Tuesday, 28 June 2005

Deal architect: analyze this!

Great post from Vinnie Mirchandani on deal architect: go read it, it's enlightening and not only because he likens Gartner to the Evil Empire. We'd stick to calling them the Borg, but agree that quite often these ego-driven cyborgs pretend being in the movie rather than sticking to being movie critics:

"We are the Borg. Lower your marketing and engage with analysts. Your messaging and uniqueness will be replaced by Gartner-speak. Resistance is futile."

That's of course when vendors forgot to sacrifice a few SAS days to the altar.

Back to Vinnie and his 5 perspectives -with a question: if vendors spend too much on AR, what do you say about marketing, PR and advertising? AR is usually a (very) small fraction of those budgets but reversely their ROI is usually a fraction of that spent on AR. The case below is a fictitious mid-sized ($1.5b) tech vendor, with a mix of direct and mostly channel sales:

  • AR: $3.75m or .25% of revenue
  • PR: $15m or 1% of revenue
  • Marketing: $45m or 3% of revenue
  • Advertising: $75m or 5% of revenue

The ROI for all those disciplines is quite varied, but it's safe to say that if a single analyst makes a positive recommendation for a single large deal, the AR investment is easily recouped. One word of caution: this implies the AR programme is built as a long term investment and that the company engages honestly in a two-way relationship with the analysts (i.e. not in media relations "push-mode", which is the best way of annoying analysts without getting anything back).

As far as the other disciplines are concerned, it would be interesting to hear from someone who has ideas on the subject, but we would argue that their ROI is way more difficult to prove...

1 comment:

theARpro said...

A great post, but I was interested by this aside "Get coaching from Bill Hopkins at Knowledge Capital Group on how to succinctly, and only infrequently, brief analysts. Less is more. Give them time – indeed, force them to spend more time with buyers and then summarize the "voice"." I'm not sure that it's good advice to suggest we should brief analysts less. Most analysts would say they want to hear more. The leading AR teams, at firms like IBM and Microsoft, organise large numbers of briefings, and are clearly amongst the firms best regarded by analysts. Before Microsoft had such a large AR program, it was really badly regarded by analysts.