Whose job is it to make sure you get the coverage you deserve? Is the onus on the analyst, or on the firm seeking coverage? These are key questions – and if you want to know what the industry thinks, you’ll find some interesting survey responses in this posting. I raised this urgent topic in a couple of professional LinkedIn groups recently and my ad hoc research brought in a flood of frank and detailed responses – more than 40 of them – from all parts of the industry, including AR professionals, analysts, IT users, and advisory research sales staff.
The results make such compelling reading that I am writing this blog at roughly twice the usual length. And there is one master tip, towards the end of this posting, that could, in itself, guarantee almost any company hugely better analyst coverage. But let’s look first at the key topics raised in the LinkedIn responses.
Recent surveys (such as Hill & Knowlton’s November 2012 study) show that analyst assessments still influence more than 50 percent of all IT purchases and respondents to my LinkedIn survey confirmed this view. As independent analyst Bob Sakakeeny put it, “For commercial sales, analysts have a significant and measurable impact on the short list process.” In practice, vendors simply cannot afford to be ignored by the analysts who operate in their specialist areas.
But surely it’s the analyst’s responsibility to cover the market?
From a theoretical point of view, it seems reasonable to suppose that an analyst should cover the market properly. As BearingPoint’s Ludovic Leforestier commented, “It’s the analyst’s responsibility to assess the marketplace and contact suppliers. That’s a process called ‘research’”.
You can’t really argue with that – and, to be fair, the analysts engaged in the conversation fully agreed. Sepharim Group’s Bob Egan, for example, called analysts who were not knowledgeable about the market makers and were not proactively engaged “ignorant and lazy”.
Adrian Bowles of STORM insights Inc, voiced a similar view: “If analysts are too busy to do real research and find obscure vendors with unique offerings, they are doing a disservice to their end-user clients.”
However, as we all know, life is not quite that simple.
As a former research manager and executive at research firms large and small, I can say from experience that almost all analysts share the same gripe that they have too much work to do in too little time (never mind the usual related grumbles about compensation). This is a fact of life in the research business. Employers want deliverables and customer engagement from their analysts. Time to do real research is not usually ringfenced, and that makes it the easiest thing for the analysts to cut back on.
But when they do skimp on the research, how does that affect the suppliers they follow?
One of the analyst sales reps who commented thought that analysts were duty bound to pay attention to the vendors who were the subject of the most hype and noise within a market. That’s a controversial point of view – should the focus really be on those that shout loudest, rather than on those who may be the best fit for the customers’ needs? – but it does seem to be the kind of attitude that informs many analysts’ selections. The user perspective from my LinkedIn responses was that the analysts appear to cover the major players in a market “because clients are most typically interested in those vendors”. Is this chicken or egg?
If that is how the decisions are being made, it is bound to work in favor of the big vendors and those who have figured out how to play the media and social media games. Vendors with something truly innovative that the market has already recognized would also get a fair hearing. As I read it, though, the analyst sales rep’s view would imply that those companies focused on producing great products but bad at hyping them up would not deserve the analyst’s time to seek them out.
The fact is, time limits how much effort analysts will invest in researching the market. As Ludovic Leforestier notes, “In the long term, analysts live and die by their integrity and overall reputation.” Omissions may cost the analyst downstream, but in the short term it’s the vendors who have most to lose. This is really where the rubber meets the road. Kevin Lucas of Forrester summed it up: “AR can’t abandon its responsibility just because analysts don’t play ball.”
It’s not that analysts aren’t interested. It’s more a matter of time. As noted by Efrem Mallach, “Analysts are human, have conflicting priorities, and don’t have all the time they’d like to do all the research they’d like to do… Analysts need to identify