Advisory Industry – Its Future

Are the days of the traditional industry analyst firms numbered?

I’m copying a public post by Phil Fersht, adding a few minor edits and comments below.  Phil asked the question: “Are the days of the traditional industry analyst firms numbered?” and offered his doubts to the public (in some detail). Perhaps his conclusions were overstated, but perhaps not; some version of today’s Advisories will undoubtedly survive. But the comments seem to support his views (13 of which I edited, and are found below the post; and of course, new readers are welcome to add their comments).

My own attitude is described somewhat on other posts, and I did not tamper with the conclusions.

I’ll first extract parts of Phil’s discussion, in bold and with ‘quote marks’, and then include 13 of the original comments to this post. Of course new ones can be added, and I include a final comment from Phil.

Phil Fersht’s Post:

‘I’ve been both analyst and consultant during my career, and work with many buyers, sellers and intermediaries of both technology products and professional services. I’ve worked with the best and worst analysts on the planet.  I’ve seen great research developed that was truly unbiased and objective, and also – sadly – been witness to some that was, quite frankly, not… seen analysts ride waves and become rock stars, and then lose the plot somewhere along the line… before either exiting… or plodding along on the vendor-briefing circuit… I also know level-headed analysts who quietly go about their job and produce decent stuff… I’ve also worked with egomaniacs who pander to paying clients and scare the living daylights out of anyone who dare criticize them or refuse to buy their services… I’ve also worked with absolute numb-skulls who somehow remain employed, despite knowing very little about anything… and I’ve worked with analysts who really know very little, but somehow persuade the world they are visionary thought-leaders’.

Wow, Phil calls a spade a spade about analyst variability.

‘many analysts are plodding, biased, lose the plot, depend upon vendor briefings, produce  ‘decent’ stuff, are egomaniacal, pandering to those who pay, scaring those who criticize or who don’t pay, are numb-skulls, and know little while parading as thought leaders’.

Phil asks whether there’ll be much of an “industry analyst” business left in another five years ’? And, he says…short-term attention-span theater has taken over, and some analyst firms are oblivious’.

He also suggests that much analyst written product goes to waste because very few people have the patience or inclination to read detailed reports any more. Today, most people are checking email constantly, scanning tweets, Facebook status updates, LinkedIn invitations and contributing to whatever social group or network with which they like to spend time’.

In other words Research needs to be served up in bite-sized chunks to stand any chance of being read so the Advisories force their analysts to meet their report quotas each yearand so forth, providing macro services rather than micro.

And Phil thinks that the situation is even worse: there’s too much “research” being produced that’s not telling us anything new’, ‘more executives declaring that today’s traditional research isn’t relevant to them anymore’….‘don’t need some primadonnas in their ivory towers telling them what they already know…, analysts may be useful sounding boards and (we) occasionally get some competitive intel out of them, they use the word “cloud” at every opportunity.  He says that’s the value clients currently obtain from Advisories, include favorable positions in scatterplot charts and after-dinner awards.

What the  buyers do want is: learning things that help them do their job better – they like listening to real experts and learning from each other….be a focal point for idea-sharing, knowledge, data and validation of their strategies.’


Needless to say,  other analysts were quick to respond to Phil. For example, Ray Wang said that:

‘The large analyst firms lack rock-star visionaries’…‘in years gone by, there were countless big personalities emanating from the Gartners, Forresters et al, but sadly, that number has dwindled …for financial reasons, and I assume because they were doing well even w/o good research…. Moreover, the last thing they want are clients calling up demanding to talk with Bill, not Ben.  Innovation is bred from people with vision and personality – and the more analysts are “standardized”, the more the personality is drained from the product. Analyst firms need to create new visionaries for clients – and maybe even dust off a few of the old ones knocking around somewhere in the blogosphere.  Hell – the retirement age is 70 now, so let’s bring some of the old egos back!


Here are  other comments from the web, slightly edited re grammar; please excuse any errors in transferring the comments:

  1. Jonathan Yarmis Posted June 19, 2011 at 4:41 pm 
    I think you’ve actually missed a few of the things that are rendering Gartner — let’s call them out by name — less and less relevant.

