What makes a tier 1 analyst?

27Apr07

Last week, I blogged about “what makes a tier 1 analyst house?” following Armadgeddon’s dismissive views of Canalys. This original article provided the catalyst for some quite thought provoking debate from Dom and Duncan. Personally I think I got the title wrong on my original piece as the focus should instead concentrate on the influence an individual analyst has and not purely what company do they work for.

The analysts that have the greatest influence tend to be those that speak with buyers directly (hence Gartner has such a large number of Tier 1s). Nor is it purely the large analyst houses that have the monopoly on dealing direct with end users. Many niche companies provide excellent value due to their understanding of a local geography or a vertical.

However, it would be naive to think that the analysts who are frequently referenced as experts within the media (something that Gartner is increasingly shying away from) do not have an impact on the buying cycle.

As AR professionals we need to move beyond looking at the big houses and instead consider the multitude of ways that a range of analysts influence a vendors sales function and create bespoke programmes for them. By all means keep the list small to just the ‘tier 1s’ but don’t only look at the usual suspects.

Duncan raised an interesting question regarding just how important media visibility is when tiering an analyst.

…Media influence is weak, and blog influence is very, very low — too small to measure — on business-scale buyers.

To take your examples of RedMonk and Quocirca: are they really ‘top tier’ firms. if they have little direct or indirect views on buyers, and mainly get their revenues from vendors?

On a ranking scale I would agree that those analysts that speak directly with enterprises have far more influence than those that rely on vendors for their income. But does that mean that “media influence is weak, and blog influence is very, very low” – absolutely not.

Top quoted analysts in the media (Jan - Mar 07, search: Microsoft)

Apollo Surveys have a great tool that allow you to measure an analysts influence in the market. Taking Microsoft as an example, the analysts that have been quoted the most in the past 3 months are:

1. David Bradshaw, Ovum
2. Bob Tarzey, Quocirca
3. Ed Barton, Screen Digest
19. Nick Jones, Gartner

Notice how Gartner are way down the list. This does not mean that their influence is less than Ovum’s but simply that Gartner analysts are less accessible than other firms.

If vendors did not believe that being referenced in the media or in blogs had a high level of importance then why are they all spending so much money in this space. PR would die-out overnight in favour of AR. We need to understand that if a companies target audience reads that newspaper/blog/journal then it is an important target for any marketing campaign.

With all this discussion about media influence a serious issue has been ignored. Many of the smaller analysts who rely on vendors for their money have an exceptionally large impact in the buying cycle purely because of the advice they give to vendors before products go-to-market. Smaller firms often provide local guidance on messaging that become the rock in which all external communications are derived.

I have been in one such meeting with a self-proclaimed tier 3 analyst that resulted in Bill Gates changing the way he referred to a product based on that analyst’s advice.

To summarise, in order to tier an analyst, we need to look at the individual and establish their influence based on:

1) Providing guidance to enterprise buyers
2) Visibility in the media and online world as experts on specific areas.
3) Guidance they can provide vendors with their messaging.

I am sure there are other areas I haven’t listed so please feel free to add your view.

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15 Responses to “What makes a tier 1 analyst?”

  1. Good Stuff Johnnie – I really like your Bill Gates example, but it goes even further than that. Its not just influence about how to refer to products, but development strategies more broadly.

    according to Duncan’s argument IDC is not top tier. perhaps he should reassess his methods if that is the case. do we have a lot of influence – of course we bloody do. If AR watchers continue to obsess about a hardcore either/or buy/sellside distinction they will are analysing last century’s Influence model. We’re moving to co-creation – SAP has Procter and Gamble people working on its campus at Palo Alto. The companies are *partners*. We’re here to drive *alignment* between vendors, service providers and vendors. RedMonk is set up to be an industry analyst firm that encourages new economic models around co-creation.

  2. another point is open source. its not about buying behaviours anymore- its about adoption behaviours. We’re experts in adoption becasue we talk to practitioners. You know what? A lot of those people don’t have budget and don’t buy products. but they do build solutions to business problems. Go into the city of London. It runs on technology like Mule, Spring, JBoss and Apache. There is no “buyer” there – just someone that downloaded something and built on top of it.

    I was talking to the head of market risk at a major City firm recently. they have just spent 18 months on a procurement process for an ESB and still havent decided, other than that IBM and Microsoft are out. Of course Gartner is part of that process. in the meantime they have been *using* the Mule ESB in production. This chap is someone *I* am more likely to influence.

    Often the buyer doesn’t even know what software is in use in their organisation.

    “business scale buyers” – what a lot of bollox.

  3. 3 Jonny

    You’ve made some excellent points concerning how an analyst presents guidance beyond simple product shortlists, they also advise on:
    1) Development strategies
    2) Technology adoption.

    The quote I especially like is:

    A lot of those people don’t have budget and don’t buy products. but they do build solutions to business problems

    Analysts speak to these people day-in, day-out and just like a guardian angel on their shoulder, provide the help, support and consultancy that enable them to make sound business decisions.

    What also stands out is the job title of the person you were speaking with – not IT but Head of Market Risk. Whilst anyone can use any open source solution and build on top of it, analysts will be demanded more and more to help companies get from A to B (and not the massive leap to Z).

  4. Great post Jonny, and also comments James. Having just come back from presenting 3 times at Infosec I am reminded of how difficult it can be to measure influence, and how difficult it can be to distinguish it from profile. I’ll be frank – I don’t think many analysts are actually as influential as they claim (or believe themselves, or are believed) to be. Conversations (literal, not bloggerised) with real customers have the most influence of all of course, orders of magnitude greater than a press quote, but many of the former will inevitably go unnoticed by those that measure. Its a tricky one – I wouldn’t like to say that such measurements are unimportant or wrong, but I do believe that the seasoned AR pro should be able to assess an analyst based on a number of such criteria, and not just the latest Apollo figures.

