What’s on the menu? Should industry analysts and bloggers have to reveal their revenue source? by Jon Hansen

Posted on July 30, 2015


“Analyst objectivity and accuracy is an issue that is frequently debated. Much of the criticism appears to focus on the business relationships between analysts and the technology providers that are the subjects of their research. In short, analyst firms often rely heavily on revenues from the technology providers they cover.”*

In yesterday’s post, I revealed the source of my revenue, including the fact that it is mostly derived from clients who are not in the procurement industry.

Based on the example of the reader comments that follow, while this disclosure was welcomed, it also raised an issue that has plagued our industry for some time. Specifically, and under the present revenue model, do analyst and blogger insights provide the complete picture?

“Nice article. I like that you expanded a little on your role and your revenue stream, as I feel there is a tendency for people to be cynical and complacent when they read genuine investigative journalism.”

Even though it is an important question, it is the answer which comes in the form of successful implementations that ultimately matters.

Given the high rate of eProcurement initiative failures, the answer would appear to be no.

There are many reasons for the high rate of failure, not all of which should be born by those covering the industry. Let’s face it, end-user clients must also own up to the role they played, in terms of the initiatives that ended up on the rocks.

This being said, would these set-backs have been avoided – or at least minimized, if the end-user market were more aware of the potential conflict of interests referenced in my opening paragraph excerpt?

Think of it in this way, you go into a restaurant and you are given a menu from which to order. Based upon what is put in front of you, you make your selection.

Even though you may have enjoyed what you had selected, how would you feel if after the meal, you found out that the menu you received listed only 10 to 20 % of the available items? What if you noticed that there was something on the expanded list that you would have preferred?

Now imagine if you didn’t enjoy your meal and discovered the same thing . . . but couldn’t get your money back?

In many instances, this latter example represents the end-user market’s experience in terms of their past eProcurement solution choices. In short, they trusted the analysts and bloggers menu list, and walked away disappointed.

Even when the analysts and bloggers provide coverage of a vendor, there is still a tendency to potentially omit important information. This was demonstrated by my coverage of SciQuest and Bravo Solutions. The paucity of electronic ink that was dedicated to the NIGP #CodeGate story should also be noted here, since many vendors use association events to connect with potential customers. Of course there are considerable benefits for me personally in terms the above situation, as my readership has almost tripled over the last few months.

I am however not certain that the greater good of the industry is being fully served, given that multiple sources of reliable information, creates and maintains the necessary checks and balances that ensure the ongoing vitality of coverage.

“This post fits right in with the questions you raised about why other media outlets did not pick up the NIGP story. Fear of ‘biting the hand that feeds you’. It’s also why Procurement Insights continues to grow in popularity…. open, unbiased assessments and willing to ask the hard questions and do the right research.”

At this point, some of my fellow analysts and bloggers may acknowledge (okay maybe not), that while their general admission coverage may be left wanting in terms of providing a complete picture, their premium pay-to-access commentaries will deliver all that you will need to make the right decisions. Without tangible proof, should you take their word at face value, and pony up the bucks?

Let’s say you do, how do you know that you are getting the complete story? Once again, I am not just talking about their actual list of companies being covered, but the extent of the information being provided.

Using our menu analogy once again, what if the item you selected had some form of peanuts in it, but it wasn’t listed? What if you were allergic to peanuts?

Like the old saying, what you don’t know can definitely hurt you.

So where do you go from here?

scrutiny eye

While a full disclosure of revenue source will not provide an end all, be all solution, it will at least help in that you will be able to have additional information through which to filter the analysts and bloggers research and related commentary.

“The thrust of my comment was more aimed at organisations that charge users for access to their content but don’t provide objective value as they also charge the providers so the commentary may be biased. I encountered this first when selling casting software and dealing with the organisation responsible for casting in the UK. They would not review our product as the only main competing product was a sponsor. Hence they provided little real benefit to the members.”

All this being said, as an end-user client, you need to adopt a buyer beware mindset. This means that you take ownership for scrutinizing all sources of information – this blog included, so that you are always in control of your own destiny.

* multiple sources spanning many years including the InformationWeek 2006 article Credibility Of Analysts


Posted in: Commentary