Tuesday, 17 May 2005

Open source analyst business model?

We've previously referenced this great blog entry by James Governor from Redmonk, but in case you missed it we thought it deserved a full reference and some commentary.

In his post titled "Things To Do in the Analyst Business When You Are Dead", James discusses the IT analysts business model.

It's a great post, if a little long, but let's backtrack for an AR 101. Analyst business models differ greatly according to their output and revenue sources:

  • Analyst output falls roughly in 4 categories: consulting (up), reports (rapidly commoditised), advisory retainers (aka RAS) and events
  • Their clients are usually either vendors (in majority) and/or users (down)

There have been very significant changes in the past years: end-user spend declined, together with reports (who wants to pay EUR2k for a doorstopper frankly?). This means research commoditisation, more white papers, more consulting.

James thinks the analyst business model is "ready for an overhaul", that analyst firms can no longer "run a sophisticated version of the protection racket":

"If you pay up we let you do business - if not we can make life real hard for you by smashing the place up/downgrading your products. Its an open secret in the business, the corpse out in the backyard we all catch occasional whiffs of."

He concludes it is time to revolutionise (esses, not zees, James) the industry with better quality, credible and collaborative research: open-source. His suggestion is intellectually brilliant but stops short of explaining how to make a living for analysts, a point subsequently documented in this other post: "Right hand commoditises left. Gluecode and RedMonk's business model"

1 comment:

Stiennon said...

I am not too impressed with Mr. Redmonk's brilliant idea to "open source" his research. This is not a new concept. If you have no brand recognition it is about the only way you can get your research read and have an impact. Charging $4,000 a copy for a pdf is an unsustainable business model.

There are millions of research papers being written every day. They are short, concise, actionable and include references. They are called blogs.

For research to be opensource it would have to be collaborative. Just like blogs with comments! Wow....