Thanks to Efrem Mallach for flagging up an interesting new article: Matt Asay’s criticism of analysts’ failures at making accurate market predictions. Matt’s argument is that analysts are great at understanding the present and past, but they are weak at what clients pay analysts for – understanding the future. However, we feel that’s mistaken: there are different types of analysts, and most of them are not driven by forecasts.
As we discussed in our article on megamistakes, it’s only vendors who have the fantasy that analysts can predict the future. Luckily, that not the key task of most analysts. Analysts’ clients mainly want help with the actual challenges of today, most of which need currently-available solutions.
Matt’s picking up on some experiences shared back in March by Sam Lawrence, CMO at a software vendor who found that Gartner and Forrester analysts failed to explore and research the potential value that his firm could offer. The weakness in both Matt and Sam’s approach is their shared assumption that analysts’ core value to clients is thate they keep abreast of new IT developments and, therefore, analysts’ failure to do that is indicator of analysts’ lagging success. This assumption is one-sided (some companies do need brand-new solutions, but most do not) and is therefore mistaken as a generalisation. Forrester and Gartner, on whom Sam and Matt focus their comments, primarily serve business managers who want currently available, and proven, solutions. You can’t buy stuff that’s not on sale.
Of course some analysts do forecast, but there are different sorts of analysts. You can’t easily generalise about their research methods. Efrem Mallach explained this very well in his paper Get Ahead of Analysts: the four business modes of industry analysts (available here).
There are some buyers of analysts’ services who want forecasts, and reports of what’s new, more than anything else: vendors. Vendors’ thirst for numbers pressures analysts into bad quantitative forecasts. Both vendors and analysts need more honesty about how accurate forecasting can be, and that’s why we favour scenario-based research.
This gap between vendors marketers’ thirst for the new, on the one hand, and buyers’ appetite for proven solutions produces a number of complications. Everyone in the ICT sector has encountered product announcements for solutions that are not actually available; they become ‘generally available’ in a few months and (even then) actually go on sale months after that, especially outside the vendors’ domestic market. This produces the self-defeating issue for vendors that they stimulate demand that they cannot satisfy from early adopters. It also produces an issue for analysts who take the vendors at face value: the vendor might tell analysts that their software has a certain benefit, and the analyst might then repeat that to clients who find out the opposite when they try to buy that feature.
Most analyst relations professionals and other marketing specialists understand that what really sells a solution is proven success: potential clients want to hear from other clients about how the solution produced concrete value. But good case studies, client references and success stories are hard to source if the vendor organisation doesn’t have a good marketing culture. As a result, all the marketing machine has to work with is the flow of innovations. However, while analysts should and do keep an eye on market trends, most of their clients are interested in technology that’s already being widely adopted rather than that’s on the roadmap.
Yes v.much agree that “thirst for numbers pressures analysts into bad quantitative forecasts and we all need more honesty about how accurate forecasting can be”. And I endorse the Schnaars work and, as you point out, the value of scenario-based research. But how to put it all together? Humans won’t stop forecasting 😉 I have a book out – Future Savvy, Amacom Press, 2008 – that builds on the Schnaars work – but goes beyond it to be a guide to what forecasts can do, and what they can’t do, and why. I can provide a free evaluation copy to anyone / any group that will blog about it. If yes, pls let me know address to send it to. thanks, Adam m.07906 054848
As the level of market uncertainty increases, the importance of forecasts diminish. I work for an IT services company. For us, charting the future is about “insight” not “forecasts”. It is about the ability to identify the big long term bets, to spot the growth opportunities in a declining market, to understand the opportunities relative to our ability to deliver, and then being accountable for the recommendations you make. We don’t get that from any analyst out there today. They can contribute, but I “forecast” this will increasingly be an in-house, and potentially differentiating, capability.
Atos Origin is reputed to be largely a Gartner shop, so draw your own conclusions from Roger’s comment.
We believe that access to in-depth and informed analysis and insight, rather than “research notes”, is particularly important in these turbulent times.