiring Screen Digest to Datamonitor expanding its portfolio.
Bottom line however is that incremental change might be “too little too late”. What’s required to succeed (and arguably needed by the industry) is use of an old trick: taking a large clean sheet of paper, and imagining an Advisory model which will clearly represent a breakthrough that will attract investors (because significant capital will likely be required to realistically challenge the current status).
A conceivable alternative might be to consolidate a significant number of strong analysts and/or small firms, with a management team working together to implement what was suggested in the paragraph above. And then the outcome will still hang on the solidity of the financials.
Small firms and new entrants can disrupt the Advisory industry. Note that IBM once virtually controlled the entire computer hardware market, until innovative firms around the edges changed the ground rules, which challenged customer reliance upon Big Blue. But these outlying firms succeeded mainly via new functions and better price/performance ratios. So while there are various degrees of freedom in structuring a hypothetical Advisory firm such that an opportunity arises to emulate what once occurred in IT hardware, this would take imagination, time, and perhaps most important, money. It can be done: Giga Information Group showed that the industry leaders were in fact vulnerable and grew from $zero to $70M contract value (not including consulting and events) in less than 5 years.
Finally, more input from Louise (Outsell): Every segment of the information industry looks the same. In each segment, a few big players represent at least 50% of revenues. Smaller companies make up the rest, carving out various niches. The IT research market follows the norm: it covers many segments, with a few firms dominating each segment and holding those positions for years on end. Successful contenders will understand this market structure before attacking it.
Editor’s Note: This has been cross-posted at Gideon’s blog, www.gideongartner.com. We’ll cross-posts your comments to both blogs.
Whenever you look for the purchase decision influencers in business intelligence (BI) and business analytics, you end up looking at the trade press. And there’s some noteworthy news on that front this week: media giant TechTarget announced that they’ve acquired the BeyeNETWORK properties and network of experts. TechTarget plans to leverage BeyeNETWORK experts to build out their footprint in BI via the new SearchBusinessAnalytics.com destination site.
Regardless how this M&A looks once the dust settles, it will have a definite impact on the influence wielded by the BeyeNETWORK experts.
Many of these experts are solo or small-group professionals with deep subject matter expertise. The group includes analysts, consultants, lecturers and authors. They tend to have closely held relationships with their clients and industry contacts. They influence purchases, implementation, and best practices around enterprise business intelligence, data warehousing and analytics software. They engage with the market, and formulate and promote their own opinions. They can also play important roles in the influencer ecosystem as intermediaries — bringing the viewpoints of more powerful influencers, such as vendors, directly to their own contacts.
If you’re in the BI market, monitor BeyeNETWORK and TechTarget over the next 3 to 6 months to see which experts get more play, which get less, which get lost, and any new experts attracted by the larger combined media site. Keep your focus on the individual influencers, not the BeyeNETWORK brand itself.
For example, some of the BeyeNETWORK experts I recommend putting on your watch list: Merv Adrian, Lou Agosta, Leslie Ament, Steve Dine, Neil Raden, Craig Shiff, James Taylor, and Colin White.
Influence is in the eye of the beholder, and that certainly holds true with the industry analyst bloggers. I wanted to know how the blogs I highlighted at Tekrati during 2009 ranked in Jonny Bentwood’s (Edelman analyst relations specialist) “top analyst blogs” table. I’ve posted the cross-reference below. It’s a good reminder that there’s no single correct list of top analysts. You have to conduct research to figure out which analysts hold sway in a given market.
Jonny and I share a common starting point: the entire analyst blogs directory I publish at Tekrati. From there, we travel along entirely different roads:
- Jonny uses a hybrid qualitative/quantitative method to rank analyst blogs. He looks at stats and applies math.
- I use a purely qualitative approach to recommend blogs to Tekrati readers. I read blogs and choose ones that offer consistently high quality content over time and are written by one or more analysts with solid reputations in their market sector.
I’ve learned a great deal about influencer rankings and attributes this year. Some of that thinking will show up in what makes the cut as a featured blog in 2010.
Tekrati Featured Analsyt Blogs with Technobabble Top Analyst Blog Rank
Blogs are listed in the order they appeared as a Tekrati Featured Analyst Blog during 2009, from early January through next week.
