Why does anyone take notice of what analysts say and write?

If you ask the people who buy technology why they value the research reports they see from Gartner, Forrester, IDC, and the many specialist firms that have flourished in the last few years, it’s because they help reduce risk.

Companies’ futures and people’s jobs depend on getting IT decisions right. It may not always be essential to buy the very best solution, but it’s vital to avoid placing your money on a horse that shouldn’t be in the race. If the research firms can just remove that element of risk, they’ve amply justified their cost.

For vendors – and less well known vendors, particularly – this risk factor is a matter of supreme importance.

It doesn’t have to be real. Perceived risk is what makes buyers decide to play safe and choose a big corporation and a name they know, even when specifications, performance figures, and price may all seem to point to a less familiar supplier.

But the problem is that it just takes the odd out-of-place word in an analyst’s write-up to ring those risk alarm bells.

How small is small?

Your company is no giant. You’re growing fast and building a loyal customer base, but you’re not Cisco or Autonomy or Dell. So the analyst casually refers to you as a small vendor in your field.  On the face of it, and by comparison with the biggest, that seems reasonable.

But that one word – “small” – could cast a shadow over an otherwise positive research report.

There may be praise for your technology, your market and distribution strategies, your clear and publicly declared development roadmap. But if cautious buyers, under pressure to reduce risk exposure, believe your small size introduces extra dangers, you will not be showing up on their shortlists.

They might fear it means you can’t afford to invest in product development. You might run out of cash and go bust, or be swallowed up by a bigger fish that would simply kill off your product.

Too much uncertainty, the thinking goes. Too much risk we don’t need to take on.  Let’s stick with Microsoft and keep an eye on these guys for the future.

The fact is, that’s your opinion 

At The Skills Connection, we estimate that merely looking risky could cost a growing technology company 25% of its potential sales opportunities, however brilliant its products may be.

The problem is the difference between fact and opinion – and the gray area where one shades off into the other.  When you see the draft version of an analyst’s assessment of your company for a Gartner Magic Quadrant or a Forrester Wave, for example, you will be offered the chance to comment on it and negotiate reasonable changes with the analyst.

Unfortunately, what you see as reasonable and what the analyst sees may be very different.  You can challenge facts, but the analyst will defend his or her opinions to the hilt. And you’ll do better to keep your powder dry and try to win the key battles about facts than pick a fight about opinions, which you will never be able to win.

Look for the evidence to back your point 

There’s a lot more to be said about this issue, and we’ll certainly be returning to it in future postings.

For the moment, though, it’s worth looking again at our earlier example of the use of the word “small”. Is that fact or opinion?

It could be a matter of fact, if everybody accepted a standard definition of smallness, based on, say, sales revenues or payroll numbers. But while the US Small Business Administration, for example, is happy to draw a sharp line, defining a business in the “computer programming, data processing and systems design” category as small if it has receipts of less than $25m, there’s no common understanding of what the term means.

Some people talk about firms as small if they have fewer than 500 employees. But what about the growing software company with only 150 employees and sales of less than $20m, but an impressive customer base of 400 companies?

The fact is, small is such a slippery, vague, subjective term that it amounts, effectively, to a statement of opinion. You should be trying to convince the analyst to change “small” to “specialist” or “pure play”, or at least to get the wording modified to say “small, innovative vendor with 400 customers”.

Think clearly. Think like a lawyer (though don’t get your lawyers involved – that’s a red rag to a bull). Demand consistency and look for evidence to show that you have not been treated objectively. If your company has been dubbed “small” when smaller firms in your industry have escaped without that label, that’s factually misleading. If you can point to that kind of inconsistency, put your case, be firm and you should be able to get the change you want.

  Are we on target? The last thing we want is everyone agreeing with what goes into this blog. After all, if you don’t disagree with some of the points we’ve raised, we’ll be forced to be more and more provocative, and who knows where that will end? So let us have your thoughts. Have you found negotiating fair wording of factual matters with analysts straightforward? Or did you feel you were banging your head against a brick wall? Shoot us down and have your say.