I’ve been in New York this week discussing the Analyst Value Survey with both Kea clients and industry analysts. The 2017 report will be available early in January, but the responses show that many users of analysts’ services are reaching out to more firms than before, and are gathering quite uneven value.
Firstly, the good news is that many users of analyst firms are gaining more value from analyst firms. They are typically using more firms, and some are doing so because they are increasing frustrated with the quality of analyst insight. Certainly the established niche firms are more respected and more valued. However, the established and conservative research methods of the larger firms means that their views can seem unoriginal, backward-looking, convergent, commodified and perhaps less insightful than those of niche firms. While the credibility of new entrants is both highly uneven and hard to ascertain, the competitive pressure is apparent. Social media, content marketing and direct email allow new firms to put the established analyst firms under pressure.
Second, because analysts’ users are under more pressure to prove value and cut costs, less objective analyst firms may struggle to get premium fees. The old ‘insurance company’ pattern, where people felt obliged to subscribe for one reason or another, is slipping away. Clients are demanding more value from their analyst firms. More buyers are using in-house resources, crowd-sourced insight and free content from firms like McKinsey, to reduce their dependency on external advisory firms. Companies that reduce their investment in analysts seem cynical about the commercial ties of analysts and fears about analysts’ objectivity. In particular, vendors report that although analysts are more flexible and supportive with co-marketing and market development projects, that paradoxically erodes vendors confidence in analysts even if it leads to more vendor revenue. Apparent conflicts of interest undermine both the demand-side and the supply-side executives’ faith in analyst firms.
Third, there’s more of a focus on strategic relationships. Analysts’ clients tell us they need analysts to develop comprehensive insight for specific business challenges, from high-level strategic advice to granular guidance on designing and managing high-performance contracts. They want more influence over, and insight into, the future research plans of the analysts they subscribe to. Some vendors, in particular, complain that analysts are too backward-looking and risk-averse to discuss still-emerging trends and future opportunities. Others, especially clients of Gartner, say that analysts can be too hard to do business with and their insight is too fragmented.