Software CEO: Don’t hire the analysts until they clean up

Writing on the Influencer Relations website, a veteran software CEO has appealed for industry analysts to clean up conflicts of interest, and for customers to not buy from firms who do not. Kyield CEO and AI expert Mark Montgomery left the comment on the website’s most controversial post, which discusses the business model of Constellation Research and other analyst firms which serve both buyers and sellers of high technology solutions. Constellation is back in the news this month after its alliance with Digital Clarity Group last week, which coincided with the closure of Gigaom.

Well I learned more about the IT analyst model in this comment section than most of my years in business, dating back to about the time Microsoft was in NM. As a so-called vendor, I’ve had terrible experience with the pay to play model and pushed back hard enough to where it had an impact with leading publishers, customers, and governments. I made the decision at least in the early years not to pay anyone for content or reports (until such time that we have sufficient customer support to influence the market). For many years I was an independent consultant doing real heavy lifting–auditing companies, bankruptcy turn-arounds, and even a few fraud cases. I had trustworthy criminal lawyers if ever something happens. I saw violence as I arrived on scene multiple times, organized crime that wasn’t known by investors, secret families of sole proprietors unknown to heirs and all kinds of other not-terribly-fun situations. But there is no way whatsoever that I would have ever considered representing both a customer and vendor simultaneously as has become the norm apparently in IT. That is the definition of a corrupt process and industry that caused the downfall of Enron among many others. I have seen smoke where I think the relationships between IT vendors and analysts crosses the line. And it’s extremely unethical–should be illegal, to have life-long NDAs surrounding ethical issues on modeling, silencing former analysts or face a legal bully and possible bankruptcy. The relationships with some firms with customers is apparently fairly murky as well. This is not a healthy industry folks–not even. I’ve seen it before several times. Don’t be surprised to see some surprises. To all those attempting to change the industry–I have some take it or leave it advice. Follow a few very basic rules–fully disclose conflicts, provide public metrics on the business (some don’t at all while analysts criticize others for not doing so), do not represent clients that are competitors or vendor/customer in an advisory capacity simultaneously. Otherwise, frankly–I don’t think anyone should hire the firms for any reason until they clean it up. And those who are customers should have their governance committee review–I’ve suggested to several they do so. Good luck with this royal mess folks.

Do you think analysts cross the line? Should the industry boycott the analysts?

Duncan Chapple

Duncan Chapple is the preeminent consultant on optimising international analyst relations and the value created by analyst firms. As SageCircle research director, Chapple directs programs that assess and increase the business value of relationships with industry analysts and sourcing advisors.