Thursday, 4 January 2007

Analyst Impartiality Questionned by NYT and the Motley Fool

A kind reader brought this article from The Fool to our attention: The Other Analyst Scam.

It links to an interesting article by Ashlee Vance from El Reg about the New York Times banning Rob Enderle from commenting in their pages after they got a complaint about a conflict of interest. The interesting point is is that while the NYT was having a go at poor old Rob they continued to use Gartner, IDC, Jupiter, Yankee and ABI! Incidently, it is quite ironical for the NYT to feel being in a position to patronise analysts about integrity...

As per one a comment on one of our posts, journalists should D.O. T.H.E.I.R. R.E.S.E.A.R.C.H. and check their sources before quoting analysts. They should also not quote any random number (but that would suppose they would have some understanding of market sizing methodologies -sigh).

The Motley Fool article insists on this point: market numbers are produced by firms (such as IDC, Gartner, etc...) whose business model depends on IT Vendors.


ARmadgeddon's take:

  • Industry analysts will increasingly be pressurised to disclose who pays them and should be careful before returning favours in the shape of press quotes. In other words, transparency will condition their reputation and thus existence.
  • AR Managers should not push analysts to provide blatant endorsement as they too often backfire. They should also use analyst quotes in press releases with caution.
  • Journalists should do their homework. Like figuring out that a one-man-shop has little or no peer reviews and its coverage will follow more closely vendor briefings than their own research agendas. But maybe that's too much asking?
  • Incidently, this also pressurises the Borg to review the disclosure rules and department separation of their Gartner Invest service following vendor concern.

Links:

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8 comments:

Bob Smith said...

I feel sympathy with Rob Enderle as he is just doing his job as an analyst. IDC, Ovum, Yankee and (dare I say it) Aberdeen are 95-100% dependent on vendor money to keep them afloat. They have no other alternative to stay in business – unlike Gartner and Forrester, who also have sizeable user businesses. If you are a program manager-level analyst in one of these firms with P&L responsibility, then of course you are going to be indirectly biased in favor of your vendor clients. I know most industry analysts are ethical, objective people and would never intentionally go out there way to skew press quotes etc in favor of their clients, but their livelihood depends on the money they receive from vendors. They simply cannot afford to be objective if it threatens alienating their job security. The only way the vendor-funded analyst firms can become unconflicted is to develop a higher-proportion of user-clients, so they are not completely dependent on money from vendors, and have more freedom to behave in a truly objective, unbiased fashion. Bottom-line, analysts from these firms represent vendorsv- and not users - and their views are always going to be biased in favor of what vendors want the world to hear. Even thought most analysts are not being deliberately biased towards individual clients, they are going to be biased towards the issues facing the broad-set of their paying clients

It is the responsibility of the NYT and other press to disclose to their readers this information and have these industry analysts reveal where they get their income – and what PROPORTION comes from both vendors and users. They love to use analyst brands to generate credibility within their stories, but if they are going to stop using people like Mr Enderle, they must practice what they preach and apply this to all analyst firms.

Anonymous said...

Whether people want to face up to it or not, the industry analyst community is going to have to change. Far better to do it themselves than have changed forced.
It is will soon no longer be a feasible to give 'independent' advice on vendors and products when those same vendor help pay your wages...
Most analysts are good people, but they are compromised and the smarter ones know it.

Anonymous said...

Very interesting discussion. The last anonymous entry got the post incorrect: it is ALREADY no longer feasible for these vendor-funded firms to provide credible advice. The IDC's of this world will only regain some credibility if they freed themselves from their paymasters.

Anonymous said...

Ovum and Yankee are not 100% dependent on vendor money. You must be thinking about the money get get from telecommunications network operators, which is a large part of the revenue for both those businesses. Remember, those organisations are massive buyers of technology and services -- and that accounts for the substantial influence than Yankee has on the telecoms industry around the world.

Anonymous said...

didn't Monitor sell Yankee because they couldn't get any user clients after Gartner bought Meta?

Anonymous said...

Depends on your definition of vendor - Ovum and Yankee have virtually no revenue from IT end users/buyers.

Telecom research sells to telcos and telco vendors. IT research sells to a handfull of big vendors. Little or no cross-sell.

Ovum and Yankee also seem to have fewer and fewer IT analysts - Best to start calling them Telecom analysts, they have no real value in IT anymore.

Anonymous said...

Business used to periodically quote analysts in articles- now these assemble entire articles around analyst quotes.

The funny thing is that end users and vendors for the most part put analyst numbers, opinions, etc. into some sort of personal context (except when vendors are tossing them around to make a sale). The newspaper reading public has really no clue what these people are saying. The might as well be reading SAP ads about "SAP in the midmarket". It's all just soundbite information tossed out there without context.

Bottom line is that this is a tempest in NYT's delicate sensibilities teapot, and says nothing about analysts and how the technology market functions

Anonymous said...

most tech journalists are way dumber than the dumbest analysts