Sunday, February 17, 2008

Are Industry Analysts Objective?

Many vendors think that Industry Analysts can be bought.
According to Bill Hopkins from KCG-the Knowledge Capital Group who are an Analyst Relations Consultancy Firm, "While there is truth to the view that you can buy the opinions of many sell-side analysts (and maybe some Point Players on the buy-side), it's absolutely not true when it comes to Deal Makers and Breakers (Forrester and Gartner)."

What do you think?

18 comments:

BFrench said...

Nancy, I suspect that you have taken Bill's comments out of context. Most of us agree that subscribing to Gartner, Forrester, IDC, etc. buys a vendor the time and the insight on which to build a trusted and deeper relationship with key analysts.

In the right hands, being an Gartner/Forrester client is a competitive advantage.

Does that constitute "pay for play"?

Jon Collins said...

Ooooohhhh ain't that the nub of the matter! I have repeatedly said that it is very difficult for analysts of all sizes (of company) to be independent of their own domain - the onus is absolutely on them to be objective however, something I was discussing with David Rossiter last week.

I'm not sure I would agree with the "absolutely not true" premise, from the perspective of "its not as simple as that." By the time the shortlist is defined and the deal is being made, it is highly unlikely there will be any indication of wrong doing. However, this is already a long way down the track. Example - CRM - did everyone who bought it, need it? I repeat - one can be unassailably independent from a procurement, while still implicated as non-objective in a domain.

Cheers, Jon

Positioning Power said...

I appreciate your comments. There definetely is no such thing as 100% objectivity but I am sure you will agree with me that there are several analyst groups, such as Gartner and Forrester, who need to align themselves with theorectically being objective and committing to publish even provocative information about paid clients.

Carter Lusher said...

Hi Nancy

If by “objective,” you mean that an analyst will give a vendor a fair hearing regardless of client status, the answer then the answer is absolutely yes for 99% plus of analysts. Because this comes up so often I wrote Analyst integrity issues – the urban legend that won’t die to address the issue.

If by “objective” you mean being devoid of bias, then the answer is quite different. All analysts – and I was a Gartner Fellow – bring their life experiences to the job. If an analyst used to be an IT manager then she or he will have a perspective that is initially different than an analyst who used to be a vendor product manager. Analysts can also have lapses of objectivity due to “demo glow,” which I call the temporary infatuation caused an exceedingly effective technology demo. There is also philosophical bias that pops up in the various “religious wars,” e.g., whether Linux is an appropriate platform for enterprises.

Cheers, -carter j

SageCircle’s blog on the analysts and AR best practices

Positioning Power said...

Thanks for your comment Carter. I will check out your piece on Urban legends. The most important point in this discussion is that vendors understand that just paying an analyst money will not give him or her a good write up. I have worked with several small vendors who were not subscribers and still got great exposure with the analysts, including Gartner, because we targeted the right analyst and created a relationship with that analyst.

Jon Collins said...

Hehe Carter, I could add to that the "love of shiny things" tendency that most in technology have a difficulty with. I'm currently testing out an OQO handheld computer, which I'm loving, but no way is it a suitable device for general roll-out!

My comment about CRM concerned the difficulty of being objective across the entire market-making process. I think history has proven that CRM was a conceptually good idea, but technologically flawed. Today, we see examples of "markets" that are in fact "products" or indeed, "features" - I was in discussion with a vendor today, and I felt almost apologetic to say that what he was calling a "market" was in fact no more than a product feature.

Duncan Chapple said...

Interesting discussion: and sorry I missed the start of it. I have flagged it up here http://analystrelations.blogspot.com/2008/03/are-industry-analysts-objective-or-what.html.

Jon, I'm with you on the OQO. I was all over them at Symposium last year, but, er, what an experience...

David R said...

I'd agree with Barbara. You might not be able to buy Gartner and Forrester - but you can buy time with their analysts which allows the development of a closer relationship than a non-client would enjoy. There has to be a benefit to this.

And thanks to Jon for bringing me in on this. We had a fascinating conversation on the issue of analyst ethics and objectivity - and analyst objectivity is I suspect going to be more relevant in the future than the idea of analyst independence.

This is a complicated area - people will have different views on what's acceptable and what's not. There's some obviously unacceptable behaviour - but plenty more shades of grey...

A great debate!

Positioning Power said...

