Recently, there have been several high-profile (at least within the independent analyst community) posts and initiatives relating to analyst business models. Each at least implicitly suggests a definition of what an “analyst” is. Interestingly, no two of the definitions seem exactly the same – even though similar people are involved in several of the efforts. Notwithstanding my well-documented skepticism about category definitions, I think it might be interesting to pull some of these ideas together in one place.
The post that kicked this all off, by Gideon Gartner and Barbara French, basically asking whether and how small analyst firms could rise to challenge the big ones like Gartner Group and Forrester Research. An extremely rich comment thread ensued. Implicit in the original post was a definition of “analyst” work that seemed to include both proprietary published research and quick-hit advisory services, fitting the traditional big-firm subscription model. More diversity, however, was shown in the post comments.
Long ago, Gideon probably based his model on his prior career at stock research firms, which to this day model their business somewhat like big IT analyst firms. Some of the main differences are:
- Payment levels and services provided sort of just happen, rather than being precisely negotiated.
- Payment style is wonky, mainly consisting of a certain share of a client’s high-margin rather-commodity-service stock trading business.
- SEC regulations insist that you not say anything material in personal advisory services you haven’t first put out in writing (there’s been decades-long uncertainty as to just what is or isn’t “material”).
Note: I used to be a stock analyst myself. Indeed, I once was ranked #1 on the Institutional Investor All-Star Team. This may be only the 3rd year in the past 29 that I get $0 revenue from investment research – and it’s not over yet.
My immediate reason for writing this post is that Ray Wang of Altimeter Group asked me to retweet his post on the best way to set up a new analyst firm, broken down into “7 Tenets”. The implicit model he’s using of analyst firm seems to be one that does a lot of advisory services, probably sells subscriptions, has “proprietary IP”, and gives a lot of research away via blogs and other public outlets. I.e., it’s similar to Gartner/Forrester, but not quite as rigid. Anyhow, I know Ray isn’t really that dogmatic, because – as he tweeted recently – he’s exploring a possible “trade association” of independent analyst firms, and I’ve talked with him about who might be in or out.
In my own business, I follow a more extreme form of the “freemium” model. In line with my stock analyst background, I feel anything I know that’s sufficiently important should be published openly, technology insight and general methodology alike. Advisory services are for:
- Teaching people how to use the information.
- Being the middleman for 1-to-1 NDA vendor/user discussion.
Of course, I don’t really publish EVERYTHING openly, for three main reasons:
- Nobody has time to write up everything they know.
- Much of what I know is NDAed.
- My best advice is reserved for my paying customers.
But that held-back advice is not apt to be a market trend or analytic methodology. Rather, it is likely to be a more specific “Due to threat, opportunity or trend X, you should do Y,” where X is something I’ve actually been writing about publicly for a while.
Jonny Bentwood, meanwhile, goes to the opposite extreme from Gideon et al., defining an analyst by
if someone is independent and directly influences technology procurement then they are an analyst
That leads, for example, to him ranking Dennis Moore as a top-100 analyst tweeter. Now, I have no problem with mentioning “Dennis Moore” and “top-100 analyst” in the same sentence. But if Dennis has any analyst business model at all, it’s one of the stealthiest ones in the whole IT industry.
Finally, there was a webinar by French, Bentwood, Ray’s partner Jeremiah Owyang (who’s #1 on most of Bentwood’s lists, except for the ones Ray’s #1 on), and Carter Lusher on analysts’ use of social media. I haven’t listened to the recording, but two of the four bullet points listed below it say analysts can or should:
- Develop personal networks, career brands, that carry with them further than reports under an umbrella brand.
- Finally realize they are also media in addition to their traditional roles.
I agree, and in fact believe analysts are a huge part of the media ecosystem, already now and even more going forward.
So what are the implications? If you’re a vendor, I think:
- Analysts (defined broadly) are an increasingly important part of the overall set of influencers. In particular, as traditional media business models collapse, we’re playing some of the role trade press reporters used to.
- You need flexibility in how you deal with influencers. Everybody is different. (Quick worst-practice story: Oracle tells me it won’t give analyst-relations support to anybody who doesn’t let it see what they write before it goes out – a process they use both for fact-checking and general last-ditch opinion-lobbying. But I know they enforce that rule selectively. And I’m not getting good PR support from Oracle these days either.)
- Understand that different analysts can give you good advice in different ways. E.g., numerous clients tell me that they go to Gartner to find out what mainstream enterprises are saying, and to me for actual marketing or strategy advice. (Conveniently, that lets them also be giving money to and getting attention from what they judge to be two of the top influencers in their area.) Other analysts might assist them in yet other ways, even beyond general influencer-relations value.
If you’re a user, please note that:
- There are numerous good providers of free information and insight.
- Many (not all) providers of free information can also be hired as consultants.
Sorry if those bullet points at the end — or for that matter the rest of the post – sound a bit self-serving, but this overview is in fact informed by thinking about my own business.
Or, to put it another way:
- What I think about the analyst business in general
- How I structure my own business in particular
are, for rather obvious reasons, closely in alignment.