The analyst watcher blind spot

There has been something bothering me for a while now, and I haven’t been able to put my finger on it until recently.

The problem is to do with ‘analyst watcher’ firms, particularly independent agencies and consultants that provide advice and other services to vendors on how best to engage with and exploit the IT industry analyst community. This is essentially a sub-segment of the analyst community itself, in that such organisations pretty much do the same job as industry analysts. We all look at solutions, who is providing them, and try to give a steer on who to engage for what and why, either at a category or individual provider level.

As soon as I realised that analyst watchers were analysts, it helped me to understand how to interpret their output and activities. Anyone who knows me will be aware that analyst watching is a bit of a hobby of my own and, indeed, Helen and I conducted a pretty thorough review of the analyst landscape before we designed Freeform Dynamics. That’s how we ended up with a firm and business model that is reasonably well differentiated to those who know us.

This last statement, particularly the reference to “those who know us”, brings me back to the thing I was struggling with. Some analyst watchers out there seem to have difficulty understanding what we do, why we do it, and why it matters to their clients. In fact, I have read various pieces of commentary recently questioning the value and relevance of smaller analyst firms – let’s call them ‘boutiques’ – in general. Related to this is talk about whether the use of media channels and Web 2.0 style delivery is as effective from an influencing perspective as advice driven through commercial subscriptions and consulting services by– let’s call them – the ‘big incumbents’.

The problem is, though, you end up trying to compare apples to oranges, and this is the trap some of the analyst watchers out there have fallen into as they attempt to assess boutiques using the same criteria they apply to the big incumbents. One of the highest weighted factors in this is direct participation of the analyst firm at the tail end of the strategic IT investment cycle, i.e. when vendors are competing head to head to win major IT procurement decisions in large accounts. With this kind of measure central to the assessment, it is no wonder that some analyst watchers struggle to see the relevance of boutiques. Even at a collective level, the direct involvement of boutiques in this context cannot seriously be compared to that of the big incumbents.

Most of the analyst watchers have not surprisingly reached this same conclusion, and as both their thinking and often their own propositions revolve around monitoring and measuring influence defined in this way, those pesky boutiques are simply viewed as an irrelevance, or perhaps ‘inconvenience’ would be a better term.

Why inconvenience? Well because there is something about many of us little guys that makes us difficult to ignore or write off completely. Even though we don’t fit into the traditional influencing models and scoring mechanisms that are often central to the services provided by analyst watchers to their vendor clients, their clients still, annoyingly, seem to take a lot of us seriously. And it’s doubly annoying because the reasons for this are often too slippery to tie down, and if you can’t tie them down, you can’t measure and score them, so how can you work them into your service offerings and make money from advising on them? Business is business, after all.

So let’s take a look at some of these more slippery factors.

As someone who carried a sales quota for many years of my career, one of the things I learned was that the earlier in the decision making cycle you can engage, the more chance you stand of closing a deal. One of the strongest positions to be in, in fact, is when you are the person (or company) that has educated the prospect at the point of them considering whether they should be heading in a particular direction or not - i.e. long before they even consider which technologies, products or services will ultimately be required. If you can get people thinking in the ‘right way’ at this point, i.e. orientate their mindset or frame a decision in line with your own view of the world (or that of the company you are representing), then you can out-position the competition even before they get involved. Conversely, walking into an opportunity late in the day when mindsets and thinking have already been set unfavourably to your proposition makes winning the business extremely difficult, even if you wave around an analyst report that positions what you are selling in the top right hand corner.

The reality, of course, is that this kind of ‘upstream’ shaping of mindsets, thinking and objectives that has such a huge bearing on ‘downstream’ decisions made later, is influenced by a whole range of inputs. This is something we discuss in a report we have just published in collaboration with our friends at The Register, in which we look at the market 'buzz' surrounding 25 global tech brands (see here). As part of this, it was fascinating to see the range and diversity of information sources that have a bearing on the decision making process when considered in its entirety (i.e. upstream as well as downstream). Now I don’t want to make any claims here as this upstream part of the equation is extremely complex, especially when you consider the interplay between influences (i.e. influencer networks), but it does put more traditional downstream analyst activity into its proper overall perspective.

And here’s where we close the loop with analyst boutiques. The point is that many boutiques play predominantly in the upstream space, with hard hitting blogs, far reaching media relationships, and deep community ties into various buyer communities and constituencies.

As I said earlier, though, figuring out how to measure all this is pretty near impossible. When several tens of thousands of people (we track the stats) read our analysis of BEAs acquisition by Oracle, for example, what difference does it make to procurement behaviour within the BEA and Oracle customer base? When the aforementioned ‘buzz report’ is circulated to a subscription list of 18,000 IT professionals as a free download, with no copy protection, how much easier or harder does the job of some IT sales people become? I certainly couldn’t quantify the answers to these questions, but to argue that such upstream activity has no influence at all is as impossible to defend as claiming that boutiques can compete with the bigger firms on direct downstream participation in major deals.

Nevertheless, appreciating the impact still depends on subjective value judgements, which is the main contributing factor to the analyst watcher blind-spot.

Fortunately for us, analyst relations professionals working in a vendor environment do not seem to suffer from this same impediment. We actually have no problem at all justifying our existence with people in this position, and I know from my dealings across the analyst community that other boutiques we rub shoulders with have the same positive experience. I think the difference is that in-house AR guys do not have the luxury of ignoring or dismissing activity they intuitively know to be important just because it is difficult to measure. Regardless of the views they might hear from some analyst watching advisors, they still therefore give us the time and access to executives and privileged information we need to do our jobs.

The other reason quite a few boutiques tend to be entertained and promoted by in-house AR people is the value their executives and other spokespeople get from a different kind of dialogue. The average level of ‘been there, done that’ experience and general level of talent within smaller firms tends to be higher than in larger ones, and analysts are far less constrained in the way they interact. This is not a criticism of larger firms (I don’t want to fall into the apples versus oranges trap myself), it’s simply a natural consequence of the scale of operations and nature of the traditional analyst business model.

If you pull all this together, the message is that it is important to appreciate that boutiques are simply different, and trying to assess their merits and value using the same criteria and approach you would for larger firms means you potentially fail to appreciate what they have to offer and why they can be important.

I would also like to stress that my comments on analyst watchers are provided in the spirit of constructiveness. Most are making the effort, and that is to be applauded, but I think it is important for some with a noticeably larger blind spot than others to realise that their thinking is sometimes actually behind that of the clients they are trying to advise. I personally believe there is an opportunity here for advisory firms that broaden their view and take upstream influence and influencer networks a bit more seriously.