Thank you all for joining in on this discussion. As always, I welcome your input. I brought it up because I have heard vendors express their belief many times that analysts only publish your "story" if you pay them. This prevents vendors sometimes from even starting a conversation and course benefiting from the real benefits of working with analysts, ie., creating a working relationship with them.
This is why I believe it is important to address this issue to vendors and explain the complexities as best as possible including the gray areas as many of you have pointed out.
I look forward to you all joining my next post on what you consider the real value of working with analysts. Coming soon...

Anonymous said...

As an analyst at a DMB firm, I would just point out that while it's true that you can buy time with analysts, that does not necessarily translate to more favorable - or even any - coverage.

I spent a paid-for day with two separate vendors recently and left with an extremely favorable opinion of one and a neutral opinion of the other - they both paid the same, I applied my own subjectivity to what they were telling me (as Carter describes above), but my opinions on the two firms differed.

Positioning Power said...

Thank you anonymous analyst for joining this debate. I invite other analysts to do so. Very good point--even if the analysts do get paid for their time-the analyst has to stay objective.

David R said...

Hi Nancy

FYI, I've just blogged on the subject of Analyst Ethics over at the IIAR blog - http://iiar.wordpress.com/2008/03/07/ethics-and-independence-among-industry-analysts/

Cheers
David

BFrench said...

So Nancy, I think you're letting yourself off a little too easily. Clearly you think well of Gartner and Forrester. However, you started your post by saying:

"you can buy the opinions of many sell-side analysts (and maybe some Point Players on the buy-side)"

Do you believe that you can buy the opinions of many analyst firms that have vendors as clients?

Or, do you disagree with that KCG statement?

Positioning Power said...

I agree with KCG and others that for the Deal Maker/Deal Breaker Analyst Groups like Gartner and Forrester, they cannot allow themselves to seem biased. Being objective is one of their greatest assets and they do need to guard that.
I have used the example of Oracle's charge that one of Gartner's reports in 2001 was biased to prove the point of analyst group objectivity.
Oracle said in the article that it sees the recent report as being consistent with Gartner's continued bias against the company.
Gartner's spokesperson said at the time:
"Sometimes [companies] might see it as bias while we see it as independence," said Wallace, in response to the charge (from Oracle).

Wallace said Gartner does not keep track of how many times companies receive positive or negative ratings. She said Gartner's goal is to maintain an independence from the companies they review."
For the whole story see:

http://news.zdnet.co.uk/software/0,1000000121,2093940,00.htm

David R said...

Nancy

That's twice now you have used an interesting caveat:

a)"theorectically being objective"
b)"cannot allow themselves to seem biased"

That's a long long way from them actually being objective or un-biased.

Are you saying that you believe analyst firms can be bought and their focus is just not on getting caught?

Or is it that not only do they have to be clean, they also have to be seen to be clean?

Cheers
David

Positioning Power said...

David,
Thanks again for participating in this very interesting discussion.
I meant that although there is no such thing as 100% objectivity (people/analysts are swayed by many different factors), the analyst groups who count objectivity as one of their assets-must not only strive to be objective but must also take care not to even look as if they are biased in any way. If they are attacked for bias-their best defense is that this is their opinion based on all the facts available to them at the time. And as we have seen, this defense can be held up in court.

David R said...

Hi Nancy,

Just wanted to let you know that the IIAR is setting up a group to look at the whole subject of ethics/objectivity etc with a view to defining some sort of "code" or "best practice".

I will leave it fairly loosely defined for now because we're not entirely sure what will ultimately come out of the process.

Marius Jost, an IIAR board member, is leading our work in this area.

If anyone is interested in participating, please do get in touch with him via our website

Anonymous said...

I agree with Carter (Feb. 21) that you can buy access. That helps: access lets you explain the reasons for something, so analysts may agree with (say) a product direction when they'd find it odd if seen just from the outside. Familiarity via repeated contact builds trust, too. Trust is vital for positive analyst reports.

Also, we can't ignore vendor size. Nancy mentioned (also Feb. 21) small companies that got "great exposure." It's easier for small companies. For one thing, analysts feel they're more likely to have interesting innovations that others may not have covered yet and that will therefore add value to reports. For another, there isn't the same "you're big enough to be a client" expectation. At the other end of the spectrum, analysts have to make time for the giants that's not an option. Medium-sized vendors that aren't clients have the biggest problem.

Efrem Mallach