    • Gartner’s core is the IT organization. More and more IT dollars and decisions are coming from end users. Gartner doesn’t know how to talk to them and even if they did, that users want something different: great accountability!  Sound bites are not the answer. Helping me make smarter decisions more quickly is! Know thy business!
    • We used to have too little information. Then, Gartner could be king, as the one place you could go to reliably find an answer. Now we have too much information and Gartner is just another voice in that cacophony. Even worse, it’s a voice that can’t be found by Google. I want someone who can solve my information overload problem, not contribute to it. I could write another 10 pages on this subject. To answer your big question: no, the industry analyst business won’t be dead in 5 years…unless we fail to respond to these new market requirements. The time for market disruption is right. Let’s see who understands and capitalizes on this opportunity.
  2. PhilFersht Posted June 19, 2011 at 5:03 pm  
    @jonathan: i wasn’t poking the finger solely at Gartner – and in reality, if the business does crumble, they’ll likely be left re-arranging the deck chairs on the Titanic. I would also add that buying decisions are being made far beyond the IT department as the traditional analysts struggle to relate with non-IT executives even more than they do with IT ones. As IT/business process boundaries blur further, consumers of information will extend even more prolifically to finance, marketing, operations, procurment etc. These execs tend to spend their dollars with consultants when they need help – convincing them to drop $100K on a Gartner subscription is a big question mark! PF
  3. Jonathan Yarmis Posted June 19, 2011 at 5:31 pm 
    Phil, we are actually in violent agreement on the point re buying decisions being made way beyond the IT department. Let me be so bold as to say that they won’t spend that kind of money on a Gartner subscription, or anyone’s, without some greater level of accountability. Yes, today they go for consulting, a largely unleveraged and thererfore pricy model. The challenge in my mind is to find that middle ground. Not as leveraged as Gartner but not as costly as consulting. I’ve been chasing that challenge for 14 years now…and I’m still chasing.
  4. ferd4 Posted June 19, 2011 at 5:34 pm 
    Will the industry analyst business be dead in five years? I don’t think so, but I agree that firms that don’t keep up with the times will die (as your article states). Actually, I think there will be a resurge in opportunity for industry analysts, because so many businesses have been and are continuing to dump their seasoned expertise in favor of cheaper (and probably off-shored) labor. Already many technical businesses have lost their former core competencies and are run by bean counters who don’t understand how the business produced salable objects – but they  noticed that they’ve drastically lost market share and profits. As they wake up, they’ll want quick answers about how to right their ships. They probably will want that information in short bites of multimedia, but they’ll be happy to pay anybody who is a good presenter. There could be Government incentive programs too. So I wouldn’t worry about your future, as long as you are willing to convert from paper reports and PowerPoint presentations to full multimedia “TV show” presentations
  5. Kieran Dempsey Posted June 19, 2011 at 5:48 pm 
    Phil, loved reading this. Jonathan also adds a good point that in the old days there was a lack of quality information in IT. Today it’s everywhere, so how do the Gartners and co. stay ahead of the curve? Clearly, they need to do a better job of being relevant to the changing buying needs and delivering it in smart ways that will get their customer’s attention. Remaining “relevant” is the operative word!
  6. KR Posted June 19, 2011 at 6:46 pm 
    Hi Phil, The market is shifting to market makers for advice and influence. The convergence of various market makers will result in the new “analyst” or influencer of the future. It’s happening across the board and the traditional definitions will fall by the way side as new business models emerge. Here’s the original post. At the end of the day, if we meet our clients needs for sound, pragmatic, and objective advice, we can apply this to line of business, IT, or the C-suite.Cheers and great post.
  7. Jonny Bentwood Posted June 19, 2011 at 6:46 pm 
    The analyst business will continue to evolve for sure but die off ? – not a chance. Without doubt as purse strings were tightened over the past year, I have seen a smaller number of analysts in the market producing less research. The real challenge though to analysts is the sheer influx of other credible influencers who do not wear an analyst hat and yet provide similar services. The reports themselves that analysts write are little more than PR tools shouting out “if you like this report, then speak to the author and I will tell you the real story”. Fact – nobody buys a IT solution based upon reading a piece of research but they may do so after seeking advisory support. Where does this leave the analyst industry? Simple: compete with influencers and either improve their own firm’s brands (like Gartner and Forrester) or supply well known rock stars who can make their POV heard above the noise of a saturated market where anyone with a blog and a twitter account can claim to be an expert. Analysts need to be cognizant of this change and nurture their USPs of independence and quality output and not get lazy. After all, it is the lazy analysts that have been the root cause of many companies seeking advice from elsewhere.Will the analyst industry be dead in 5 years? No, but this period in time will see a good number of the poorer quality firms and analysts find themselves without sufficient income. Evolution for me is not such a bad thing; from an AR perspective we will focus on the best analysts and the best influencers.
