AR Classics Series: Buyer beware on analyst advice

Here's more decade-old wisdom we found on archive.org; this time it's an article by Efrem G. Mallach.

Admit it. You're an advice junkie. Need proof? The industry analyst business rakes in more than $1 billion annually, mostly from IS managers who seek advice on trends, vendors and products. Consultants take in even more for advice tailored to a specific situation.

If you spend that much on advice, you pay attention to it. Vendors know that. So U.S. vendors spend more than $100 million per year to get analysts and consultants in their corner. These efforts don't always work, but they help.

Why do vendors go to this expense? Because some parts of an analyst's advice are objective, but others aren't. It's one thing to say that vendor A's hub supports X ports at Y bit/sec. That's objective. It's another thing to say that vendor B is a technology laggard, or vendor C's strategy is flawed. That's where opinions come into play and where analysts' attitudes toward vendors matter.

What's more, feelings should matter. A vendor's treatment of analysts may not mirror its treatment ofusers precisely, but it's a guide. When vendors give analysts prompt, clear responses to questions, access to experts when needed and truly useful presentations, the analysts will conclude that users are likely to get similar attention. Analysts who get the opposite will conclude the opposite. The logic may not be perfect, but experience can't be denied.

Yet this situation of vendors courting analysts with varying effectiveness makes analyst evaluations inherently subjective. What's an IS manager to do?

• 1. Don't kick the habit. It's OK to need advice. Technology is complex and moves quickly. You can't spend all your time evaluating vendors and technologies. Go to people whose job it is, and pay them for what they know.
• 2. Remember you're at the end of a long information chain. Everyone in the chain helped shape what you hear. And everyone in the chain has an ax to grind, personal favorites or entrenched dislikes. They put their spin on the elusive ``truth.''
• 3. Get multiple analyst perspectives. If you can't subscribe to more than one service, read what others say in the press, pull summaries off World Wide Web sites or exchange views with colleagues.
• 4. Probe. Only a minority of analyst subscribers take full advantage of their call-in privileges. Join that minority. Find out what assumptions the analysts used, what their methodology was and how they chose the vendors to examine.
• 5. Be aware that analyst firms receive millions of dollars from vendor clients, too. Although few analysts will ``fudge'' evaluations to favor clients, they are more likely to know client firms in depth. This makes them more likely to write about clients and more aware of their products' true capabilities.
• 6. Check the record. What did this firm or even this particular analyst say about the vendor, product or technology a year ago? Two years ago? And what really happened? As mutual-fund advertisements say, past performance is no guarantee, but it's another calibration point.
• 7. Evaluate recommendations in the context of your firm's approach to technology. Is it leading-edge or conservative? Is management centralized or distributed? Does your business stress market share or current profits? The right recommendation for one company profile could be disastrous for another.

That's work. But if you don't do it, your analyst experience could be a bad trip.

After the Sydney Symposium

Gartner's Symposium event has closed up in Sydney. If you haven't been there, I recommend it -- and not just because the city's amazing. There's also a more practical edge to the discussions. They are less policed than in Orlando, and at times more surprising. Or perhaps it's just the jet-lag that makes them seem that way.

Mark McDonald reported on the results from the CIO Agenda survey, for example, which showed some pretty major changes over the last year. Few analysts' presentations would dare to suggest similar shifts over such a short period of time.

Despite the slight differences between the different Symposiums, the discussions over lunch in Sydney are pretty similar to ones back in the States.

Many people feel that Gartner Invest is an time-bomb. Even if Gartner is not issuing buy, sell or hold recommendations, they are naive to think that fair disclosure regulations do not already apply to vendors briefing Gartner. I've read reports that Gartner's Office of the Ombudsman is lobbying internally to have Gartner Invest communicating with both vendors' IR and AR departments. However, while we can review research, we can't review advisory calls with investors. The risk remains clear: private information given by vendors to Gartner under NDA is different from the public information that we give to investment banks. This is a calculated risk by vendors. When we brief Gartner under NDA, it's us who would suffer if this information got through to the financial markets.

Nobody believes Chinese walls will appear between Gartner Invest and the rest of Gartner. Some analysts have written research on the same topics for Invest and for mainstream Gartner. Even if there are separations, who is there to prevent verbal interactions between analysts? How can a vendor prove whether or not a leak spreading on Wall Street did or did not come from Gartner Invest?

All these problems seem massive. We just can't see how this can work. Gartner Invest should close, and close soon.

Of course, the other complaint we have is about pricing. Gartner's price hikes will go on, and on, and on. They just don't care about vendors' complaints because the extra revenue from higher prices is more than the revenue they lose from lost sales. The different product groups have a duty to make money, and they will keep on truckin'. Anything they can break out and sell as a stand alone service will be salami-sliced off from our core contracts. Gartner is adding ten sales people a month, and they will be have to work increasingly hard as the new products get successively less valuable.

On Blogger Relations and Influencers Relations

We have received some echoes of the last IIAR meeting. Apparently James came to present about blogger relations and independent analysts. He made a few good points about blogs allowing an open peer review, his other views are pretty well summed up here. John Simmonds, an IBM AR Manager, also posted on the subject here and there.

