The future of the IT analyst game

Last week's news that Gartner is acquiring AMR had the blogs and Twitter abuzz with comment and counter comment. Any way you want to look at it, the coming together of these two firms effectively creates an IT analyst monopoly for Gartner. The gulf between the enlarged firm and Forrester, the next largish scale research firm combined with an effective exit by one of the better known research brands makes Gartner look unassailable. Carter Lusher has the most detailed and authoritative analysis of the reasons behind the acquisition. As I've come to expect, fellow running mate Vinnie Mirchandani slaps Gartner/AMR for its continuing emphasis on vendor driven revenue while Jason Busch puts a satirical veneer on the story. It's priceless stuff. Is that it? Has the analyst research market been closed down with what amounts to one provider to which all must go? I don't think so. If anything, it has created the opportunity for something new to emerge.

I don't wish to re-ignite the whole pay-to-play discussion but it is interesting to read comments Jonathan Yarmis of Ovum left on this topic which I wrote at my personal weblog:

If we're meeting customer needs, we'll likely find a way of extracting economic value, be we large firm or small, new or traditional. What's important in my mind, therefore, is my belief that customer needs *have* changed. No longer is tech advice relevant. Much as we've stopped talking about eBusiness because it's now just one component of business, so too can we no longer talk about technology without talking about business, or business without talking about technology. That's where the current model is broken. We're selling technology insights to technologists. Is it any wonder why the average tenure of a CIO is so brief? Only once we've agreed on what the unmet customer needs are can we begin to address the issue of the right approach to satisfy those needs.

Jonathan backs his argument with a couple of video conversations between Gideon Gartner (founder of Gartner and Giga), David Rossiter, AR consultant and himself. Part 1 is at the top of this post. Part 2 can be found on the IIAR blog. Whether you regard this as a thinly veiled effort at pimping Ovum's new direction or a genuine attempt to move the industry forward depends on your point of view. Regardless of which side of the fence you sit, the main protagonists make important and valid points.

David says: "The problem with analyst firms generally is they risk getting too far away from their customers...I think whether you're an end user or a vendor actually what you're looking for when you buy from an analyst in an analyst firm is you're looking for authority...if that doesn't come from experience then where does it come from?...Vendors definitely see that they want to be selling to a business audience...business is somewhat skeptical of what the IT department says and won't take it on trust...but we've seen people buying from the likes of Gartner because they need the rubber stamp. It seems...you get the Gartner stamp and you can't be fired."

Gideon jumped in with: "Verification of your own opinion so there's no real added value by Gartner really except to acknowledge that the decision you've already made is correct...as opposed to exploration, where you're really studying the variables of making your own better decisions."

These are great insights to an industry that some of us see as ossifying and which leads neatly to the question about what happens next. Gideon is of the view that money needs to be put into the industry such that players can acquire the expertise needed and grow out from there. This was the model he followed and so naturally assumes that might work. He sees funding as the way forward. Given Gartner's success, you'd be hard pressed to argue against it. David on the other hand notes the rise of other voices and wonders whether business will respond by listening to the new breed of (say) blogger analysts. People like myself, the Irregulars, Advocates and other emerging groups.

It comes down to working out a business model that balances expertise and authority with economics that make sense to everyone. Unlike the panelists I don't believe it resides in a fixed model of the kind the analyst community has developed. The new model may well be about a brand but it will more likely be about loose coalitions where there is a revolving door of participants. That allows the brand to act as the center of gravity for the best expertise that can be found. This has already happened in the financial analyst world where firms like DeMatteo Monness maintain a panel of experts who are hired on an ad hoc basis to provide analysis to DM's clients. (Disclosure: I am signed to DM) Contributors, analysts, call it what you will all have to be at the top of their game. Clients demand the best they can find. It is not therefore surprising that DM is able to charge a healthy rate in part because the knowledge pool is both competitive and constantly refreshed.

In the second video, Gideon Gartner sees this style of model as one from which the analyst community could draw inspiration. It is one where reward is tied to results rather than entitlement. He also sees it as one that is lucrative for the best people. In other words it is a way to help the individual scale while providing a magnet for expertise. In that sense it provides a method to move away from the 80/20 value rule to one that is more like 90/90.

Elsewhere, Edelman's Jonny Bentwood has published his Technobabble Top Analyst Blog rankings. Yes, OK, so Mike Krigsman, Joe McKendrick and I made the top 10. A number of colleagues are in the top 25, more are in the top 100. Interestingly, the first mention of a Gartner analyst comes at 32 with Jim Sinur. There are lots of ways to think about this. Here are four ways of interpreting the data:

• No-one reads Gartner, everyone reads blogs and other social media.
• Everyone reads Gartner, no-one who matters reads blogs evidence by their $1bn+ revs and bloggers' scraps.
• Gartner needs to up its blog game. 650 analysts should have a better showing.
• Bloggers are a self-obsessed bunch of navel gazing opinion makers.

But then I know the influence that some of us have. That influence may only be one or two points on the thousand points of influence scale but I see it as becoming increasingly important to those who cut checks. It's all down to the thing that Jonathan Yarmis was alluding to in the introduction. Deep domain expertise matters to the business. So while most I know who are enthusiastic about IT find nothing better than to talk SAPanese, extol the virtues of SOA etc, business doesn't care. It just wants to know where it will find value at reasonable cost and sense check against the experience of peers. There is a place for the pure play IT researcher/analyst who can survey the market and talk to technology strengths and weaknesses so that IT decision makers can draw comfort they're not making statistically poor decisions. But that is only part of the story.

As the analyst industry reshapes itself to the realities of a different economy I'm confident that the business analyst will take on a much more significant role. It won't simply be a case of validating decisions already made. It will be a case of having those decisions questioned on the basis of rigorous examination of the business case. Sadly to say, I've not met an IT analyst yet who can do that with any degree of authority. The acquisition of AMR will give Gartner a taste of what that means. Ovum is on the case. Advocates are as well. Back in the real world, Phil Fersht (ex-AMR and now with Cognizant) predicts that in 2010:

As the analyst business consolidates, many business leaders are looking further afield for inspiration, validation, data and advice.  Especially in the sourcing world, where the best advice is often coming from those living the experience in the field.  Our forthcoming survey results will reveal this is happening.  Business decision-makers today need advice that can be made available in personalized models from experts that can deliver it.  The smart advisors are going to be those which can adapt and scale their experienced talent successfully in a semi-customizable model.

[My emphasis added]

We're in for some interesting times.