Are you in a “contract renewal trap” when it comes to Forrester and Gartner contracts?

icon-budget-cuts-105w.jpgAs we work with clients on helping them manage their analyst spending, one major problem that keeps popping up is what we call the “contract renewal trap.” This occurs when the analyst contract manager (e.g., analyst relations, market research or IT manager) lets the analyst firm control the renewal process by starting with last year’s contract. The previous contract then becomes a de facto floor to build upon. It is a seductively easy trap to fall into because it appears to have minimal work involved and there is little likelihood of not renewing. Of course, this trap benefits the analyst firms immensely. 

The contract renewal trap is likely costing the average vendor or end-user client of the analyst firms tens of thousands if not hundreds of thousands of dollars of unnecessary spending every year.

SageCircle Technique:

  • Contract managers, whether end user or vendor, need to determine if they are in a contract renewal trap
  • Contract managers need to take a “sacred cows make the tastiest hamburger” mentality and approach renewals as if Forrester and Gartner might not get any contract
  • Contract managers need to seize control not cede control to Continue reading

NCVI are the four most important letters in the English alphabet for a Gartner sales rep

icon-budget-cuts-105w.jpgKnowledge is power when it comes to purchasing decisions about analyst firm contracts. Unfortunately, too many contract managers do not understand many of the underlying behavioral drivers when it comes to dealing with Gartner sales representatives, which puts those managers at a disadvantage. 

For instance, an important piece of information is that Gartner reps are measured on NCVI, net contract value increase. NCVI is calculated based only on the total syndicated research revenues, seats, and clusters. Other purchases such as event sponsorships, consulting or SAS are not included in the calculation.

Gartner sales reps that achieve NCVI are golden. Those reps whose client contracts are less than the prior year’s amount are in danger of termination. That is why Gartner sales reps start getting desperate when it looks like contract renewals are going to be less than the previous contract.

It is possible to reduce spending – notice we did not say “save money” – with Gartner without damaging the ability to access analysts for influencing purposes. However, it is not as simple as trying to negotiate a better discount from the sales rep, which is quite difficult because of the pricing discipline mandated by Gartner’s CEO. Rather it takes intelligence about Gartner’s business and sales practices to know what Continue reading

Saving money on contracts with the Forrester / Gartner duopoly is not simple

icon-budget-cuts-105w.jpgA common client inquiry we receive is in the context of someone negotiating with Gartner. Our clients want to know why in the midst of a terrible economic downturn, when vendors are cutting budgets left and right, that Gartner does not exhibit greater flexibility (i.e., cut prices) when it comes to contract negotiations. The short answer is that due to its end-user advisory market dominance – we estimate that Gartner has ~70% of the end user contracts – it does not have to be flexible. 

However, this issue is a little more complex than slapping a “monopolist” tag on folks over on Top Gallant Road. The reality is that there is an effective duopoly with tacit partner Forrester which gives them both the flexibility to be inflexible with it comes to negotiations. The last time this market saw pricing and packaging that in anyway favored the buyer was the mid-90’s when Giga and later META used significantly lower prices and “all you can eat” research seats to take market share from Gartner and Forrester. Alas, today there are no such firms that can play that role to counter Gartner and Forrester. As a consequence, the Big Two’s CEOs habitually inform Wall Street that they are maintaining their pricing and discounting discipline.

However, it is possible to reduce spending – notice we did not say “save money” – with the Forrester / Gartner duopoly without damaging the ability to access analysts for influencing purposes. However, it is not as simple as trying to wrangle a better discount from the sales rep. Rather it takes:

  • Knowledge about the firms’ business models
  • Knowledge about the firms’ research methodology and analyst culture
  • Knowledge about the true business value of Continue reading

Do I place my bets on AR-Sales partnering or adopting social media?

icon-dollar-euro.jpgQuestion: If I had to choose between starting an AR-Sales partnership or launching a social media initiative, which way should I go? If I did both, but with limited resources, how should I divide my efforts?