James' conclusions in a nutshell are that:

• In today's Web 2.0, conversations are in the open: blogs force corporations to rethink the line between what needs to be protected (actively) and what can be left in the wild
  
• Communications need to be crafted around communities, not articulated for the masses
  

This is both a significant departure for AR, traditionally more used to one-on-ones and NDA's. As we expressed before, it is a unique land-grab opportunity for AR departments:

• Step up a geAR or disappeAR, redux (updated)
• Step up a geAR or disappeAR!
  

However, it requires a rethink not only from AR Managers (Open Source Briefings anyone?) but also from analysts (Coo-petitive Reports folks?)

We'd like to ask the question back to James: how would you envision a Briefing 2.0?

AR Classics Series: Seven Ingredients for a Winning Analyst Relations Program

Well-known analyst Laurie McCabe was kind enough to write down for Kensington Group her suggestions for how she'd like vendors to treat her. As she points out toward the end, she's probably pretty typical in most of these respects. Laurie was at Summit Strategies back then, and is now VP at AMI-Partner. We thank her for taking the time to write this and urge vendors to heed her words carefully.

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Industry analysts' opinions can influence how the press, customers, prospects, partners, financial analysts and competitors perceive a vendor and its standing in the market. Particularly in an age of information overload, many of these constituents turn to analysts to get an inside "take" on vendors' products and services.

In the three and a half years since I transitioned from the vendor to the analyst side of the business, I've responded to many surveys about what it takes to run a successful analyst-relations (AR) program. Lately, vendors seem to be putting more energy than ever into creating effective conduits to the analyst community. Judging by the increase in surveys conducted on behalf of larger companies with existing AR programs, many appear focused on making their programs more effective. More interesting, smaller companies, which may not have bothered with AR programs before, also are launching them and trying to determine what it takes to build a successful program.

Responding to this flurry of surveys has given me ample opportunity to think about the necessary ingredients for vendors to create successful AR programs. In the interest of sparing at least some Summit Strategies subscribers the aggravation and cost of broad surveys, I'll share my perspectives on this topic.

First, let me state that the views expressed in this article are purely my own--and do not necessarily reflect those of this firm or the analyst community as a whole. So, without further ado, here are my top seven suggestions for creating a win/win analyst relationship:

• 1. Call us early. Give analysts a heads up before calling the press about an announcement. The press expects vendors to brief analysts first--and expects us to have knowledgeable commentary ready for their articles. Leaving analysts in the dark about announcements that are within their areas of expertise, at best leaves the analyst with nothing to say, and at worst leads the analyst to think you don't have your act together.
• 2. Don't "spam" analysts. This, of course, is the other end of the spectrum--and you don't want to go here either. Unless analysts specifically request them, most of us don't want to be bombarded with daily releases about every new customer you get or every new person you hire--unless of course it's someone we know. Don't get me wrong, we're happy for you, but e-mail overload is at an all-time high. Try aggregating all this wonderful news on a monthly basis instead.
• 3. Schedule early, send briefing materials in advance, and, if a file is big, "zip it." Believe it or not, we are not just sitting around watching Oprah and soaps, waiting for a call to get a briefing scheduled in 24 hours! Try to schedule briefings a couple of weeks in advance--and get your materials to us at least 24 hours prior to the briefing. And, please, zip large files so that they don't take excessive time to download.
• 4. Know your analysts, and use their time wisely. Companies that profile analysts' areas of interest and target meetings and mailings based on their specific interests score big points. Big vendors need to send analysts information relevant to their areas of interest, but they shouldn't overload us with press releases about everything going on in their companies. Similarly, briefings are much more productive when the vendor's representatives align with the analysts' areas of expertise. Use marketing personnel to brief strategic and market-oriented analysts and technical staff when briefing product-centric analysts.
• 5. Use what you pay for. Take advantage of any paid analyst-consulting time. We are going to tell you what we think anyway, so why not test your message with selected analysts that you respect before making a broader announcement?
• 6. Use technology effectively! Everyone's time is getting spread too thin, and many analysts work remotely. Conference calls are adequate for contacting them, but I'm surprised at how few vendors utilize some of the easy-to-use Web-cast solutions available (such as PlaceWare, which requires no software downloads beforehand) to provide more interactive calls. On the flip side, please avoid using solutions that require us to download something beforehand--the odds are good that we won't have time to.
• 7. And schedule free time earlier in those events! If you are going to fly us all to a posh, tropical resort for an event, build recreational time into the beginning or middle of the schedule. Many vendors tack on all kinds of amenities--golf, tennis, spa, road races, sailing tours, etc.--at the end of events. Many analysts end up skipping these to leave early, and vendors miss a key opportunity to bond a bit more personally with their event attendees.

Despite my disclaimer above, I think that most analysts share my opinions. These tips seem pretty straightforward to me, but I keep getting surveyed about them--so maybe they're not. The bottom line is that, as with any other target audience, it's about building relationships. Vendors that design their AR plans to foster timely communications, open dialogue and mutual productivity are on track to create a winning AR program.