SageCircle

Research is commoditized – a dead idea

Public policy wonk and Fortune Magazine columnist Matt Miller’s new book The Tyranny of Dead Ideas: Letting Go of the Old Ways of Thinking to Unleash a New Prosperity got us at SageCircle thinking “Hmm, are there dead ideas holding back analyst relations?” Of course there are! This is one in an occasional series of posts that will address the dead ideas that impact AR programs and their ability to delivery strategic value to their companies. These posts are meant to be provocative and not necessarily definitive in their new ideas and suggestions.

Dead Idea: Analyst research is commoditized and thus analyst influence is dropping

Back Story: The other day Carter was chatting with a very smart VP at a major software firm about whether or not analyst influence was waning due to social media. The VP kept mentioning the commoditization of research and its impact on influence almost as if this was a new phenomenon. This was not a unique conversation as SageCircle strategists discuss this topic every week with people holding various positions in technology vendors.

The topic of “research is a commodity with so much free information on the blogs, so why do end users buy it?” is a common question, but the underlying idea is not new. In fact, chatter about the commoditization of research goes back to at least the early 1990s.

Before the World Wide Web, Ziff-Davis was considered Gartner’s biggest threat, not META, Forrester or Dataquest. Why? It owned so many IT and telecommunications magazines and had the potential for huge amounts of content that could be aggregated, integrated and multi-purposed. Because Ziff-Davis could pump this information out in so many channels (publications, consulting, events, and so on) it could quickly commoditize all that Gartner research in those official three-ring binders on so many IT managers’ desks and kill the analyst business.

It did not happen.

Later when the Netscape browser made the World Wide Web a practical tool for accessing magazine content, academic papers, and vendor material, the talk once more was how the industry analysts’ research is a commodity that could not support a business.

This did not happen.

Since blogs came on the scene the talk is now that all the content and commentary available in the blogosphere render the analyst research a commodity and analysts irrelevant.

This has not happened so far.

The “dead idea” in this case is that analysts’ written research is the sole source of their value to enterprise clients and influence. The reality is that written research has always been a commodity. There have always been magazines, newsletters, books, academic papers, management consultant quarterlies, vendor white papers, white-paper-for-hire analyst reports, and such that offered similar content to what were in analyst research notes. Because written research has always been commoditized, the advisory analyst firms have always emphasized on-demand, convenient access to analyst advice. It is those 30-minute phone-based inquiries that sell, not the written research.

Problem: Executives who perceive that analyst influence is dropping because their research is a commodity will be less likely to invest in AR or making themselves more effective spokespeople.

New Idea: Advice – personalized and delivered real time – cannot be commoditized, digitized, and distributed around the Internet. AR teams should educate their executive sponsors and other stakeholders that the analysts’ written research is only a fraction of how advisory analysts deliver business value to enterprise technology buyers.

SageCircle Technique:

  • AR should incorporate a formal training strategy into its AR Strategic and Tactical Plan
  • Topics for training should include analyst market realities, research methodologies, and business models in addition to spokespeople best practices

Interested in insights into how to incorporate effective training into AR Strategic and Tactical Plan? Check out SageCircle’s STRATEGIC ISSUES: Challenges for AR Team seminar. The next seminar will be held on March 24-25, 2009 in Cupertino in the Silicon Valley. Click here for more information including agenda, registration and future sessions.

Bottom Line: Vendors often follow dead ideas that have long passed their “sell by” date. AR teams needs to attack these dead ideas and work with their executive sponsors and colleagues to come up with better approaches that address today’s challenges.

Question: AR – How many of your executives express the opinion that analyst research has been commoditized? Are they referring only to written research?

 

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9 comments

  1. It’s an interesting topic that continues to evolve. I actually recently made this point in an exchange I had with Evan Quinn, our corporate AR honcho.

    Personally I see it as a “data” vs. “information” issue.

    I agree that the “sage” (pun intended) advice, intelligence and TRUST provided by knowledgable analysts cannot be commoditized. However, DATA is increasingly being commoditized, simply because there’s so much of it out there, and it’s much more accessible and easy to find than in the past.

    You make this point with regard to written research, but I would posit that it’s perhaps a bit broader than that — perhaps extending up the chain somewhat farther.

    To my original “data vs. information” point … the trick is translating DATA into value-added INFORMATION that can be instrumental in divining market trends, determining market dynamics, assessing competitive offerings & vendor viability, among other things. Ultimately, as we all agree, to help customers (and vendors) make better and more informed business decisions.

