451 alum Hecht: analyst is tech evangelist not vendor advocate

Lawrence Hecht, formerly an analyst at 451 Research/TheInfoPro, offers this response to Phil Fersht’s recent contribution to our post opposing Federal regulation of analysts.

Why would anyone want to be called a vendor advocate? How about technology evangelist? That connotes a point-of-view without saying that the advocate is beholden to the vendor’s interest.

I actually believe that B2B content marketing and evangelism is where most analysts get most of their money. I also believe that most consumers of analysis already assume that there is bias in white papers and analyst work. Interestingly, they continue to consume the research because it is still the best out there. My question is, how do we keep an economic incentive to do research without demanding purity? I know that community, association and peer-based research efforts are just as susceptible to bias as are analyst-based models. Furthermore, except for a few outstanding, specialized analysts, I don’t believe there is no room in the market for independent analysts that do not also do some work advocating technologies. My answer to this problem is at the bottom of this comment.

In previous posts, we’ve talked about the non-starter regulating analysts in a similar way to equity analysts. I agree that there are similar conflicts of interest issues with industry analysts. However, I think a better analogy is the regulation of political contributions. In politics, there is definitely pay-to-play. Donors get access for donating money. This puts the “poor” at a disadvantage but is not illegal as long as a politician doesn’t take any specific action. Unfortunately, it taints politicians who pretend to be unbiased and advocates for everyone. When politicians admit to supporting a specific constituency over another they lose some tepid support (customers) but gain legitimacy for putting their cards on the table.

I personally don’t care if a survey is done by a far-right or a far-left group. As long as the methodology is transparent and sound, that’s enough for me. In fact, I don’t care if an NGO takes donations from corporations as long as the donation is reported and they didn’t change their position because of the donation.

The analogy is similar to the analyst industry. An industry analyst can do great sponsored research. Yes, there is inherent conflicts of interest, but those can be reviewed by the buyer. An industry analyst is hopelessly biased if their take on a market changes to align with the interests of a vendor’s marketing team. However, just as a politician can take a contribution and not be corrupt, so can an analyst. The key is not to sell your soul.

Again, looking at the equity and political analyst analogies, it is important to realize what group is being protected and why. Equity analysis is regulated in an attempt to protect consumers who are assumed to be naive and information poor. Contrast that to political analysis, which is for the most part not regulated. Why? Because we assume that the public is pretty savvy and can decide issues for themselves.

So where does that leave state of industry analysis? Most tech buyers don’t trust analysts and haven’t for years. If anything, with an increase in information availability the tech buyers now know more about the market than the analysts do. That, rather than bias is the biggest reason inhibiting the analyst market.

In terms of regulation, it is a non-starter because it is a bad idea. To combat poor information, more information is needed. Tech buyers are sophisticated and can sort through the maze of reports. For companies that want to emphasize their impartiality, there is a market for that. For those folks, I recommend pooling together to create a “media watchdog” type organization that calls out bad actor analysts. Then, whenever a research company’s salesperson wants to contrast their independence to another company’s, they can point to the watchdog type website. This idea builds upon some ideas Ray Wang wrote about a few years ago about promoting a coordinated attempt to promote standards and to call out bad actors. Honestly, it would be in the best interest of IIAR as well as Gartner, Forrester and the rest to support these efforts. The big companies have enough wherewithal to adhere to standards. It is the independent analysts and consultants that are constantly being tempted to sell their soul to the devil.

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