James Govenor’s MonkChips, Redmonk: Technobabble #7
Brandon Hall Analyst Blog - Janet Clarey, Brandon Hall Research: Technobabble #35
ThreatChaos, IT-Harvest: Technobabble #52
Technology Marketing Blog, IDC: Technobabble #288
A Software Insider’s Point of View, (then, Forrester Research) Altimeter Group: Technobabble #20
Craig Mathias’s Blog, FarPoint Group: Technobabble #313
Lopez Research Blog, Lopez Research: Technobabble #376
Pike Research Blog, Pike Research: Technobabble #269
Michael Fauscette (personal blog), IDC: Technobabble #156
Column 2 by Sandy Kemsley, Sandy Kemsley: Technobabble #17
The TEC Blog, Technology Evaluation Centers: Technobabble #145
Unified-View, Unified-View: Technobabble #190
Yankee Group Blog, Yankee Group: Technobabble #68
Enterprise Mobility Matters (personal blog, Philippe Winthrop), Strategy Analytics: Technobabble #152
ABI Research Analyst Blogs, ABI Research: Technobabble #314
GigaOM Pro Blog, GigaOM: Technobabble #350
Thinking Out Loud, Outsell, Inc.: Technobabble #280
Jon Arnold’s Blog, J Arnold & Associates: Technobabble #148
Service-Oriented Architecture, McKendrick & Associates: Technobabble #9
Supply Chain Reaction, (then AMR Research, Inc.) Gartner, Inc.: Technobabble #176
Workplace Learning Today, Brandon Hall Research: Technobabble #5
Vendorprisey (personal blog, Thomas Otter), Gartner, Inc.: Technobabble #47
George F. Colony’s Blog: Counterintuitive CEO, Forrester Research: Technobabble #46
Pattern Finder (personal blog, Guy Creese), Burton Group: Technobabble #135
Supernova Hub, Supernova Group: Technobabble: #159
Parks Associates, Parks Associates: Technobabble: #134
Javelin Strategy and Research, Javelin Strategy and Research: Technobabble #105
The Guidewire, Guidewire Group: Technobabble #115
Rabkin’s ROI, Market Insight Group: Technobabble #343
Gartner - John Pescatore, Gartner, Inc.: Technobabble #40
CCS Insight Blog, CCS Insight: Technobabble #210
Gartner - Jeffrey Mann, Gartner, Inc.: Technobabble #65
SharpBrains, SharpBrains: Technobabble #3
Many of us are ready to recognize social media as a standard subset of our B2B and B2C communications channels. Even the slow moving Fortune 500 is adopting public-facing blogs, according to SNCR. So it’s time to stop thinking about analyst-written blogs as a novelty and start thinking about them as part of standard analyst business practice. One of the central topics we can start talking about openly is vendor sponsorship. That’s right: analyst-written blogs as vendor sponsored content.
In the analyst business at large, most (maybe all) communications channels contain a portion of sponsored content. The mix varies by firm. Some don’t license any content to vendors. Others license any and all content. Most firms are somewhere in between.
Sponsored content represents a mature, steady stream of income for many analyst businesses. I doubt many of us were around when the first vendor co-branded analyst report was circulated as a sales tool. Lots of us were around to witness the first analyst appearances in vendor-sponsored microsites, webinars and podcasts. These are commonplace today. We accept them — even mine them — as a natural part of everyday communications channels.
Why imagine that blogs will be any different? Or Twitter? There’s nothing about blogging as a communications channel that makes it a poor match to sponsorship interests.
Think about it. Some analyst firms won’t buy into sponsored blogs / blog content, some will. The question is, will you buy-in?
Personal congratulations to Ray Wang, formerly with Forrester Research, and Jon Collins, head of Freeform Dynamics for taking top honors as “Analyst of the Year” in a survey of analyst relations professionals. More at Tekrati.
It sounds so simple: tell me your definition of an industry analyst. In truth, coming up with a viable definition for the tech “industry analyst” is not such a simple exercise. Clear-cut distinctions between industry analysts and other types of influencers have been dissolving over the last few years.
From 2006 to 2008, I helped the industry come to some common understanding by writing and curating the base Wikipedia article on industry analysts. It doesn’t quite do the job anymore.
Today, definitions of the industry analyst role run into trouble on several fronts. You’ve got big differences in the balance of research and consulting revenue streams at the largest to the smallest of analyst firms. There’s also competition from more and more quarters, including diverse businesses, organizations and social media groups publishing “good enough” research and vendor reviews, not to mention decision advice and thought leadership. Then too, there’s the growing number of SOHO professionals who take the label.
Hard and fast rules for what constitutes an industry analyst may work on paper, but they rarely hold up in the marketplace. Behind closed doors, tech decision makers and vendor AR teams alike regularly debate the criteria for what constitutes an industry analyst.
I think the conversation about what’s an analyst — the debate itself — is the answer.
Instead of aiming for one rock-solid definition that fits all analysts all the time, we can make deciding who’s in and who’s out part of an ongoing process. Each of us can make it our own process. Involve our customers and supply chain partners. Involve our salesforce. Revisit our assumptions, criteria and earlier judgements in a fluid never-ending process.
From an execution standpoint, this only works if we ask the tough questions regularly. We can’t wait for a decision event or a crisis to ponder whether someone is, or is not, an industry analyst.