    I don’t see the “research is becoming commoditized” view much in my job, but I have heard it at various times in the past 5-10 years. What I do hear are varying impressions from execs about the value of “personalized and real-time” analyst interactions. Some interactions hold far more value than others for certain execs, and these perceptions are based on a number of factors — the knowledge level and insight (advice) offered by the analyst(s) being key.

    For the best analysts, your post fully understates the point with regard to commoditization of advice and information. For others, perhaps not so much.

    Cheers,
    Gerry

  2. I’d be careful with the notion that “data is commoditized.” The collection and filtering of statistically significant samples is not as simple as some think. My experience in primary research included a lot of thinking, experimenting and execution around cleansing of the collected data – after a very careful design of the sampling technique. And we had to throw a lot out after we examined the “traps” we put into surveys to uncover problems.

    There is also an insidious downside to the otherwise exciting growth of interest in social computing – the belief that if we listen to the tweeters, or the bloggers, we’re going to know all we need to about what’s going on. That is not true, and anyone who remembers the famous “Dewey Beats Truman” headline from the last century know why. Market segmentation still matters, and the insights analysts provide are even more valuable if they are founded on sound primary research that helps distinguish the different parts of the marketplace. A word of caution to AR: many analysts do great (and useful) work on the basis of whiteboard exercises and thought experiments – but it’s not always founded on good primary data. Know the difference.

    Love to hear from people who have tested the real connection their favorite analysts have to data.

    Best,
    Merv

  3. Interesting conversation. I’ve been on both sides of the fence. For many years I was an Analyst Relations person in several ERP companies. Then, I became an analyst at AMR Research. While one analyst I worked with always joked that with an internet connection and a weekend of surfing, he could do his own research on any vendor. The reality is a good analyst doesn’t just give you the feature, function check list on a vendor. From an end user perspecitvie, they understand how these systems help solve business problems. The really valuable ones tell you how it’s solve problems for your industry.
    From a vendor perspective, as an AR person, I thought I was doing a good job. I was compensated on getting movement, up and to the right, on any quardrant. But, what I didn’t take advantage of was the wisdom of the analysts in brainstorming ideas and strategies. As an analyst I found the really successful companies used me more effectively than those who sat back and waited for my report.
    Data is great, but wisdom is invaluable.

  4. Carter,

    I think the threat is not where you see it.

    Guerry, Merv, Judy and yourselves are of course right about information vs. insight (those terms seem more accurate than data vs. information), although there’s a need for some filtering: Gartner.com could be seen as a logically organised repository vs. the unstructured web.

    I would pose the problem more in economics term: to gain insight and abstract trends, you need to have conversations with vendors and users. That time needs to be financed somehow: there are different models but in order to keep those two complementary views of each side of the vendor / users fence, analysts typically need to be on retainers by both parties.

    And when you spend time working on those relationships and having those conversations, you don’t write. Gartner now imposes targets to some analysts to write up to 30 research notes per year: this is very high and may at some point become an issue if those analysts don’t have time to gather insight.

  5. Ludovic, I don’t know where you’re getting your information, but I’m an analyst at Gartner and I can tell you that we don’t have targets to write X research notes per year. We’re actually being actively discouraged from writing for the sake of writing. The emphasis is being put on measurements which management hopes reflect the value of a document to clients.

    I do agree with the rest of your points, though. Balancing inquiry and writing time is very difficult. Moreover, there’s an irony involved: If your written research on a topic is comprehensive and current, fewer clients will call with an inquiry (they’ll just read the note and use it for guidance), which means that you get less insight into what they’re thinking. I find there’s often a boom-and-bust feedback cycle with a Magic Quadrant, for instance — when the MQ is first published, inquiry volume can drop a lot because buyers just look at the MQ, whereas six months later they’ll call because the data is no longer “fresh” (and conveniently, this gives you a nice pipeline of input into the MQ’s next iteration). But if you don’t publish enough, you will drown in the inquiry load, making it more difficult to get the next piece of writing done thanks to time availability. Definitely a balancing act.

  6. Lydia,

    I agree with your point on balancing act, but I have heard several analysts, over the last 2-3 years saying the same thing.

    This is not only a Gartner issue though: independent analysts have to sell as well as write, when they do one they don’t do the other.

    My point is that when this balancing act sways too much in favour of “desk research” -sometimes this is influenced by compensation schemes/MBO’s-, and decide not to attend major vendor briefings, they might end up loosing on relationships and insight.

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