 During the happy hour after the first session of our STRATEGIC ISSUES advanced AR seminar, one of the attendees asked these great questions. Both Dave and Carter answered immediately and in unison:

     “AR-Sales!”

Why? Even a simple AR-Sales partnership pilot will give the AR team an opportunity to gather real world examples of the analysts impacting sales opportunities. These types of hard sales numbers, even in anecdotal form, are powerful tools for illustrating the strategic value of AR. In addition, a pilot project can Continue reading

Forrester layoffs in Europe – round 2 or round 1 continued?

SageCircle has received credible intelligence from AR professionals on both sides of the Atlantic that  Forrester Research  initiated a job action resulting in analyst lay offs. We will continue to provide updates as we learn new information.

  • Update – 2/18/09 6:53 am PT – Initial post. Sent request for confirmation to Forrester’s press office
  • Update – 2/19/09 7:12 am PT – Two analysts added to list

Analysis

These layoffs could simply be a continuation of the layoffs that we identified on February 9th (see Forrester experiences analyst layoffs). Because European countries have different labor laws than the US, job actions there frequently lag what happens in the US. On the other hand, these layoffs could be a start of a round two because management has determined even after a few days that the original layoffs were insufficient. While Forrester has over $240m in cash and marketable securities (see Forrester Research Q4 and FY08 earnings – 2008 revenues up, 2009 guidance down)  and can obviously weather even a severe recession, that does not mean it should not  Continue reading

AR & Recession – AR needs to help Sales deal with analysts’ cost cutting advice

icon-dollar-euro.jpgAt SageCircle we keep our eye on all aspects of the analyst ecosystem. This includes other bloggers with opinions about the analysts. In a very uninformed blog post, Irrelevance doesn’t pay, analystsanalyst said that analysts should “… start telling people how to save money and jobs, NOW.” What a nonsensical statement. Does analystsananlyst not know that helping their end-user clients save money is the bread-and-butter advice for Gartner and Forrester (and META and Giga before they were acquired)? Has analystsanalyst not looked at Gartner’s IT and the Economy theme webpage, which is about gathering all the research on cost optimization? Did analystsanalysts not follow SageCircle’s lead and listen to Gartner’s February 5th earnings call where CEO Gene Hall mentioned 

“… In consulting, fourth quarter results were stronger than expected and this was driven by robust demand for our contract optimization and benchmarking services. These unique services directly help our clients lower costs and their outperformance continued the positive trends from the second and third quarters. …”

Obviously, analystsanalyst has never been an effective end-client of Gartner or Forrester, because s/he would have received cost cutting, job saving advice over the last quarter century in good economic times or bad. Obviously, analystsanalyst has never been in a technology vendor’s AR or sales department (like SageCircle’s clients) and had to struggle with fixing a sales situation where an analyst has given a prospect totally unrealistic discount advice.

Geez.

Ok, enough venting. (The preceding rant represents the personal opinion of the commentator and does not necessarily represent the opinion of SageCircle, its clients or sponsors. Now back to our regulat AR best practices discussion.)

The above rant is quite serious in that every AR manager should be very aware that advisory analysts, especially Gartner, are constantly giving advice to vendor’s prospects on cost cutting. This “cost optimization” advice is especially impactful during Continue reading

Should vendors be investing in analyst conference sponsorships in 2009?

icon-budget-cuts-105w.jpgIt their Q4 and full year 2008 earnings calls, both Gartner (2/5/09) and Forrester (2/11/09) commented on how the recession is impacting enterprise end user attendance at their events. Example statements:

Gartner CEO Gene Hall “As discussed on our last earnings call that business has been impacted by corporate travel restrictions which have made it more difficult for our clients to attend our events.”

 Forrester COO Charles Rutstein “As you might expect, the events business has been softer than it has been historically. That’s largely tied to people’s travel budgets being down.”

 Both Forrester and Gartner projected Event revenue declines for 2009 due to both decreased attendee ticket sales and lack of vendor sponsorships.

