In a discussion at the Informatics Forum at the University of Edinburgh on September 19, Efrem Mallach outlined his 40 years in the industry to a seminar room crowded with technology researchers. The university is Europe’s largest centre for IT research.
Efrem’s second job was in Honeywell; he ended up as a manager of competitive analysis. In that role he read reports and developed a deep understanding of the IT analyst community. That community developed quickly in those decades, IDC started in the 1960s with the goal of tracking every computer installation in the world. Gartner thought that there would be more people interesting in buying analysis.
All analyst firms found they were able to add real insight to the market, for many reasons. One interesting example is that vendors can admit weaknesses to vendors, but they can’t admin them in the marketplace to clients.
In the early 1990s; Efrem taught full-time at Boston College and then moved to the University of Massachussets. In academia, it was very possible to not really speak with end users. He tried consulting, not only to supplement his income, but also in order to expose himself to what what happening in the IS world. He ended up doing a lot of vendor selection work, which meant he spoke to vendors. Some understood the role of consultants; other saw him as an interloper. Vendors who supported him got the recommendation. He’d say: if you get rid of me then only someone even riskier will come in. They started to use him to move towards better consultant and analyst relations in the mid-1980s (Efrem added that consultants serve one client facing many technologies, most analysts focused on a single technology, and how that might apply to many clients.
Now we see analyst firms strengthening their consulting businesses, which are rather autonomous from their research work. In house consultants are varying in the degree to which they are constrained by analysts’ research.
Analysts are as specialised as they can be while still having enough to do to keep themselves busy.
Efrem also outlines the four types of analysts:
– Those who have a set agenda. This allows them to plan ahead, but they risk being preempted.
– Those who follow the market: they are led by trends.
– Those who focus on numbers. A great example is those who produce scheduled market sizing reports, which encourages vendors to have clear policies about sharing information with analysts.
– Those who combine these models, such as Gartner. Efrem stressed the role of charts like the Magic Quadrant which allows both analysts and their clients to structure the end of the market.
Efrem quickly started writing about AR; both journal articles and a book, which is now in his third edition. At that time, analyst relations consulting was only Efrem. Wang Labs was an early contact. One of Wang’s most inspired inventions was helping multiplication and division by using logarithms; his machines produced 2*2 as 3 followed by 14 decimal 9s. So then they started rounding up and moving into local area network word processing. Tim Sloan directed analyst relations there. Dr Wang cared about quality, so he was charged with managing the quality of the AR function. They surveyed AR people to find out how happy they were with Wang Lab’s support. They didn’t have enough money for evaluation, so they suggested running it as a multi-client study. Three clients each paid half of the fees, to speak with dozens of analysts to evaluate Wang and its competitors like NCR. In the second year, four clients came on board. Amdahl offered IBM-compatible computing, 20% faster and 10% cheaper than IBM, as did Hitachi. Their AR manager decided to also go into the same AR consulting business: so they formed Kensington Group.
The studies expanded over the next decade into software, telecommunications and services. He also started organising forums. He recalled the Kensington event when Hitachi’s AR manager sat nervously opposite his arch rival at IBM, only to become close colleagues the following day.
Efrem’s firm organised 2 or 3 forums a year (East Coast, West Coast, London: generally 20 to 75 people [75 was too many]). 100% were AR people: no-one else could attend. They wanted people to be able to speak freely, even if we had analysts as occasional speakers it was felt they might hamper the discussion. At this year’s AR Forum it seemed that having those analyst sponsors in the room didn’t change the discussion or make anyone uncomfortable.
Now there are several analysts and perhaps a thousand full-time AR people. Managing the process is complex: agencies are part of the mix, with the trade-off what while AR is often more systematic with an agency, the vendor itself is working through an intermediary who partially owns the relationship. The background of AR people has always varied: Sam Albert, the AR person, moved to being an analyst.
Now there are new influencers: there are over a thousand analyst blogs, looking at every aspect of the industry, and analyst insight is available through many channels.
There was a fascinating concluding discussion around the famous IDC Itanium forecast: optimistic forecasts are great for business, and bad ones can have a chilling effect on markets.