Emerging Tech

IT leader's guide to working with industry analysts

Working with industry analysts is more complicated than most IT pros expect. The hard part is putting a process in place to ensure that you are getting the most out of your deal by educating your organization about how they can use the analyst data to make better decisions.

Industry veteran and ex-Gartner analyst William Hopkins is the Founder and CEO of the Knowledge Capital Group (KCG). Founded in 1998 and located in Austin, Texas, KCG is a specialist advisory firm that has helped thousands of technology buyers and sellers maximize the value of their relationships with industry analysts. www.knowledgecap.com.

Ever wondered why, as a technology buyer, almost every vendor wanting to sell you something hands you an "analyst report" or "whitepaper" from some firm you have never heard of? Meanwhile you spend untold thousands of dollars a year buying a subscription to one of the major firms that doesn't quite seem to cover what you are really interested in?

Here's why. The vast majority of "analyst firms" in the market today do substantially all of their business with the technology vendors that are trying to sell you stuff, not with you -- the folks that are actually buying, using, installing, and maintaining it. These "sell-side" firms specialize in writing reports and whitepapers, coming up with ROI or other cost-benefit analyses, or offering commentary, all on behalf of the vendors that pay them. They then either give this "research" away for free on their Web sites or they sell the reprint rights to the vendors whose marketing and sales forces distribute them to the rest of the world. Sooner or later, they end up on your desk. The average technology vendor does business with between 10 and 15 of these firms.

Contrast that with a firm that sells "subscriptions" to technology buyers (and to be fair, vendors too) so that they can access and read all of their reports, ask their analysts questions and engage with them in short and long term consulting projects.

Though ALL analyst firms take money from the technology provider community, as a percentage of their overall business, some take far less than others. As the top-end of the analyst business has consolidated over the last five or so years, the number of firms that generate the majority of their revenues from technology buyers (and tend to be more objective, neutral, and therefore less susceptible to "pay for play") has dwindled steadily.

Today there are only about a dozen or so firms globally, across all vertical and horizontal technology markets, that have a business model that derives a substantial amount of their revenue from technology buyers. The average technology buyer has subscriptions with between two and three of these firms.

By the way, and for the record, here at The Knowledge Capital Group, we take absolutely no money from analyst firms -- and never have. Our clients are technology buyers and sellers and others that want to understand the analyst business better.

So, given that this can be a pretty confusing marketplace, how do you make sure that you maximize the value of the time and money you spend with the industry analysts?

Target the right firms

Finding and engaging the right analyst firms to help you with technology strategies and decision-making data is more about alignment and coverage than anything else.

To judge alignment and coverage, simply ask the question, "Do they have analysts that are aligned with the technology we are interested in and who regularly talk to all of the stakeholders (buyers, sellers, and others) that make up the market?" Small firms sometimes have top-notch, highly targeted horizontal and vertical market coverage, and large firms sometimes have holes in coverage and no analysts to cover them. Ask hard questions of the specific analysts you would be dealing with, about how they see the market, before you commit.

Get the best possible deal

Our research shows that nearly 100 percent of all customers (buyers and sellers) of the analyst firms are either dissatisfied with what they are buying or feel that are paying too much for it. This is because the prices that you pay for your analyst firm contracts are dependent only on the imagination and initiative of your friendly local analyst firm sales reps. There are recommended prices and guidelines, but it is the nature of the beast that every deal is different. On top of that, the bigger the firm you are dealing with, the worse this problem seems to be.

What are the keys to getting the best deal?

  • Knowledge: You need to know and be able to justify what you need to buy. Which individuals in your organization need to be able to read the analyst reports? How many also need inquiry? Do you need broader consulting engagements? You'll also need to know the products that the different firms offer and how they are structured. Some of these offerings, especially those including "roles" are very difficult to understand and even more difficult to leverage. These are the parameters you'll need to understand -- just to get started.
  • Initiative: Throughout our 12-year history advising companies on how to do business with analyst firms, we have been shocked and amazed that over 90 percent of the folks we talk to allow the analysts to propose what they buy, how they buy it and how much they pay for it. Bad idea... You need to take the initiative and tell them what you want to buy, how you want to buy it, and how much you want to pay for it, not the other way around.
  • Negotiation: Once you know their products and services and have taken the initiative to tell them what you want and how you would like to buy it, it is time to negotiate. Remember there is no rate card or uniform pricing and every deal is different. How well you understand what you want and negotiate to get it will determine your satisfaction. This gets even more interesting if you need to involve your procurement department

Leverage the value in your contract

After you have looked at all of the options, evaluated them, and carefully chosen the firms and analysts that will be most likely to help you solve your problems and validate your results, you move on to negotiate a contract. When you get everything you need for less than you were willing to pay, now what do you do?

The real value of the analysts is in how you leverage what you bought. Most of the folks we talk to find that this is the most difficult part of the process. Your users need to know not only what kind of information they can access, but also how to access it. How often can they download and distribute reports, ask questions, and make inquiries? In particular, you should understand how the analysts can help you in these areas:

  • General information/data gathering
  • Strategy formulation
  • Problem definition
  • Solution requirements/RFIs and RFPs
  • Identifying vendors
  • Short-listing vendors to evaluate
  • Assessing options
  • Validating assumptions
  • Help with negotiations and pricing

The analyst firms are generally not very good at telling you how to leverage them and even if they do they don't usually follow up and make sure you get the most from your contract. You'll have to make sure that happens.

The bottom line?

Working with industry analysts is more complicated and difficult than most IT pros expect and is likely to be a source of dissatisfaction that raises many questions of value.

To be successful working with the analysts, you'll first have to know which firms you can trust and which ones will have the information and knowledge you are looking for. Then you can determine how best to do business with them to tap that knowledge and advice. The hard part is actually putting a process in place to ensure that you are getting the most out of your deal by educating your organization about how they can use the analyst data to make better decisions.

Do you engage with industry analysts or use analyst research and reports to help you gain insight into the technology world? If you do, we want your opinion! Ever wondered how other companies use the analysts? If you do, we want to help you out. TechRepublic and The "analyst watcher" firm, The Knowledge Capital Group, have collaborated to produce the definitive survey of the impact of industry analysts on the technology business. Click here to be directed to a quick survey (should take less than 10 minutes) and give us your opinion!
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