Analysts firms are less vertical than the vendors

Few analysts following high-technology industries tend to follow vertical markets, mainly because there’s very little verticalized technology. For example, the construction market is perhaps the largest single buyer of project management software. Mostly, such software has generic functionality, so the analysts don’t need to focus on just one vertical market. There is specialist construction software, but these are often easily followed by analysts following horizontal technologies, such as accounting, ERP and project management.

Each large vertical market is, by definition, a huge market, but analyst impact on it not always verticalized. To give you an idea, take a look at ARchitect Express. That’s the single-seat AR contact management system available only from Kea Company. Out of almost eight thousand active analysts, “insurance” is in the profile of fewer than 100 analysts, and “hospitality” is in that of seven. Clients in these industries are rarely using analysts who are focused only on their vertical market.

A resulting issue for AR professionals is often this: providers of technology solutions often organise their sales force and even product managers vertically. As a consequence, their spokespeople are most comfortable speaking about the vertical applications of the vendors’ technology. But, for example, what happens if the analysts are not vertical? For example, what if your firm has vertical solutions for business intelligence, but if the majority analysts are still looking at business intelligence solutions across all verticals? Then the vendor has a choice: either focus on the small number of vertical analysts or learn to speak to the analysts’ non-vertical concerns.

This is a choice with strategic implications, and it’s a hard one. It’s strategic because many of the analysts who follow verticals are in analyst firms that serve vendors more than they serve end-users. It’s also a hard choice because those vendor-funded analysts firms might more likely to write favourably as a result of a briefing. There are also exceptions, such as the telecoms industry where analysts have a substantial impact on regulators and operators.

Astonishingly, many vendors choose the route of focussing on vertical analysts, which prevents them from connecting seriously with the majority of influencers, who will hold most of the analyst industry’s influence on their clients. Many firms take the worst option: Speak about top verticals only (say finance, retail and energy), and so talk about the rather eternal issues in several vertical, which won’t interest any individual analyst, while missing out on bigger issues like data visualisation or information security.

Whether or not an analyst firm has an analyst in a particular vertical, vendors should consider which analyst at the firm is most likely to get passed an inquiry from a client with the problem that the vendor aims to solve. For example, a Mexican bank with an HR BPO challenge might be given to a banking analyst, an HR analyst, a BPO analyst or a Spanish-speaking analyst who follows quite different technologies. AR managers need to react to that reality, even if that means forcing spokespeople into less comfortable conversations.

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