Many analyst relations professionals have misunderstood the implications of last week’s lay-offs at Yankee Group. Yankee Group has ended coverage of a number of technologies (generally more mature ones), and laid off analysts covering areas with less customer demand, in order to build research strength in its core field of ubiquitous connectivity.

The scale of the redundancies has been overstated, but it’s still significant. Carter reported there were 82 analysts at Yankee prior to the lay-offs; that’s a greatly inflated figure which suggests 45 redundancies. Yankee’s own figures say that analyst numbers have fallen two-fifths since October, from 63 analysts to 37. Lighthouse’s AR Intranet reported 57 analysts at Yankee in August 2008, which suggests around 20 staff are being laid off.

What is happening at Yankee is pretty normal, especially in a recession. There’s declining client demand for many coverage areas (especially maturing and legacy ones), and analyst firms will take resources away from those areas in order to boost profits. And, of course, Yankee is adding staff in core research areas, including Ashvin and another hire on the research side happening later this month.  As with every analyst house, Yankee is trying to look earlier in the Technology Adoption Lifecycle to identify more strategic, game-changing and higher-growth technology areas.

One potential benefit to Yankee is that tracking earlier technologies means they can have a research team that is less globally distributed. It’s ‘anywhere’ focus means that clients are buying from Yankee to get information that is increasingly geography-neutral. Clients will be happier with a ‘horizontal’ technology specialist rather than someone with the regional insight needed for more mature markets.

Naturally, Yankee will continue to offer regional insight. Yankee can develop global survey samples, and ask its analysts to cover global beats.There’s a good example of that this week: Yankee’s launching a study on the ‘anywhere economy’ which talks about general adoption patterns, but also makes observations about which national markets seem to be more, or less, engaged by the ‘anywhere’ approach.

Of course, this must reflect what its clients are asking – and paying – Yankee to do. Clients express a preference between local insight and global overviews – and Yankee will follow clients’ money.  Needless to say, the result of these changes will be a boost to Yankee’s profitability.

As a result, we are also sceptical about reports of impending purchase of Yankee (I’ll bet $1000 that it won’t be bought this year; offer open for the next week if you want to take it up). It’s a couple of years since Yankee bought Transmedia, and we think it’s more likely that Yankee looks for further ways to invest in order to add value to the firm’s clients.

One obvious way to develop the firm’s value is to better understand the way that clients’ use of analyst firms is changing. Users of analyst research are under increasing time pressure. They have less time to read research and need more responsive analyst firms. It needs to be easier to read esearch. Executive summaries need to precis reports, not open them. Analysts need to be more responsive to clients needs. As it happens, we think Yankee is a little better at being responsive than many other analyst firms (That said, the firm still needs to be clearer with clients on who has left, what is happening with their coverage areas, what is happening with repeated, scheduled research).

However, there’s one set of clients who will remain very unhappy: Analyst Relations managers, especially those who promote the maturing technologies that Yankee has dropped coverage of. Since Yankee is now much smaller, it will look less credible and relevant. Some service providers are communicating less with Yankee, especially those who can’t get the visibility they want on when and how Yankee is publishing information. AR managers will find it harder to fill their executives’ diaries at Yankee (both because of ‘supply’ of analysts time and ‘demand from executives) and will look for coverage at other firms.

However, the reality is that those professionals need also to pause and reflect: should they be reading the writing on the wall? Analysts’ interest declines in technologies that become more mature, less indicative of change, less risky and better known. If your technology is moving towards legacy status, then analysts following that solution will become less important to potential buyers, and will decline in number.

PS For an update on this 2008 article, read this report from 2013.