So that brings up an important question for IT and telecommunications vendors:

            Should you be sponsoring analyst events in 2009?

If the analyst firms are expecting fewer attendees – i.e., potential prospects – why should vendors waste money sponsoring an event? Remember the fee to the analyst firm is only part of the overall event cost to you and often not even a large percentage. Significant resources (e.g., labor bandwidth and budget) are spent on preparing booth displays, staffing the event, special side events like receptions, and so on.

Some vendors may automatically sign up just because they have always sponsored a particular event.  Others may not take advantage of a potentially useful sponsorship because 2009 is a year of cut backs.  A better approach is for vendors to seriously evaluate the pros and cons of sponsorships in 2009. For example, having a higher profile at an event because your competitors declined to sponsor could more than offset the lower attendance by IT managers. In this case, the opportunity is more of a quality than quantity play. On the other hand, if the analyst firm is only keeping the event on the schedule because the cancellation fees would be so high then the vendor has to seriously consider whether there will be even a minimal number of attendees.

One important point to keep in mind is that vendors should not worry that lack of sponsorship will hurt the relationship with Continue reading

AR & recession – Ruthlessly revisiting analyst lists and service level frameworks

Analyst Relations PlanningDuring a recession AR managers are confronted with the need to cut back work either due to headcount constraints or the need to refocus their priorities (e.g., providing more support to their company’s sales force and increasing lead generation via analysts placing the company on purchasing short lists). Two areas of low hanging fruit for saving time that can then be reallocated to other activities are the normally important analyst lists and the level of service provided to each tier of analyst. 

One of the biggest ongoing mistakes that AR professionals make is not using a rigorous methodology for managing their analyst lists. This often leads to too many analysts on their lists and too many analysts designated “Tier 1.” This state of affairs leads to inefficiency and ineffectiveness as AR teams are spread too thin over too many analysts to effectively influence the most relevant analysts. While bad enough in good economic times this mistake can be fatal in recessions when all corporate functions are being scrutinized for efficiency as well as contribution to revenues and corporate/business unit objectives.

Another major problem is that many AR programs have not revised their service level frameworks – or do not have formal service levels in the first place. These plans to allocate effort must be adjusted to reflect recession driven resource constraints. This results in AR teams being too generous in the amount effort they give to lower ranked analysts’ information/briefing requests which in turn siphons away precious AR bandwidth for higher priority activities. A related problem is not having the discipline to follow established service levels.

To correct this situation, AR managers need to ruthlessly revisit their analyst lists, aligning them more tightly with today’s business objectives and cutting back on the number of Tier 1 and Tier 2 analysts in order to focus more intensely on the most relevant analysts. Second, AR programs have to reduce, perhaps significantly, the amount of service they provide to Continue reading

AR & Recession: Top Five Tips for Communicating AR’s Value

Analyst Relations PlanningAt all times, but especially during a recession, analyst relations (AR) programs need to effectively communicate to executive sponsors and other internal stakeholders the business value delivered by AR. Unfortunately, too many AR teams are so focused on interacting with the analysts that they do not do a good job telling their stories to their colleagues and the people that hold the purse strings. This can be a fatal mistake as AR is competing for resources – executive bandwidth for briefings, budget and headcount.   Not communicating about business value means being at a disadvantage during budget discussions. 

While there are many aspects to an edu-marketing (educating colleagues using marketing techniques) campaign, here are our Top Five Tips for effectively communicating AR’s business value:

(5) Develop a compelling “elevator pitch” for analyst relations

(4) Gather examples of analyst impact on actual and recent sales deals

(3) Constantly communicate, monitor, and adapt AR’s message

(2) Focus on the business impact of analyst relations

And the #1 tip for communicating AR’s value is… Continue reading

Announcing the SageCircle Webinar “AR in a Recession – Refocusing Priorities and Activities”

Analyst Relations (AR) programs often get caught in the downdraft of a recession experiencing budget cuts, headcount freezes or reductions, and less analyst interaction support from executives and domain experts. If AR is to avoid being the target of budget and headcount cuts is it critical to ensure that it is aligned with corporate priorities and is demonstrating positive economic contributions. While this seems obvious, too many AR programs are so caught up in reactive mode or simply doing normal day-to-day tasks that they don’t see the danger forming. As a consequence, these programs have a greater likelihood of getting cut than those AR managers and teams that proactively or preemptively move to change their focus. 

