In Tale of Two Cities fashion re it was the best of times, it was the worst of times, this is definitely the worst of times for analyst firms.
Back in the late 90s I had been chastised with great regularity for suggesting that analyst firms such as the Aberdeens and Gartners were perhaps more Madison avenue than independent and objective guardians of market interest. At the time I felt like Christopher Columbus trying to convince everyone that the world was indeed round and not flat.
Where analyst firms have led the market?
Suffice to say, time not only heals all wounds (not that there were any wounds inflicted beyond the occasional scornful remark) but, time can also reveal the truth at least from the standpoint of supporting a particular position or belief.
In the case of the analyst firms, and as demonstrated by the responses I have received to recent blog posts questioning their continuing relevance, my position is no longer on the fringe of mainstream market sentiments.
For example, here is a response that was submitted by Elcom International’s Director of Strategic Business Development, Ian Burdon. A long time public sector veteran, Burdon has certainly earned his stripes and with it the ability to provide a broad and informed lens through which to view the industry’s evolution through what can most certainly be considered tumultuous periods of significant change.
I read the comments on Gartner’s assessments with interest as they chimed with the deeply sceptical view which I developed over a period of ten years while working on the inside in Government procurement. At the risk of impudence, my scepticism extends also to the technical press and to modern journalistic realities, characterised as “churnalism” by Nick Davies (http://www.pressgazette.co.uk/story.asp?storycode=40117).
The context for my comments is not precisely in point as it relates to assessments of software and software vendors but is sufficiently similar to be relevant I think.
There is a natural process in place which begins when an IT company develops applications about which it becomes very enthusiastic and which it then wants to sell. The launch of the product is accompanied by an effusive press release which has been professionally drafted as though it were a camera-ready article and at least some technical journalists will simply reformat it slightly and then print it as a news item without any critical analysis. This then sits in a cuttings file for further recycling and will also be picked up on by analysts who will often not look behind the press reports. In this way the press reports which do no more than reprint the press release tacitly function as an independent verification and reinforcement of that same press release!
In fact, once this process gets going, delivery of an actual product is not necessary: a well publicised piece of vapourware is enough to gain a reputation for innovative thinking and “thought leadership”.
The net effect is that a buzz and a hype is built up around particular products and/or companies. The buzz and hype bear little or no relationship with either the underlying reality of the product, or the alleged benefits of its application, or the capability of the company to deliver.
In the case of enterprise products as opposed to consumer products, neither the analysts nor the journalists who write about them are also users of the products. The analysts who pronounce upon the market and market trends rarely undertake the level of research and analysis which equates to the end-user experience and certainly real live end-users are not often asked what they think. And so, unobtrusively but conclusively, the emphasis has shifted from “analysis” based on what buyers might want to buy to one based on what vendors want to sell.
Pronouncements are made on “market leading” products and companies based upon criteria which are quite unrelated to whether or not the products are fit for purpose. Instead judgements are made based upon the halo effect of the favourable buzz and the ensuing attraction of investment capital to those “market-leading” suppliers. This is an edifice built on sand. While the dot.com boom and bust of 1995-2000 should constitute a salutary lesson, in fact it is largely forgotten in day to day practice where irrational exuberance continues to flourish.
If traditional analyst firms (at least as we have known them) are in the final throes of being legitimate sources of industry insight, who or what do you believe will take their place?
30
Procurement Insights 
Ditka Reiner
June 19, 2011
I couldn’t agree more. I have also experienced the disapproval you mention for casting doubt on the objectivity of the analysts firms. Those firms were very helpful when their analysts were experts in their respective subject area and could ask deep and probing questions of the suppliers they covered. At that time the suppliers provided access to the products that were being covered and in fact the seal of approval of certain independent analysts were highly sought after by the suppliers they covered. If they came up with an issue the suppliers worked very hard to fix those issues. Once the firms started taking substantial fees from suppliers to create custom ‘reports’ the die was cast and eventually expectations from and relationships with those firms changed. On top of that once they became service providers there often existed an inherent conflict of interest. Not too far from the financial analysts who may not be intimately faimiliar with the products they are selling but have close relationships with the industries/executives they cover and therefore can’t be as objective as one would like.