  8. Jonathan Yarmis Posted June 19, 2011 at 7:02 pm 
    Jonny raises an interesting question. What is the difference between an analyst (and an analyst firm) as compared with an “influencer”? I would argue that one critical difference is that analysts have a research methodology and process whereas influencers have opinions and insights. If analyst influencers ever lose this rigor, we’ll have lost everything. I’ll concede that many customers don’t necessarily value that process but I would argue that’s the fault of the analysts and not the clients. It’s up to us to create relevance, to show that it produces more reliable insights and judgments. In this sound-bite world, that’s a hard message to deliver. But I’m betting that the pendulum will swing back, and if we’re not prepared to answer the challenge when customers come to realize the value of sound process, that’s unfortunate for all of us, analysts and customers alike.
  9. James Posted June 19, 2011 at 7:03 pm 
    Excellent piece – and some insightful comments. Gartner and Forrester will be around in the future if they can evolve their models. I agree with Jonny about the “lazy analyst” issue – those that simply follow the trends and make minimal effort to come up with new thinking are the main cancer to the analyst industry today. I see that as the largest threat to the big two. However it does concern me if we end up with a duopoly situation – does this really incentivize the big two to innovate and stay ahead of the pack? Isn’t that why we have lazy analysts today, and won’t this get worse? The smaller analyst firms  producing lower quality research will die – and likely before another 5 years. They’re increasingly irrelevant and are overshadowed by newer market influencers. Simply producing vendor-related marketing will not keep them in business.
  10. Andrew Wagoner Posted June 19, 2011 at 7:21 pm 
    As IT increasingly becomes a commodity, it’s harder and harder for analysts to stay ahead of the curve. The new innovations are happening in social media, mobility, cloud computing and globalization/outsourcing. I don’t see any of the traditional analysts taking the lead in any of those areas – it’s the new influencers / bloggers / smaller analyst firms at the helm. It’s a struggle for the traditional firms and we may be left with a smaller number still in business five years from now (and with more consolidation).
  11. GW Posted June 19, 2011 at 8:06 pm 
    Why does Gartner have to change? Most IT departments don’t know where else to go, and vendors keep feeding the beast. It’s the rest who should be worried – if they can’t embrace new media and hire top analysts who can lead insight and research, they will be gone in five years.
  12. Ajay Posted June 19, 2011 at 9:42 pm  
    They’re too large and bureaucratic to change with the times. The day of new influencers is coming and we’ll see most of the old-style analyst firms slip away in time. But Gartner will never die and IDC will continue to churn out data; the rest are going to struggle.
  13. Tony Posted June 19, 2011 at 10:20 pm 
    When I was a buyer, most analyst reports were read by IT, but decisions were business driven so they were also read by middle mgmt (directors and managers). Some of the material was good, but less than 25% was usable. Analysts were almost always helpful on the phone. Senior management and business-side buyers hired consultants to answer their questions. Again, some of the material was good; 80% was useful, but half of that was regurgitation of client thought or to  supplement employees. Hiring better staff would eliminate that half.  All of this was expensive. The gap is the analyst model for business owners. Leaders don’t need advice from someone who hasn’t walked in their shoes. They save their investments for rainmakers, and deliver services and research with far less costly and less capable resources, and they then dilute their brand. Great: everyone is well paid. But the clients need to be served better. And I don’t think the dominant players do that yet. At least not consistently. TF

 


Phil Fersht: The view among many – and I’m sure many people will get upset with me for calling it how it is, while others will just say, “tell me something new, Phil”. I chose research and analysis as my chosen profession and believe passionately in the value that good expertise, broad thinking and data-driven guidance can bring.My firm, HfS, couldn’t survive alone merely peddling research reports – we have to deliver products, data and networking opportunities our clients need, to help them do their jobs better.  Research has to be about bringing together the voices shaping industry, providing real data to help guide decision-making, and also forcing people to stop, think, and take notice. At the end of the day, research is discretionary spend – we’ll have another recession one of these days and we’ll have further secular changes to industries, like the last one.  Just look at what happened to the worlds of media and journalism.  I fear that the analyst business could fall victim, if the 13 Comments which seem to be in cahoots, are realistic.

 

 

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