When AR programs are considering what has to change during a recession they often focus only on cutting spending. However, this is not enough. AR professionals should remember to both work as well as spend differently. Only doing one is not enough.

In this SageCircle Webinar (see agenda below), our strategists – who have experienced recessions both as AR professionals and as a top Gartner analyst – will provide succinct and practical advice on how AR programs need to work and spend differently in this recession. Participants will come out of the webinar with best practices and tools that will help them survive the current recession and thus provide their employers with a competitive advantage by continuing to influence the industry analysts. Key issues that will be addressed include:

  • How should AR conduct a zero-based rethink of its priorities and activities?
  • What is the impact of the recession on the AR measurement and reporting program?
  • Does the recession change the priority given to an AR-Sales partnership program?
  • What AR spending cuts should be considered and how will analyst contract reductions impact relationships?
  • Should AR shamelessly market its contributions to its executive sponsors?

There will be plenty of time for your observations and questions. See below for the agenda

The cost of this information-packed session is only $95. You can register by Continue reading

AR & recession – Using social media expertise to improve AR job hunting

icon-social-media-blue.jpgUnfortunately there are AR professionals who are getting caught up in recession-related layoffs. While this is never a pleasant occurrence, AR professionals have new tools for maintaining their network and seeking new positions.  In addition to updating resumes and posting them to places such as this blog AR professionals should use this time to increase their expertise by developing or honing their social media skills. 

SageCircle Technique:

  • Set up a blog (it’s free) mainly to provide an on-line backgrounder on yourself, but also to do an occasional post (two or three times a month) to show off your writing skills and expertise on AR
  • Create or update your LinkedIn and FaceBook Continue reading

AR & recession – Reconsidering analyst contract priorities

icon-budget-cuts-105w.jpgControlling spending is a high priority for most vendors during a recession. For analyst relations (AR) teams this mandate causes angst because it means cutting spending with analyst firms, usually a big part of AR’s budget. Discussing this issue has become an increasingly common inquiry for SageCircle strategists as clients work through budget cutting scenarios. 

One of the main sources of anxiety is the perception that analysts will start bad mouthing the vendor to prospects, making negative comments in the press, and cutting off AR’s ability to brief the analysts. This is usually an overblown concern as reputable firms will not damage their standing with vendors – a significant source of information and market insights – over short term contract spending changes. Analysts at the largest firms often do not know the size of a vendor’s contract with the firm and will not notice if the vendor cuts the contract by some percentage.

Unfortunately, there will be individuals who do resort to threats and making overtly negative comments about vendors in the press as pressure tactics to get contracts. Typically these individuals are Continue reading

AR & recession – Refocusing metrics to emphasize outcomes not activities

AR Metrics & MeasurementWe are continuing our commentary on analyst relations (AR) and the implications of the recession (see recession category for all posts). SageCircle suggests you think about how metrics need to change during a recession as you are refocusing and placing emphasis on something different. In this case, it is important to be capturing and reporting metrics that demonstrate AR’s outcomes and ability to impact revenues. 

In typical times, most AR programs emphasize operational metrics and simple mention counts (e.g., the number of times analysts mention the vendor in published research and press quotes). This is never the best approach even in the best of times, as we state in moving beyond operational metrics.   However, during a recession it can be fatal as it sends the message that AR is a boring tactical function whose headcount and budget can be cut without much downside. Instead, AR needs to shift all metrics reporting to performance metrics that position AR as something more akin to a strategic profit center.

