Within the 30 leading analyst firms, Nucleus Research came top in the the 2014 Analyst Value Survey when it comes to value for money. Maybe it’s because Nucleus is under-pricing its services, but the firm’s unique focus on measuring return on investment, and its sponsorship of next week’s Analyst Relations Forum, led me to interview CEO Ian Campbell for the next in our Coffee Talk series of webinars I host for Kea Company (we’ll edit and post the webinar after the AR Forum).
Campbell says that a key piece of context for his firm’s success is that most CIO’s now report to CFOs, and that is also reflected in the big shift in analyst research generally from being quantitative, and more broadly structured around highly comparative and technical approaches, and towards qualitative approaches that are more multi-factored and complexly solve specific business cases.
Case studies are really at the heart of Nucleus: it has 482 published case studies, looking at what particular companies have gone through and what the payback was concretely. They have been looking at every continent and every industry, with almost every major vendors. You name it, Ian says: Nucleus has been looking into it. End user clients want to base their decisions by looking at firms similar to them, and looking at how they assess their way forward.
Nucleus doesn’t look at strategy, or at market shares: so a major part of the value for vendors from analysts firms is not offered by the firm. However, its quantitative approach spans numerous issues, such as helping saleforce.com to show how green its customers were when they moved over from in-house technology (90% greener). For strategy or market data, look elsewhere.
Nucleus is a reaction to a second major shift in the context: 15 years ago analysts had access to rarely public information information that was also hard to access and structure, even if you could obtain it. Now, much of that information is free on the internet. Nucleus is trying to increase the business value of analyst insight, by supporting leaders making often-risky business decisions through giving them tools to show what the value might be of their investments. An important part of that is showing that the risks might be in worst-case scenarios. That’s important because buyers are more cautious, and because 90% of influential buyers are outside IT. As a result, technologists in the wider business need more resources to help them select technology. That’s obviously accelerated by SaaS and cloud tools, where the support is done by the vendor rather than by internal IT.
These shifts in buying are also challenging for vendors and solution providers: how can they shift from explaining features that benefit IT into using proof points that show the business value: not just showing, for example, that smartphones unlock productivity but quantifying the benefit credibly? Such an approach also helps internal advocates, not only to speak to senior managers in the business’s language, but also to present outcomes in terms of clear financial outcomes. That’s advantageous for both vendors and for end-users looking to clarify benefits to their common senior stakeholders.
Nucleus works with a lot of AR people and finds them valuable, especially in terms of getting information smoothly, pro-actively and in context. The initial benefits of AR from working with Nucleus are pretty clear: it has a high media profile and Nucleus’s research helps amplify the messages of firms by focussing on how they deliver value.
That gives them a certain idea about when the right time is for early-stage firms to start speaking with analysts: Campbell advises companies to start speaking with analysts right from day one. That helps firms to modify their messages, focus their product development priorities, and to explain the benefits of solutions more clearly to internal stakeholders and to customers. A good research firm won’t expect you to be a client when you brief them: they are anxious to speak to new and interesting firms that reach out proactively. To do that well, vendors also need to focus on analysts that have the reach and the ethical reputation that’s needed to be taken seriously.
It’s also very important, says Campbell, to connect with the local analysts in the major markets. We are moving to a global economy, so Nucleus can work with clients in every continent from one base in Boston. Having analysts locally gives both vendors and end-users more insight, so we’re wondering what Nucleus can do to co-operate with analysts outside the US, or even hire some.
Of course the final question we had to ask Nucleus was: how could you measure the RoI of analyst relations? Looking at the influence of analysts in the sales process, and in the media, are metrics that are concrete enough to be measured. But it’s important to be cautious: many vendors over-focus on small numbers of analysts, and specific communities of end-users might be using different analyst firms.
But the final tip Campbell has for AR people is this: spend more time with sales people to better understand how analyst research is being used and how to modify the AR approach to better help analysts to produce research that’s useful for decision-makers.