The claim is based on four observations:
1] Around 18% of influencers are analysts. influencer50’s paper reports that industry analysts are on average 18% of those reported as influencers by technology buyers. However, it does not suggest whether this percentage is rising or falling. Without trend data, that number means little. For example, if the 18% of business that are the largest only use analysts, then that 18% would be more influential than all the others. The key issue is who advices the firms that spend the most on technology, and how deeply are these different advisers involved.
2] Outsell feels analyst influence was stronger in 1996. It also reports Outsell, Inc., as saying “Analyst experts will always have their place, but we don’t believe that their influence is as strong as it was 10 years ago, when they were the go-to people to network.” However, Outsell does not provide data to support its belief. Even if there were verifyable data, there are some specifics about Outsell’s approach which condition its data, as we have discussed. For example, it looks at core research sending, and not at advisory and consulting services. Outsell’s data also show that spending on analysts is rising continuously: that is hardly proof of their declining influence.
3] Santa Clara businesspeople rely less on magazines and analysts. It reports May 2003 research by the “Santa Clara Institute of Business”, cited by Pui Wing Tam in a June 2003 supplement to the Wall Street Journal Online, in which the percentage of influencers classified as “industry analysts, or trade or specialist magazines” had declined from 1996 to 2003. They tell me this is a reference to the Santa Clara University Business Index, which surveys alumni and advisors of Santa Clara University. However, influencer50 seem to be mistaken since the online data from the Santa Clara study do not include a question along these lines. Furthermore, the sample is both heavily concentrated in Santa Clara and will contain very few purchasers of enterprise-scale technology, if any. Factiva‘s WSJ archive does not contain the article to which they refer, but influencer50 have emailed me a copy of the article they found.
4] There are three very large analyst firms. It observes that there are only three analyst firms with broad influence. However, these firms are larger and more influential than they were. Furthermore, the analyst industry is one with low barriers to entry: The number of analyst firms is not a good guide to analyst influence. Let’s consider other measures, such as the revenue of those firms, the number of analysts, citations of analysts, and the degree to which analysts are involved in the sales pipeline: All of these trends point upwards.
Lighthouse’s research into these questions, in fact, shows no substantial rise or fall in analyst influence; just a modest upwards trend. The number of business buyers using analysts and analyst research has increased substantially, but analyst research found for free doesn’t seem to meet users’ needs very well. Companies that use analyst research are using analysts at more stages in the decision-making cycle, but they certainly use many other advisors as well. Very large firms, that buy the most, are using analysts more but small firms are rather likely to use analysts less.
The reality is always more humdrum than the headline. While we tip our hats to those who know how to spot a story, we also look forward to seeing if any verifyable data support the claim that analyst influence is falling.
P.S. I updated this post on October 4 and have added a post explaining how analysts set the tone for the whole industry.
P.P.S. I’ve asked influencer50, Santa Clara University and Pui Wing Tam if there’s anyway to see the findings, or even a summary, from this study. I’ll let you know if I get a positive reply.