Of course, this shift is a non-trivial effort as it is much easier to capture data for operational metrics than performance metrics. For example, capturing sales impact data requires establishing a working partnership with the Sales organization. Showing success shaping analyst perception requires performing Spoken Word Audits and measuring tonality not just mentions in published research.

SageCircle Technique:

AR & recession – briefings need to focus on customers and fast business results

Analyst Relations PlanningBesides refocusing their priorities and activities during a recession, analyst relations (AR) professionals also need to think about what they are telling the analysts. Ordinarily briefings can cover any of a number of topics with even more numerous proof points to support their key messages. However, during a recession AR teams should be rethinking what they communicate to the analysts. 

SageCircle research of how IT managers use industry analysts, reveals that helping them make the business case for a technology product or service purchase is high on their list of activities. This insight provides AR with the direction they should taking their briefings during a recession. Because enterprise executives become cautious during a recession, they demand a more detailed justification for technology purchases. By giving industry analysts customer success stories and hard return on investment (ROI) numbers, AR can provide the analysts with fodder that they can in turn give to IT managers that will help shorten the sales cycles.

While customer success stories have always been considered a high priority topic for vendors to provide analysts, because they are difficult to obtain they frequently get pushed to the back burner.  During a recession AR needs to make finding and communicating customer success stories a much higher, if not the highest, priority. This becomes part of AR’s strategy of refocusing its priorities during a recession.

A critical success factor is to focus attention on examples of Continue reading

AR & recession – it’s about refocusing priorities and activities

Analyst Relations PlanningRecessions typically change technology and telecommunications vendors’ priorities and activities. One of the most common changes is to cut back on marketing, especially brand building and other “fluffy” activities, to reduce expenses. At the same time, there is more emphasis on selling, especially for those vendors that sell direct to large enterprises. Another change is to focus on core markets and reduce effort in secondary markets. There are several dangers for analyst relations (AR) programs in economic downturns: 

  1. AR is associated with “fluffy” marketing and subject to headcount and budget cuts
  2. AR is not closely associated with driving revenues
  3. AR’s priorities become out-of-sync with new corporate or business unit priorities
  4. AR is executing its original plan (or typical activities if there was no plan)
  5. AR is reporting metrics that do not seem relevant to executives

If AR is to avoid been the target of budget and headcount cuts is it critical to ensure that it is aligned with corporate priorities and demonstrating positive economic contributions. While this seems obvious, too many AR programs are so caught up in reactive mode or simply doing normal day-to-day tasks that they don’t see the danger forming. As a consequence, these programs have a greater likelihood of getting cut than those AR managers and teams that proactively or preemptively move to change their focus.

When AR programs are considering what has to change during a recession they should remember to work and spend differently. Only doing one is not Continue reading

Managing the AR budget in a recession

icon-budget-cuts-105w.jpgWith all the turmoil in the economic scene, we have been getting inquiries about how to manage the analyst relations (AR) budget in a recession. This post is a roundup of content we have published on the SageCircle blog on the topics of budgets and spending. 

This content is the tip of the iceberg when it comes to the full set of intellectual property SageCircle has generated on these topics. There is more written research and SageToolsTM in the Online SageContentTM Library. There is also an AR Team Briefing on managing budgets in a recession. Finally we recommend that Advisory clients, either Blocks of Advisory Hours or Annual Advisory, schedule inquiries to discuss the budget implications of the economic uncertainty.

