Aberdeen Group – guns for hire?
The Wall Street Journal today slammed into Aberdeen Group. In their article- Vendors Still Paying For IT Research That Flatters Them, the journalist exposes some practices that would make the most hardened analyst advocate blush with embarrassment about the state of the industry.
(Edit: I recommend you read the comment by Stephen Gold, President – Aberdeen Group stating his side of the story.)
To put things into context, Aberdeen Group went bust in Europe largely due to a lack of trust – as the WSJ explains the perception of their reports was that:
If you saw an Aberdeen report saying that Acme MicroMacro sold world-class solutions, you could be sure that Acme had written Aberdeen a world-class check.
The AR world hoped that things changed when Harte-Hanks bought Aberdeen in 2006. However, reading some of the key points from the article today raises some interesting questions regarding just how much practices have moved on. These include:
The current Aberdeen comes up with a research topic, typically involving some new technology trend, and then approaches tech companies selling products associated with the trend. For what customers say is roughly $30,000 a company can become a report sponsor. Aberdeen, which wouldn’t discuss its fee, then sends questionnaires to tech users, asking about their current activities and future plans for the area in question. The reports are meant to be a snapshot of the marketplace and don’t mention specific companies.
The sponsors’ funding is fully disclosed. Sponsors have their logos on the report’s front page and are passed along with the contact information of everyone who downloads it.
All above board? I don’t think so. The conflict of interest is abundantly clear – with 212 sponsored reports published last year, according to the WSJ:
if much of your top line is dependent on getting tech companies to sponsor your research reports, you’ve got quite an incentive to design questionnaires that will yield the kind of reports tech vendors will want to sponsor.
This kind of article is not what the AR world needs. In an industry that is built on trust and in a market where technology buyers are confused and need advice regarding what they should do – the independence of analysts is critical. It doesn’t seem that long ago that Information Week asked this very question in their article: Do tech vendors wield influence over IT research? You bet–but how much of it is a matter of perspective?
I had hoped that we moved on from this debate. Some of the smaller firms (like Freeform Dynamics) rely on vendor cash to keep them going but this is perfectly transparent through their patronage model. The last thing we want is for this discussion to gain momentum and for practices to be questioned.
I hope the WSJ have got it wrong but I fear Aberdeen have chosen a quick path to easy money that may jeopardise the industry en masse – something that will force the AR industry a great amount of time and energy to fix.
Disclosure: one of my clients is TowerGroup
Filed under: analyst relations | 18 Comments
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Jonny,
I agree the journalist doesn’t do the analyst world any justice by singling out a rotten apple and generalising it. At best it’s a poor piece of journalism. I can’t think of any analyst I deal with that doesn’t place integrity and intellectual honesty as her/his cardinal values. But we don’t deal with Aberdeen, just because they are a pay-to-please outfit.
Have you emailed him?
Folks,
I would hope that everyone would consider the facts before passing judgement. Ironically, Aberdeen has been out of the “play-for-praise” business since 2003. The letter below is Aberdeen’s response to the editor as it relates today’s story.
Stephen Gold
President
Aberdeen
++++++++++++++
Lee,
I fear your Portals piece today provided a great disservice to the WSJ reader. The article begins with the title of “Vendors Still Paying for IT Research That Flatters Them.” Yet, Aberdeen’s core research does not mention vendors, their products, or services, a fact that is buried half way through the article. In addition, there is no mention of the 1000+ research reports published last year that were not sponsored and made freely available for end user consumption. I am confident that our community of 2.5 million readers would disagree that somehow the “sponsored research” model undermines the value of the fact based research we deliver. To this point we provided the WSJ end user (not just “tech users”) references, the stature of MetLife, Best Buy, Kawasaki, Tyco, Nike, and General Dynamics, who leverage Aberdeen’s research to make informed decisions. Unfortunately it does not appear that their voice is represented anywhere in the article. Nor does the article acknowledge that Aberdeen does not conduct single sponsor, custom research, or sponsor initiated reports that are still prevalent by other research organizations in the market.
This year Aberdeen will publish over 250 core research reports originating in the process of interviewing and surveying relevant end users. These responses will emanate from the 410,000 individuals that have opted in to participate in our research panel. Our research is not predicated on “some new technology trend.” In fact, the comprehensive research agenda for 2008 which is published on our web site (www.aberdeen.com) and was presented to you in hard copy for review, controverts the very notion that emerging technology is anywhere near the forefront of topics covered. In addition, the half-dozen customers who indicated that the value of sponsorship is in the opportunity to be associated with Aberdeen’s thought leadership and wanted to “rise above the noise of the marketplace” find comfort in the independent methodology, quantifiable insight, and to use your words “straightforward information”, that Aberdeen’s “research” provides.
Our reports “invariably discover” how the market is behaving, what changes they perceive, the vehicles by which they are tracking and measuring progress, and the actions they are taking to manage their business. This insight is not grounded in some “new tech trend” as you state. In fact, your reference to our study that finds that “best-in-class enterprises have “contract compliance rates 70% higher than their competitors” is a great example. Contract compliance is an outcome of a process not a purchase of a product. Last time I checked “Improved Process Visibility” and “Cutting Administrative Costs” are bell weather goals of most corporations and not rally cries to adopt tech trends as the article implies.