  5. Jonny,

    You’re really quite mistaken in the way you use the data from Apollo. You write “Apollo Surveys have a great tool that allow you to measure an analysts influence in the market.” No. It measures the profile of analysts in the media. However, media impact is higher on consumer produces, and lower on business buying.

    I’ll try to write more on this later in the week.

    Duncan.

  6. 6 Jonny

    Duncan

    You are right here – I should clarify. The Apollo survey measure influence in the media – this as a bi-product, helps to show influence in the market.

    The main point though is being lost with semantics.

    Influence is determined in ways more than just do they speak to customers (although this is a key one). Providing market insight and intelligence, testing and validating messages and scenarios as well as the media impact they have all contribute. We should not get hung up on media or customer-focus when reviewing the help an analyst can provide to a vendor.

  7. Jonny,

    I understand that here you are winding together analysts with influence over buyers and those with influence over sellers. I think that, from an analyst relations point of view, that is mistaken. Generally, analyst firms either get most of their revenues from users or from seller — few mave a mix that better than 80:20.

    Most analyst relations effort is wasted because AR professionals don’t focus on analysts who impact sales, and instead prioritise analysts that primarily work with their competitors. It’s essential to get hung up on that if we’re going to turn analyst relations from being a cost, into being a source of value.

    Duncan.

  8. 8 Jonny

    All points are valid.

    AR should focus on analysts that impact sales but not forget those that can help drive the strategy and messaging before we even get to that stage.

    In the case I mentioned earlier:

    I have been in one such meeting with a self-proclaimed tier 3 analyst that resulted in Bill Gates changing the way he referred to a product based on that analyst’s advice.

    …this change of selling tactic would have been lost if we only concentrated on analysts that speak directly to customers.

    As AR professionals we need to create bespoke programmes by individual and use them in the way they can best help the vendor. Some will be through Inquiry, some consultancy, some market intelligence, some pre-brief etc etc,

    It is only when we do this, that real value will be shown that will dramatically impact the bottom line.

  9. 9 David R

    Jonny, this is a great post (and not just because we seem to be pretty much agreed)!

    There are a variety of ways in which analysts add value to a business. And while sales is important, it’s not the only factor.

    You talk about media and messaging. I’d add the whole ‘industry buzz’ element too. Some companies have the “big mo” behind them – analysts contribute to that sense of momentum.

    It may be tough to measure the value of analysts – there’s a lot of soft elements at play – but we’re shooting ourselves in the foot if we under-estimate the value that they bring to the market.

  10. It seems to me that a multi-faceted approach is needed. We find that the vendors we talk to are looking a a range of different things. This may be direct influence on teh buying decision, it may be to raise awareness of the company brand, it may be for more internal strategic reasons. Different analyst houses are therefore correct at different times, as not everyone meets all of these criteria. Then, within each analyst house will be specific analysts, who may have specific skills.

    Now, for a vendor who is looking only at big ticket sales into the largest organisations, and wants a dierct impact on teh buyer, a Gartner approach may be best. But this just isn’t the case when you look at the lower end of teh market – we know that few SMBs pay for analyst reports – so what is the point of gaining a Gartner analyst recommendation if the target audience isn’t going to see it? For these vendors, it’s far more about how do they try to get on the shopping list – and this will be by being seen mentioned in the press and in the “free” analyst output.

    Yes, we have found that being a smaller analyst house means that we do come up against the problem of our brand not being as big as Gartner’s in the market. It hasn’t stopped us being successful – all we have done is make sure that we do not position ourselves as a Gartner, nor offer oursleves in direct competition to the types of services that a Gartner offers. As can be seen by the bouyant state of teh small analyst house market at the moment, we must be getting something right – and this, I believe is not just based on price, but on flexibility, on value for money, on independent viewpoints (yes, you can be independent and only have vendors as your customers), and in the experience that we bring to the game in a broad sense, rather than the highly focused views that the Big Analyst Houses bring in many cases.

    The role of AR houses, and of those measuring the AR markets, must be to ensure that a representative offering of services is made available to their customer base – and this will need a matrix as described above to ensure that the right analyst house and the right analyst is in front of the customer at the right time.

  11. I’ve been trying to put this together as a more formalised matrix, and think that I have a basic approach that may work (i.e. here’s something for everyone to shoot down)…

    I can’t see how to get a graphic into this thread, so here’s a description:

    Create a table. Across the columns, put the areas of influence that you are interested in – for example, Strategic thinking, Media influence, Buyer influence, “Buzz” creator, whatever. Down the columns, put the names of the analyst houses.

    On the intersects, fill the cell with red where you don’t believe that the analyst house has any capability, amber where there is some, and green where it is a core area. Where it is a specific analyst that has these skills, then put their name in teh box, otherwise leave it as the whole company.

    Obviously, a box may have multiple names in it – and thes box can be subdivided by colour so that the main analyst will be green with others in orange.

    This gives an immediate visualisation of the analyst community topology, one that is easily digestable by the vendor themselves. As has been said elsewhere, this would not be a once-done document – not only will it need to be dynamic over time, but obviously will need to be done for each vendor, and for each part of the vendor’s portfolio.

    It seems to be the best way of bringing together the 3 axis of influence in a simple way – the only other way is to use three dimensional paper?

    Thoughts?


  1. 1 tecosystems » links for 2007-07-17
  2. 2 The black hole of industry analysts… SMB « Technobabble 2.0
  3. 3 Influence: it all comes down to money « Technobabble 2.0
  4. 4 Why and how you should tier the analysts? « The IIAR Blog

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