Analyst firms should pay serious attention to the Institute of Industry Analyst Relations‘ (IIAR) new Tragic Quadrant. The TQ spotlights some upstart firms that have successfully won much greater mindshare with many AR managers than their firms have in the market. Analyst firms can boost their position in future editions of the TQ through being easier to work with, through increasing their profile on social media, and by appearing more open to discussing with and learning from vendors.
About the Tragic Quadrant
On June 8th, the IIAR published its first Tragic Quadrant. The TQ shows the perception, by around 60 vendors’ analyst relations professionals, of the sales impact, relevance and ease of interaction with 14 analyst firms. The results confirm two worrying findings from the 1,100 respondents to the Analyst Value Survey. First, vendors mistakenly give some companies credit for much more impact on sales than buyers tell us they have. Second, other companies with much greater influence on the market are absent.
The Tragic Quadrant is modest and, in the IIAR’s words, a “slightly cheeky” attempt to chart the most influential analyst firms. It fails to do that. As a comparison, the 2014 Analyst Value Survey (AVS) collected the responses of 450 users of analyst research in demand-side organisations, those which buy IT. When we asked those end-users that firms influence buying, they mention both companies that get into the TQ’s top 14 and many which do not. Everest and NelsonHall, for example, are highly rated by the demand-side in the AAS but are absent from the TQ. Also ignored are CXP Group, Aberdeen and ISG although end-users tell us those firms are influencing buyers notably. The IIAR’s survey, however, places analyst firms like Constellation, ESG, SMB and Ventana in their top 14, when they fail to get into the top 20 in the AAS question.
The principal reason the TQ fails to show accurately influence that AR people over-rate particular firms. While the survey design and execution could be improved, our warnings about IIAR surveys has been consistent over several years: don’t forget who took the survey. AR people will often tend to equate being easy to influence with being impactful, and they will tend to overlook analyst firms that do not actively develop business with AR managers.
It succeeds, however, in showing those analyst firms that have high mindshare with the AR managers that took the survey. The value for vendors in this chart is the size of the bubbles, which shows how easy the firms are to interact with: use this as a guide to understanding which firms are harder to crack.
The actual audience for the TQ should be the analyst firms. Everest and NelsonHall have every right to snigger over the inclusion of SMB and ESG, but they should be asking instead why they don’t have a higher profile in the AR community, especially in North America.
While the TQ is new, the ideas have been brewing for a while. The data come from a survey conducted irregularly over the last several years by the IIAR. The primary output is the Analyst of the Year award. The term Tragic Quadrant has been coined previously to refer to the Magic Quadrant ironically.
The article announcing the TQ credits Helen Chantry. Back in 2013, Chantry and I discussed the Analyst Value Survey and the KCG Mystical Box, which the TQ seems also to pay homage to. Helen wasn’t able to answer some questions I emailed her about the survey last year, but I’ve picked a few things up. The base of respondents is rather small: many IIAR members were invited to take part, but not all, and the survey was open for only a day or two. Some of the criteria are hard to grasp. The TQ segments firms into being ‘global’ and being ‘independent‘: only one firm is described as both although, as far as I can see, these words seem to have no identifiable meaning.
For the IIAR team that produced the survey, a key factor was the ease of interacting with analyst firms. They wrote that “analyst firms should monitor the ‘transactional tax’ they impose on AR people: if they raise the ‘interaction barrier’ too high while not providing sufficient coverage and not showing impact, their vendor information source might soon provide them only a partial view of the market (raising exhaustivity and fairness issues) or their vendor revenues might suffer too.”
Analyst firms need to pay attention to that notion, even if they don’t accept it. Partly this is a side-swipe at firms like Gartner whose requests for ever-increasing volumes of information don’t lead to any improvement in research quality or favourability. But it is in some way a representation of what is creating the unusual vision of the market shown in the TQ. How is it possible to leave off Everest and ISG and yet include Ventura and SMB? The answer must surely be in the ease of interaction. Probably those two firms are reaching more frequently to AR people and are adding value to the relationships they are building with AR people.
The bottom line
- The TQ repeats a finding of the AVS: the vendor community greatly misunderstands which firms are impacting on sales.
- AR professionals should not use this diagram to guide them on the impact or relevance of these firms. The Tragic Quadrant is misleading, incomplete and inaccurate.
- AR professionals should pay attention to the estimates that this chart makes of the relative ease of interacting with firms. Pad your plan for time to get through to these companies, and recover from them. Most importantly, please appreciate that a firm that is hard to work with is often much more influential and has demanding communications because of robust methods.
- If ESG can get into the IIAR’s top ten, then any firm with a couple of dozen analysts on Twitter can. Analyst firms should consider if they want to be a top performer on this chart’s future editions.
- Analyst Firms should understand that this shows the opinions of 60 or so AR pros. If they are an important group of stakeholders, you need to be adding more value to AR people and lubricating the interactions with them.