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Why technology industry disruption is also disrupting the analyst relations game

The analyst relations profession has always been a challenging one – fun, but challenging. Over the past couple of years, it has become tougher, and all indications are that it’s going to get even tougher in the coming years.

Like many buzz words that the technology industry latches on to, “disruption” is much over-used and often incorrectly applied. But the reality is that some technology market segments are being significantly disrupted by a range of forces, and by extension that is having a profound effect on the analyst business and the AR profession.

Confronted by this range of forces, many traditional IT vendors are struggling to get the attention they’ve previously enjoyed with the larger – and smaller – analyst firms. So, for AR pros, this means getting smarter & more creative if they want to get the cut-through they need.

But before we look at some of the potential solutions, let’s look at the problem. These are the forces at play:

Analyst business models are changing

To a large degree, analyst firms provide – and have always provided – pretty much the same thing to their clients, whether they are IT vendors or users. That is: content, engagement & advice. It’s a multi-layered approach which has worked for years & will continue to be successful, but here’s how it’s changing:

  • “One to many” is being disintermediated. The subscription model for written research & market share data has long been the cash cow for analyst firms, but it is being devalued by the vast amount of information available for free on the web. Some emerging analyst firms are using freemium models to drive interest in paid services, but there is a wealth of information available online – on vendor websites, on blogs, on aggregation sites and elsewhere. Quality written research is still relevant for most analyst firms, but it is no longer a differentiator.
  • “One to some” is gathering steam. Analyst firms have always done events – it’s a great way to promote the brand, the content and the ideas, but it also provides for more intimate engagement with customers. And it’s an area where many firms are focusing their investment. Gartner’s event business grew 17% last financial year, while the Symposium conference in Orlando in October sold out. IDC has a crowded schedule of events covering just about every country in Asia/Pacific, not to mention North America, Europe & elsewhere. And they’re not alone.
  • “One to one” delivers value, but doesn’t scale. A key value proposition for Gartner – among many others – has been its enquiry service, through which it is able to provide specific, personalised advice to both vendors & users. This is what many clients really pay for, but there are only so many 30-minute enquiries that an individual analyst can manage. Increasing enquiry volumes means adding expertise, which costs money.

The technology business ain’t what it used to be

In the beginning there were just a few technology vendors – old hands will recall referring to one predominant group as the BUNCH (Burroughs, Univac, NCR, Control Data, Honeywell). The minicomputer business started the process of expansion, but the advent of the PC in the early 1980s truly democratised the technology business, with the emergence of software standards & platform independence. The web further built on this legacy, spawning thousands of new players, while the smart mobile revolution has made everyone an app developer. But it gets worse:

  • There are few barriers to entry for new players. There are still barriers to success, but anyone with a good idea, access to some smart programmers and a half-decent marketing plan has the potential to carve themselves out a niche and/or disrupt existing business models. Add in some venture capital & social media cred, and they have the potential to be a real player. And guess what – they’re doing everything they can to get the attention of industry analysts.
  • The Internet of Things. What can we say? Even Gartner has declared it as the #2 strategic technology trend of 2015, and many other firms have been beating the drum about this for some time. This brings a lot of non-traditional players into the mix. And guess what – they’re doing everything they can to get the attention of industry analysts.
  • Everything old is new again. In part due to the IoT, many old established manufacturing companies are finding that they’re interesting & relevant again as they build sensing technology into products like jet engines, heavy haulage, air conditioning systems and more. As one analyst said to me recently, many of the new disrupters are 100-year-old companies, not creative start-ups. Think Honeywell, Siemens, Rockwell Automation etc. And guess what – they’re doing everything they can to get the attention of industry analysts.
  • Traditional IT vendors are looking for greener fields. The vendors we know & love are not sitting idly by while all this happens. They are well aware of the factors shaping the market & the emergence of new competition, and they are exploring their adjacent markets to maintain their growth. Unfortunately, they’re not seen as “sexy” like a lot of the so-called disruptors. But guess what – they’re doing everything they can to get the attention of industry analysts.

Analyst behaviours are changing

Being an analyst has always been a good gig, but it’s been getting tougher over the past few years. It’s still a good gig, but in general, analysts have less latitude than they once had to explore ideas, to think, to pontificate, to focus on the big long-term issues rather than the immediate problems in need of resolution. In simple terms, they’re more accountable for their time, but let’s look at the pressure points:

  • Analysts are busier than they have ever been. Most analyst firms have figured out how to get more productivity out of their analysts over the past few years, so many of them now goal their staff on the stuff that impacts their renewal rates – not just written research volumes, but also enquiry volumes and paid engagements. So analysts are not just more accountable, they don’t have the “slack” in their schedules they once had, or the ability to apply that as they choose.
  • Analysts need to know more about more things. Analysts in the Asia/Pacific region have always been broad rather than deep because they have to understand multiple geographic & technology markets, more so than their US & European peers, who have the luxury of larger markets which allow them to specialise. But all analysts need to understand the adjacencies to their focus markets, and that has become more complicated. They need to understand – and explain – how the new market dynamics affect the narrower markets they focus on.
  • Analysts are being used differently by their own firms. As we noted above, there is a greater focus on delivering events which engage analysts more closely with their clients, whether they are vendors or users. While these events deliver a good contribution to the bottom line, they require more time commitment, not just in terms of presentation delivery & travel, but also for preparation. Analysts involved in these events are expected to be “always on” even when they’re not on stage, doing client enquiries, networking & otherwise promoting the firm’s brand.
  • Analysts are being used differently by their clients. Not only do analyst firms run their own events, but IT vendors host them too. The user conference/roadshow/roundtable is a stock component in the marketing playbook of most IT vendors, and they love to use analysts in keynotes and breakouts to add an air of credibility and independence to their events. There’s nothing wrong with this, but once again it sucks up a lot of analyst time in preparation, delivery & travel.

Bottom line

What this boils down to is that many traditional IT vendors are struggling to get the attention of the analysts with whom they’ve engaged for years. They are competing for airtime & mindshare with a growing number of new players, whose stories are often more “sexy” than the business-as-usual messages they deliver. And this is at a time when analysts have less time to listen to vendors, and are more selective about what briefings they attend.

It’s a tough landscape, and vendors are going to have to get a bit creative to stand out from the crowd. There isn’t space today to discuss potential solutions, but I’ll do that in another post in the next week or so. In the meantime, I’d appreciate your perspectives on this dilemma, the ramifications and potential solutions.

Cheers,

Dave

2 Comments Post a comment
  1. Nice post Dave. I agree with the first part and have blogged on similar lines with a different angle a while back: Analyst firms: rock star bands or record label dinosaurs?.

    Your second part nicely links to the role of the analyst, which I agree to as well.

    Where does that lead us though? With the IT industry maturing fast (in some areas), is there still a role for IT analysts? There aren’t in other verticals for instance.

    And are subscriptions (RAS) dead? What’s the new business model?

    December 5, 2014

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