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How cloud, adjacencies & intersections are making the analyst business interesting again

Analyst firms have traditionally been structured in silos. In the past, this made sense – hardware was different to software, which was different to services. Breaking down just one of those segments as an example, PCs were different to servers, which were different to storage, and so it goes on….

The silos were a reflection of how products were sold (by vendors) and bought (by users). They were also a reflection of how research about those products was sold, and to whom. Many analyst firms – the big ones particularly – have done very well out of selling siloed, compartmentalised research programs to narrowly-focused product managers in vendors and technology specialists on the buy-side, slicing & dicing to match their specific interest.

The silo approach still works for (some) analyst firms – up to a point. But it’s started to break down over the past few years, and it’s going to break down even further over the next couple of years.

This is a good thing! Silos may be deep, but they’re narrow – and frankly, just a bit boring & artificial. I don’t think we’ll ever see them disappear, but the way that vendors market, sell & support technology continues to evolve, driven by changing preferences in how users buy & deploy it. And the same is true for analyst firms.

The largest analyst firms have started to break down the silos, to a greater or lesser degree. But it is the newer, more nimble firms which have most enthusiastically embraced the new order, partly because it provides them with differentiation, but also because that’s what their clients are asking for.

Probably the single most important factor driving this change is cloud computing, but it’s not the only one. Cloud sort of sits at the centre of this, but there are other adjacent “technologies” and “trends” which have a play – data centre transformation, mobility, application awareness, big data, broadband, social media, BYOD, always-on, possibly a couple of others…

But I’m not here to lecture to you about technology market dynamics – if I was, I’d still be an analyst! But these dynamics do have an impact on analyst relations, and how AR pros should go about engaging. From that perspective, I think it’s one of the most interesting periods I’ve been involved in over three decades of observing the tech space.

So what’s the upside, from an AR perspective?

 Access to a bigger audience

AR is not a numbers game, but it is a lot more fulfilling engaging with a number of experts than just a few. Service providers can now talk to software and telco analysts, software vendors can talk to mobility specialists, hardware vendors can talk to outsourcing analysts, and so on. Tiering is still important – within and across the silos – but you’re not restricted to core technologies.

Analysts get a little broader

Once upon a time, a storage analyst was a single-focussed hardware guy. Today, he might still be a hardware guy, but he probably covers servers and enterprise networking. He might also be developing a pretty good understanding of the infrastructure management software layer. The “old” handheld devices guru now covers a bit of network infrastructure, applications, security and service delivery models, as well as the device itself. Through necessity, analysts in APJ have always been broader than their colleagues in North America and Europe, but this trend is putting more structure around it.

 Analysts get a little better informed

Being exposed to these broader conversations has the potential to create better analysts. Context is important in understanding & explaining the deployment of technology, so looking and thinking outside the silo adds depth to the advice that they provide to clients.

But what’s the downside?

 Analysts sacrifice depth for breadth

There are already some analysts who try to be experts about everything, and there is a danger that more analysts will start providing commentary outside their areas of expertise. Deep domain knowledge is where analysts can add value, and that will be eroded if they allow the pendulum to swing too far.

Too many opinions from one source

Diversity of opinion is one of the great benefits of a competitive analyst business, but there needs to be some consistency of perspective within individual firms. Some firms are better at collaborating than others, and it’s important that analysts whose coverage intersects or abuts with others are actively communicating & collaborating with their colleagues. They don’t have to agree 100 per cent, but two perspectives which are poles apart within a single firm tend to destroy the credibility of both.

Targeting gets more difficult

Putting analysts in a single box has always been tough, and probably a little dangerous. These days, you need to map analysts right across your portfolio, and across your adjacencies. You’re still going to tier them with your usual methodology, and it’s going to take more time, but in the process, you’re probably going to learn more about them.

Like all things in technology and the analyst business, this isn’t black-and-white. There are lots of fuzzy edges, but what else do expect in a market which continues to evolve? For mine, it makes the analyst business much more interesting than it was a couple of years ago, and I’m pretty sure it will continue to be for the next couple of years – at least!



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