IT buyers look to industry analysts for wisdom in understanding the past, counsel in handling the present, and advice when future plans go awry. Unfortunately, this symbiotic relationship between analysts and their corporate masters can include a complicated mix of mutual respect and fear, punctuated by greed and need on both sides.
The Institute of Industry Analyst Relations recently blogged about analyst ethics:
Any analyst firm which values its long-term reputation in the market has to ensure that its research is independent....
However we do need to be realistic about the economics of the analyst business. Most analyst firms couldn’t exist without vendor cash - be it via sponsored research, consulting projects or speaking engagements.
And so long as analyst firms clearly communicate who is sponsoring their work, I’m fine with that.
The blog raises questionable analyst practices such as the following:
- the analyst that writes blog posts promoting a project that his consultancy is involved in - without disclosing his connection
- the division of a large group that prioritizes briefings based on the likelihood of selling reprints of the resulting company profile
- the analysts that use a briefing as an opportunity to pitch their own services
THE PROJECT FAILURES ANALYSIS
Analysts can achieve transparency, and neutralize many ethics violations and conflicts of interest, by fully and completely disclosing their affiliations. Unfortunately, such disclosure is not always forthcoming, and some analysts use lack of transparency as a tool to mislead clients and the unsuspecting public with so-called "objective" research that has in fact been compromised.
Ethical lapses also occur among the corporations that engage analysts, some of whom use their buying power as a lever to manipulate undue influence over research and reports. Using the promise of large fees and ongoing retainers, these corporate weasels subtly encourage analysts to bias their recommendations to the sponsor's advantage. Again, unsuspecting readers are wrongly led to believe the analyst's report and conclusions are unbiased.
The best analysts skillfully manage these conflicts and tensions without compromising either their integrity or their work. For example, Jon Collins, of Freeform Dynamics, told me that analysts who pitch their own services at briefings are "unsavory and unproductive." He wrote that's it's "difficult to be both transparent and unethical." Similarly, James Governor, of Redmonk, blogged "You Can Buy Our Thinking But You Can’t Buy Our Opinion."
The bottom line: When talking with analysts, remain alert to potential conflicts of interest and ethical gaps. Ask about their affiliations, demand full disclosure, and walk away if you don't get satisfactory answers. The best analysts will welcome your questions and withstand your scrutiny; the others aren't worth your time or money.
Update 3/10/08: Changed the title to better reflect the content.