I agree that “the new Aberdeen is better than the old”, it just would have been useful to draw the distinction and provide insight into how sponsored research has reinvented and reinvigorated objective, quantifiable, actionable insight that educates end users to action.
Best Regards,
Stephen Gold
President
Aberdeen Group
Stephen
Thank you so much for letting us know the other side of the story. Echoing Ludovic’s comment – at best, what the WSJ have provided is a piece of poor journalism.
I greatly appreciate you taking the time to comment on this blog and reposting your letter in full – I only hope the WSJ offers you the same courtesy.
I do believe though that as long as analyst houses offer a sponsored research solution, they will inevitably face questions regarding independence. I know that several of the UK houses have had to argue their case against many sceptics.
However, my own personal perspective is more focussed on what this kind of article does to the AR industry. Our world is one based on trust – I truly felt that we had moved on from this discussion a few years ago and I am annoyed that so much time will be spent over the next few months realigning perceptions. Nevertheless, I am pleased that you are taking a proactive stance in this as well.
I am sure that this discussion will continue and many will wonder how much Aberdeen has changed – is 212 sponsored reports, 212 too many? I am fully cognizant of the fact that many analyst firms will cease to operate without vendor cash – whilst outright “we will write what you want” is not on the cards, I believe a model closely related to the patronage model will rule out.
Jonny,
Great thoughts. While industry analysts play an IMPORTANT role, and can be very helpful to companies (like mine), they’re not the final mark of authority, fact or outcome (which a few would like to think). They’re one of many forces and voices that inform and shape market perception and decision. As you point out, there’s a wide spectrum to their integrity. In the case of Aberdeen, I’ve received for years solicitations to help with white-paper writing. Personally, I have no problem with commissioned work, so long as there is complete transparency. But Aberdeen was a special case in how they sold the (“wink”) objective benefits upfront. I never hired them ESPECIALLY that reason, but also because they never convinced me on the intellectual value-add beyond our existing talent and resources at the time.
At the end of the day, I think the long-term business models of all the analyst firms are being challenged. For one, similar to the news media (which you PR guys also deal with a lot) the individual analyst voices often are becoming more important and credible than the very firms they affiliate themselves with. This will foster an industry-analyst landscape with many more, smaller players and analyst brands. This is my experience having worked at one of the most prominent, trusted industry analyst firms, as well as being a client and a collaborator (joint research/analysis). Some of the top industry analysts are also close friends of mine, and I’ve talked with them about this trend.
Secondly, industry analysts’ share of voice has much more competition thanks to a lower barrier to publishing — ahem, BLOGS, for example! There are more voices of authority. A smart individual NOT affiliated with an analyst firm can offer analysis equally as valuable as an individual WITH an analyst firm, and the market will rate their public authority accordingly.
Thirdly, as alluded to above, the value of most syndicated analyst products on the publishing end (reports, databases and programming) are becoming diluted thanks to smart people who self-publish their work for free online. Additionally, digital aggregators like Google and manual ones like eMarketer are lowering the price threshold (in many cases to free) and forcing industry analyst firms to redefine their core value proposition and subsequent monetization.
It’s important to note the recent Web and technology boom, because it is masking the long-term challenges facing the subscription-publishing side of the analyst business, while also bolstering the events and custom-consulting gigs. I suppose the custom-consulting side will tend to grow more, while the publishing side will become more of a marketing value, or even turn ad-supported. How many industry analysts give away massive value simply by openly publishing (again, blogs) or participating on the public speaking circuit (where value tends to get archived openly)? To maintain awareness and perceived credibility, I believe industry analysts have no choice but to openly publish value — and increasingly so. To not be visible is to not matter.
But to compensate and move toward higher-margin custom-consulting revenue streams — and away from the syndicated — is to make one’s self more susceptible to the special interest of individual, cash-in-hand masters. As a result, the bar for transparency will rise in analyst firms’ attempt to maintain their public “objective authority” personas.
Indeed, it will be interesting to see what becomes of the industry-analyst industry.
Thanks for bringing us the news – ethics and integrity must come first.
At my former employer we did the Aberdeen survey sponsorship and also subscribed to the advisory service. This was part of our AR-Sales Partnership program, where AR and field sales force worked closely together.
The survey was pretty much set and we could only contribute a couple of questions. Maybe we were naive, but we did not try to slant the questions to make us shine. Rather we were thinking about the data we would get that would cement the relationship with field sales. Alas, the experiment was not successful as we got nearly no leads from the effort. We did not revew, but felt it was a good learning experience.
BTW, Aberdeen changed its business model before Harte-Hank bought it. In 2003 the then investors removed the CEO/Founder and hired Jamie Benard. Jamie got rid of more than half of the analysts — those wedded to the old business model. He then hired some experienced analysts, including some of my former Gartner colleagues. Aberdeen then focused on fact-based research (facts!, what a novel concept)
BTW, I linked to this discussion at Reading List for January 30, 2008
Carter and Max
Thanks for your great comments. Aberdeen will always be in the unfortunate position in that they have been found guilty once. if anything they will need to be more open, honest and refuse any form of ‘research’ that could question their integrity,
Hi Jonny
FYI, I’ve just blogged on the subject of Analyst Ethics over at the IIAR blog – http://iiar.wordpress.com/2008/03/07/ethics-and-independence-among-industry-analysts/
Cheers
David