Candid AR would aid Oracle’s sales

Candid AR

For each 1 percent more candid firms are with industry analysts, those analysts become 0.93% more likely to recommend them: almost a one-to-one ratio. That is the most striking finding in Kea Company’s Analyst Attitude Survey, which 150 analysts responded to in December 2015 and January 2016. However, the survey also shows that even firms that are traditionally not so candid, such as Oracle, can still punch above their weight.

The chart above compares two average scores that analysts in the survey gave to 12 major powerhouse vendors, including Dell, HPE, IBM, Microsoft, Oracle and SAP. Each dot is one of those firms. The higher up, the more likely to be recommended a firm is. The further right, the more candid the analysts find it to be.

While the trend line shows the correlation between being candid and winning analysts’ recommendations, there are also outliers. One of the most consistent outliers is Oracle (the dot furthest on the left-hand side). Interestingly, while Oracle’s candor is low, it’s above the trendline for winning recommendations. While Oracle could win more recommendations by being more candid, it’s apparently using other tactics to win recommendations (in particular, it’s much more proactive).

This chart has two big tactical suggestions for analyst relations managers in any firm.

  1. If you can be more candid, that’s probably the one thing that will most boost your recommendations
  2. If you can’t be much more candid (maybe you work for a firm as secretive as Apple or Google), then you might be able to learn some ways to compensate from companies that can get good recommendations without being highly candid. Oracle, for example, is very proactive.

Oracle is also in an unusual situation.

  • It is pretty candid with analysts it trusts, but it doesn’t feel IBM’s need to engage with almost all analysts or firms. Indeed, Oracle has cut off analysts.
  • Oracle’s scale means it is in an enormous number of Magic Quadrants: 78% as many as IBM, and more than peers like SAP, Microsoft, HP, Cisco, Fujitsu and Dell. In comparison, it’s in more than four times more MQs as powerhouse vendors like EMC, CA, CSC, Accenture and Symantec (to make up the rest of the dozen firms about which the most MQs have been written).
  • Oracle is much more aggressive than most firms and not afraid to get into a fight. It has historically escalated more than any other vendor (although the volume of escalations has decreased significantly over the past few years).
  • The goal of AR at Oracle is to get positive coverage in research. That has many consequences.

These parameters mean that Oracle has chosen to be faster, more private, more forceful and more discriminating with analysts. This goes some way to compensating for the firm’s lack of candour. Analysts find Oracle’s AR is exquisite once you are on “the list”. However, it produces risks for Oracle with the analysts who are not. One analyst told me that Oracle’s AR is useless because it never responds.  Another said, “I’d like to hear from them, but have no interaction with them at all.” That produces a reputational risk. Positive research doesn’t compensate for negative research, any more than sugar makes seawater less salty.

Furthermore, that risk spreads beyond Oracle. A controversial article written by an Oracle alumnus in that firm’s defence has had around 20,000 views but, sadly, reflects some of the confrontational and dismissive language about analysts which some people have picked up at Oracle. Oracle today, of course, would not attack analysts in public in this way. However, if it took the opportunity to defend the analysts and be more candid with them in future, then Oracle would benefit still further.

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