Jonny Bentwood was in touch with an invitation for you. He’d like your help in determining the IIAR’s “analyst of the year”. Technically, you’ll help determine more than one analyst of the year. They’ll name one worldwide, one for the Americas and another for EMEA. I suppose with enough votes Asia-Pacific could have an analyst of the year as well. The challenge for Asia-Pacific is not the number or quality of analysts, but in the number of analyst relations practitioners at agencies and tech companies.
The IIAR, aka Institute of Industry Analyst Relations, is a paid membership association of industry analyst relations professionals and their service providers. It’s based in the UK and has a sister organization in Germany.
This summer has seen computer battery recalls affecting consumers and professional users alike, and in record-setting numbers. One manufacturer acknowledged investigations were already underway before one of the incidents took place. Yet, I’ve found only one analyst group criticizing these recalls and advocating higher standards at the source: Ontario-based Info-Tech Research Group.
Most of the industry analysts cited in the media have agreed more or less with the official statement from the Consumer Electronics Association: “While the number of incidents thus far has been relatively low, Dell and its manufacturing partners have been incredibly responsive and are going well beyond expectations in this circumstance. While we can’t foresee any additional recalls of Li-ion batteries in laptops or other consumer electronics devices, it is heartening to see that our industry is moving quickly to protect consumers from even the rare circumstance that may result in hazardous conditions.”
The CEA statement goes on: “Given the number of Li-ion batteries in use today, failures resulting in hazardous conditions are extremely rare.”
Info-Tech Research Group doesn’t find the situation quite so easy to accept and is downright unwilling to describe recalls as an impressive solution. In June, these analysts called for the tech industry to fix such hardware problems at the source, rather than issuing after-the-fact recalls (here). This week, they reiterated their position (here).
Topics like convergence, infotainment, always on, and consumerization generate lots of buzz. Advocating quality does not. Yet, analysts can be powerful advocates for setting higher industry standards in product quality and reliability. Twenty years ago, analysts help pound PC manufacturers into producing fewer DOA units. Right now, analysts are making a difference as advocates in nanotech, privacy, and telco regulation.
Take Info-Tech Research Group to task, if you conclude that the known failure rates, reliance on recalls, investigation process, and timeline for manufacturing process improvements are acceptable.
Or, cut from the herd. Use this as a launchpad to reset the register for what’s “acceptable” in today’s high tech markets.
Reprinted from Tekrati
In conjunction with their new book, “Getting It Right the First Time: How Innovative Companies Anticipate Demand”, Internet Research Group principals Peter Christy and John Katsaros offer a one-page analyst perspective on do’s and don’ts for high tech vendors intent on briefing industry analysts. I suggest that analyst relations managers read the book and consider giving their spokespeople each a copy of the book, along with a print-out of the Do’s & Don’ts page. Here’s why.
1. For spokespeople: The Do’s and Don’ts are a minimalist list, and this is a good thing. If all else fails, don’t fail on the points explained by Christy and Katsaros. If your spokespeople have the attention span of a gnat or the ego of a shark, then these are the prep points to cover, cover, cover. Meanwhile, the book may help them rediscover the importance of accurate, well-informed forecasting.
2. For analyst relations professionals: The book can revitalize analyst relations managers, providing a launch pad for redefining the way that analyst relations and industry research contribute to high tech companies. Analyst relations managers are in a unique position to contribute to their organization’s success. The first challenge is envisioning such a role. This book can help:
In ‘Getting It Right the First Time’, we show that the most successful businesses will be those that accurately predict market conditions–especially the market changes that will occur within the crucial 18-to-36-month innovation window. Or, to paraphrase the advice hockey superstar Wayne Gretzky received from his father: ‘Skate to where the puck is going to be, not to where it is.’ — Katsaros and Christy
Advisory Councils are one of the most effective venues for building strategic relationships between leading industry analysts and vendor executives. According to Rob Enderle, one factor that determines the effectiveness of analyst advisory councils is the degree of goal orientation and planning. Councils that are effective tend to have clear, concise goals that are collaboratively set with both the host company and the analysts.
The more effective councils also meet regularly.
By contrast, less effective councils usually lack goals or overlook the analyst expectation to participate in goal-setting as well as ongoing, stable dialogues and processes.
“In other words, beating analysts to death with foils on a whim seldom works,” says Mr. Enderle, who participates in several advisory councils for vendors such as AMD, Clear Cube, Dell Computer, HP, IBM and Toshiba. In his experience, the high tech vendor executives who achieve the most value from their industry analyst advisory councils are those who involve analysts upfront in goal setting and planning.
Mr. Enderle offered numerous candid insights on building executive advisory councils and their impacts on industry analyst influence and objectivity during a live interview with Sam Whitmore Media Survey and Tekrati on November 4, 2004.
Enderle Group white paper: Download the related Enderle Group white paper (PDF): Enderle Group Advisory Council Report, 2004-11-04
Reprinted from Tekrati