Purchasing Analyst Services, a six-part series:

  1. Using five rights to avoid a wrong when it comes to purchasing Gartner or Forrester services
  2. Right reasons – Evaluate why you are purchasing analyst services
  3. Right services – Align the services you buy to better Continue reading

Why it is a really bad idea to cut AR, even in a recession

icon-budget-cuts-105w.jpgIt is common for tech vendors to cut marketing spend in a recession. Because Industry Analyst Relations (AR) is typically in the marketing department, AR is often asked to shoulder part of the cost cutting burden by cutting spending, freezing hiring, or even cutting head count. As a consequence, AR often cuts back on the total number of interactions it conducts with key analysts. This can be short sighted for a variety of reasons:

  • Analysts interact with many communities on a daily basis – As we pointed out in involving the analysts early and often, analysts do a significant number of touches each and every day with IT buyers, reporters, financial analysts and others. Providing analysts with a continual stream of information about your company, customer stories, and so on ensures that the analysts will properly position you with IT buyers, press, investors, et cetera.
  • Top-of-mind presence is ephemeral – Because the analysts have so many interactions and gather so many data points, it is easy for a vendor to get pushed lower in the analysts’ consciousness unless Continue reading

Notes on managing your budget in a recession — SageCircle’s Coffee Talk

icon-budget-cuts-105w.jpgOn Tuesday April 1 SageCircle conducted a web-based Coffee Talk around the potential impacts of budget cuts and how AR teams can best handle them.  We began with a few slides to review the techniques for managing a budget and then opened the session to questions from the participants.

Often when resources are trimmed certain areas experience across-the-board and significant cuts.  While some of these areas can be quick to recover in the future analyst relations is generally not one of them.  Developing relationships that can truly provide a positive revenue impact takes sustained effort over time.  Once your program begins to slip the effort required to Continue reading

Budget cutting part two — Alternate solutions for analyst contracts

icon-budget-cuts-105w.jpgLast week (see Budgeting cutting can help AR focus and innovate) we suggested that potential budget cuts may have the effect of causing AR teams to prioritize and innovate in their programs and might not always be as negative as when first viewed.  Another way to deal with the possible cuts in funding that follow any economic slowing is to look to alternative solutions.  These techniques obviously take precious time and effort that AR teams also don’t have, but may be reasonable choices when money is not available.

Analyst seat holder contracts

Review each analyst contract for usage and determine business group seat holders who need to be eliminated.  Then contact the high value and high usage seat holders to see if the business group can pick up some or all of the cost.  Be prepared to justify the cost as the business group Continue reading

Budget cutting can help AR focus and innovate

icon-budget-cuts-105w.jpgIt is a fact of life that because of the reports of economic slowing, marketing departments at communications and IT vendors are considering budget cuts. Because most analyst relations teams report to marketing, there will be trickle down cuts hitting AR as well. Unfortunately, most AR functions are already short of staff and funding resources so the natural reaction is to perceive that budget cuts are only bad. However, if AR managers use the budget cutting as an opportunity to rethink how they do business the cutting exercise can have at least some positive outcomes.

Any business function can accumulate outdated expenses, activities and techniques like barnacles on a ship. An example can be always buying 20 advisory seats during the annual analyst services contract renewal even though only 14 are really being actively used. Another example is spending too much money on analyst events by selecting fancy destination hotels when analysts would prefer a more convenient and often cheaper location. Yet another example is buying expo floor booth space at firm conferences because “everybody knows” that they are great sources of leads when no investigation of lead generation effectiveness has been done for years, if ever.

Besides eliminating unnecessary spending, a budget cutting exercise can also surface innovative approaches to accomplish tasks that actually might be more effective done in some other way. An example here is substituting “Deep Dives” for the annual Continue reading

Will the analysts drive down IT spending? Not if you talk to them.

In Saturday’s New York Times Business Day section there was a reassuring article by Steve Lohr called Belt-Tightening, but No Collapse, Is Forecast in Technology Spending. Reassuring because the IT executives and industry analysts interviewed all indicated that there was less likelihood that IT spending was going to be slashed like during the 2001 recession. Whew, it looks like the IT market will dodge the bullet this time! However this relief could be short lived if the IT analysts turn negative and start counseling their IT buyer clients to be conservative and cut spending.

What could turn the IT analysts negative on spending? The analysts could flip their opinion if all they hear are the concerns and fears of budget cuts from nervous IT executives. As explained Continue reading

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