Ray Wang has laid out his vision of the future analyst firm: Personal Log: The 7 Tenets Of Building A “Star Analyst” Firm. It's an interesting read because in posing the question, Ray is in one sense asking the critical question: "What does the next Gartner look like?" I phrase it in those terms because until recently most I know would have said that Gartner represents the analyst firm benchmark by which all others are measured. However, what Ray and others know is that the model is no longer working in the best interests of clients. I'll get to that in a moment.
Ray's thesis is a work-in-progress because Altimeter, the firm Ray now represents, is relatively new and there is plenty of time over which he and his partners can refine the model. In putting this out there, Ray isn't giving away any secrets as such, just using common sense and 'the commons' to stimulate a discussion that will help him figure it out.
I've talked extensively on this topic at my personal weblog in a critique that centers on business strategy and growth issues in the broad context of professional services firms. Ray has come back with a set of detailed comments which enrich the discussion. In this post I'd like to extend my thinking into what it might mean for the IT industry.
The analyst world as we know it seems to be following a path that is similar to that of the well known enterprise apps players. Continued insistence upon incumbent revenue but with diminishing value in return and a narrowing focus on a declining number of vendors. That's one side of the equation. The other side is that end user clients are not getting timely advice. As I am writing this I see a Tweet where Mrinal Wadhwa says:
RT @rwang0: RT @InFullBloomUS: Not news to we observers, but now IDC research shows all software sales momentum is SaaS http://bit.ly/c4T1CL
Last week, Vinnie Mirchandani had this to say:
Extract from my new book:
'As we know, the 1990s were a chaotic time for Russia as the Soviet Union’s centralized, defense - heavy infrastructure was gradually torn down and replaced by decentralized, commercial enterprises. Seth Ravin describes his work there blandly as “ defense conversion, ” but it was dangerous work where he faced kidnapping and death threats.
He is now into another type of conversion — going against what some would call today ’s “ evil empires" '
This blog readers have, of course, heard about Seth, Rimini Street and low payback from software vendor maintenance dollars since one of its first posts in March 2005. Now, Gartner finally acknowledges it in the code of conduct for reasonable, predictable maintenance costs developed by its global IT council.
I would love to see Gartner put some teeth behind this code. Have the guts to call out IBM, Oracle, SAP, Microsoft and others as they violate those principles. Its analysts hear about them in client calls all the time. Here are some I cited in arecent article and Ray Wang discusses here. Gartner could easily anonymize the client names but share them with the world.
Regular readers will remember the stream of articles Ray, Vinnie, Frank Scavo and myself wrote on this topic. It's a topic that's not going away. Instead what we see are firms like Rimini almost entirely ignored by the mainstream analyst community despite they are clearly making a dent in Oracle's maintenance revenues to the point where Rimini is under fire through lawsuits.
In making the detailed case, Ray put a lot of effort into publicly exposing some of the ways that companies can benefit from taking different approaches to the problem. Do you see the Gartner, Forrester, IDC's of this world doing the same? Are the incumbents walking the extra mile to help their end user clients in this way?
Consistently I am seeing a small but growing cadre of independent analysts - if that is indeed the right term - who are clearly setting out their stall in public by offering rich information that can be explored in the pursuit of understanding fresh perspectives on topics of importance. They are the innovators in the expression of information that CXOs need. This for example from Horses for Sources last week that talks about BPO innovation:
Essentially, once they have out-tasked as much of the feasible routine administrative work to service providers, they quickly discover that next tranche of productivity is not nearly as straightforward as documenting standard processes and training an offshore team to replicate them effectively (commonly termed in the BPO industry as “lift and shift”). Those buyers realize they actually need to introduce new, creative methods to actually change the old way of managing processes to find improvement. This scenario continues to dominate the vast majority of large-scale BPO engagements today.
The answers lie with both BPO buyers and their service providers working together to achieve measurable business outcomes as part of organized and collaborative long-term partnerships. However, too many enterprise buyers jump into a service provider relationship polarized on the initial cost take-out from the “lift and shift”, and gloss-over the future initiatives they will need to implement in a couple of years, when they seek to find new value through better processes, talent and technology.
We believe buyers need to put the innovation track-record of service providers high up the decision-making tree when they select make selection decisions.
Guess who's going to articulate that?
The point of all this is simple: the thought leadership that characterized the start of the analyst business in the late 80's and early 90's seems to have almost gone from the mainstream. It's all about steady state or small incremental value add. The premium value that used to exist no longer seems to be there or if it is then it is tightly controlled and kept largely under wraps. Sure, quantitative validation is still required but it is almost always in the qualitative discussion and analysis that true value is unearthed.
Much of that is being surfaced through the writings of Ray, Vinnie, Frank, Phil Fersht (Horses), Esteban Kolsky, Sameer Patel, James Governor, Michael Coté and many others including our own Brian Sommer, Phil Wainewright and Oliver Marks to name but three.
That neatly brings us on to the question of licensing. IP is created by individuals. It might be enhanced through collaborative activities and in that sense it is shared. But who gets the rewards? In the corporate analyst environments, there is little real incentive to be original or provocative.
If both Ray and Phil (as examples) are right in that companies are hungry for help in transforming their businesses for the 21st century then is it not fair that those who are leading the thinking around the big picture topics should be the ones to see the rewards?
In comments to Ray's post, Esteban says:
As an independent analyst I realized early on that my only value was my IP. My ideas cannot be sold, but can be licensed.
All my work is licensed, without restrictions of use in most cases, as long as there are no changes to the content. Any change reverts the license back to me. I retain IP on all products and byproducts of my work (at least what I do, the original content used to create a byproduct by others must be attributed via a CC 3.0 license) and can revoke the license on any byproduct at any time.
This is the only way I can work and retain control of my work.
Note the term 'independent.' Can this work in an 'all-star' firm of the kind Ray describes. I believe it can because once you get the 'cat herding' problem out the way then it is all about alignment. The folk I mention above are stars in my eyes because they are passionate, have a thirst for knowledge that can be communicated and respect for their peers. They equally know they don't know it all and so hunt out those that know more than they. They're also fun to hang out with. That still leaves open the question whether Ray's model is one that will work.
In many ways, what he is describing resembles the traits of the guys and gals I spend time with in the SAP Mentor group. That works very well. These are a mixture of geeks and suits who get on very well. They are brought together through a common theme - in this case excellence and passion in SAP environments. Some of the things they have achieved are truly ground breaking. They are freely shared among those that wish to know. They stir up terrific debates. They are a source of pleasure.
Now - if that's something that inspires and Ray takes on board the best bits of what he sees and hears then what's to say his model would not only work but be differentiating in value delivery?