Third Parties’ Influence on Sales in the Enterprise Software Market

I’ve recently been discussing analyst relations with Hans Moonen, a researcher working for the Rotterdam School of Management.

Hans’ paper on Third Parties’ Influence on Sales in the Enterprise Software Market is a useful survey that discusses both the impact that analysts have on new product development and also discussed what happens when analysts attack. Hans’ survey of the literature picks up on Baan, the Dutch software giant I followed at Ovum. Hans’ paper has a lot to say about “the crucial role of 3rd parties have in this industry.”

“Important 3rd parties are consultancy firms (such as Deloitte & Touche, Cap Gemini Ernst & Young, and KPMG) and analysts-firms like the Gartner Group, Forrester, and AMR Research. Those companies influence the buying decision of their customers – the businesses searching for an enterprise software solution – by providing them advice. Consultancy firms are key in almost every implementation, since it does take specialized skills to properly implement a software package. It is not unusual to see costs of implementations rise immensely, whereas the costs for software get limited to only 10% of total implementation costs.

“Analysts do directly influence the perception potential buyers have of the software. This perception potential buyers have (of the enterprise software vendors and their products) does almost one-on-one match with lower or higher sales. See figure 2 [above] for an illustration of this circle of influence. Hence, that we see a relationship between the analysts’ advice and financial performance.”

The paper is available at http://www.hansmoonen.com.