I recently previewed excerpts from a book my former Gartner colleague, Bill Hopkins is writing titled "Influencing the Influencers". It is chock full of data on the analyst industry (Gartner, Forrester, AMR, Yankee etc) and should be a great read when it comes out. Bill's company KCG advises vendors on that art of influencing analysts.
What struck me was an episode which "made" Gartner in its early days.
"The Hartford,
one of Gartner’s earliest user clients, called (David) Stein seeking some last minute advice
in the fall of 1980. Turns out, an IBM salesman was sitting in the CIO’s
office. He was holding out a contract that would convert four 3033 mainframes
from lease to purchase. “Do whatever you have to do, but do not let him sign
it,” Stein told the CIO’s secretary over the phone. “You’ll be very sorry
because those prices will drop 30% within a matter of a few weeks.”
Fortunately, she got the pen away from her boss. And, as predicted, the prices
dropped steeply – saving the insurance company $4 million. “Now, we had a
reference sale like you can’t believe,” adds Stein. “Well, we were able to do
that all over the country ...
... Indeed, the goodwill that Gartner created
with end users during this period arguably set the stage for its rapid growth
in the 1990s and continues to be reflected its dominant – deal making and
breaking – position today."
So, made me wonder would Gartner (or Forrester or any of the analyst firms) do that for a buyer today, given their much larger vendor revenue stream? And if they did, would they proudly talk about it like David does above?
The analyst firms do have negotiation advisory services. But they are relatively small compared to their vendor revenues - and often hidden away to avoid conflict with vendors. Trust me the negotiation groups are small - only scratching the surface of price leverage being opened up in different technology spend - from the impact of Open Source, SaaS, third party maintenance, offshore delivery, rural staffing, VoIP, hardware as a service. Gartner could be saving many of its clients $ 4 m a year in each of these areas
Of course, economics are not everything. But stretch the analogy - how likely is a Gartner analyst to call a client back and say our report said neutral things about a certain vendor's new product - actually here's the skinny - DO NOT SIGN THAT CONTRACT.
And vendors are clients too. They need advice, they need TLC. But many analysts will quietly complain that vendors watch them like a hawk
and use their client privileges for influence more than intelligence. Most analysts I know try to stay independent, but the sales people in the analyst firms have little incentive to and subtle pressure invariably seems to apply. Add to that the fact that vendors are individually much bigger clients for the analyst firms than even the much larger user organizations - the GEs and Wal-Marts and it makes for a complicated world when you need the revenues to keep the Street happy.
But it is a slippery slope. Buyers are turning to peers, specialist advisers, even blogs for more independent feedback. As buyer influence shrinks steadily, why would vendors keep paying the big bucks to the analysts?
When you have delighted buyer clients like The Hartford above, vendors may not always like it, but they have to respect that influence. They did in 1980. They do even today.
Just shake your head!
A few years ago, I accompanied a couple of Japanese visitors on a flight which took us over the plains of the US. Every so often they would look out and shake their heads. They later told me they were so jealous of all the land we had. The unsaid message was you guys could do so much better with the huge advantage you have.
I see the traffic on this ARmadgeddon blog. An anonymous post critiquing a firm. The firm responding (with a name and contact info) "not our policy to engage in debate on anonymous blogs". Then a commenter criticizing the previous gentleman for not debating while themselves remaining anonymous. And these are all professionals in the tech community, not some young kids on MySpace.
And I thought to myself what would a Chinese or Iranian blogger think of this? He would be so jealous of our freedoms and just shake his head on how we in the West waste it on, pardon my language, chickenshit...what are we afraid of in the tech world to disclose who we are and engage in open debate, compared to what they face?
August 31, 2006 in Industry Commentary | Permalink | Comments (3) | TrackBack (0)