Industry analysts could help their users to make better choices if they had diverse research lenses, for example looking more deeply into fundamental research, vertical markets, new business models, hidden champions, new categories and local markets. Non only do many analyst firms have convergent information collection methods, but they also have similar ways of analyzing and presenting information. As a result, they move like a herd to respond to similar inputs and have similar blind spots. Not only do users miss out on valuable alternative views but, as Neil Pollock recently exemplified, many providers of valuable solutions remain off the radar. One obvious solution is surprisingly absent: for these marginalized providers to work together to illuminate those blind spots to the most open-minded analysts, and thus benefit from the growing endorsement economy.
Pollock’s example is Scotland: Alongside unicorn start-ups like Skyscanner, Scotland has deep capacity in a range of technology areas including financial services and artificial intelligence. Scottish technology firms face a triple obstacle
- First, analyst firms focus on North America. Most analyst firms, and especially the largest, are headquartered in the US and even British analyst firms like NelsonHall gain most of their revenue in North America and understandably focus on that more than their domestic market. Research programs
- Second, information flows in more easily from North America. Analysts’ semi-structured data collection methods are especially open to data from North America and North American multinationals. North American providers are more likely to reach out to analysts and their clients are more likely to also be the clients of analyst firms, creating a feedback loop.
- Third, as a result, providers in other regions are more likely to sell to firms which are not clients of those firms, and are thus less likely not only to see analysts as vital influencers but also to be mentioned by analysts’ clients.
Drawing these three factors together, we can see that the viewpoint of many industry analysts is dramatically over-determined by the experience of the North American market.
There are many techniques that providers can use to counter this bias, but its systematic and reinforcing nature means that joint action by many players can be especially effective. It’s not only technology providers that have an interest in addressing analysts’ blind spots, but also investors, regional governments and intermediary organizations such as public relations firms and analyst relations consultancies.
One excellent example is the multi-vendor airport analyst day. This approach is to identify a range of solution providers in similar market spaces, for example Service-Oriented Architecture, and invite them to introduce themselves to an audience of analysts gathers at an international airport. In one day-long conference at Frankfurt’s international airport, for example, analysts have gained the opportunity to get a comprehensive picture of a market in a dialogue with several market participants in a single day and at the same location. The framework of the event includes time for individual discussions and briefings with the analysts, as well as informal networking. The Frankfurt airport day attracted more than a dozen analyst firms. Importantly, these included five US-headquartered firms (including Gartner, Forrester Research, IDC, Sageza Group, Strategy Partners) and nine European providers (such as Bloor Research, Experton Group, MWD Advisors, Ovum, PAC, Sievers Consulting and TechConsult). Similarly, the participating providers included both European providers (Cordys, IDS Scheer) and the local subsidiaries of international firms (HCL Technologies, Oracle).
The breadth of the event reflected not only the effort of German analyst relations professionals working together but also realities of the regional market. It gave international analysts new insight into local players and the features of the regional market. It also gave local analysts the opportunity to get a deeper and more integrated picture and thus made them better able to give insight and compete a little better with the quasi-monopoly of the US-headquartered firms. One of the participants wrote to me that:
“analysts do try hard to be open (and I personally try to favour local players when appropriate in client discussions) but the PR machine in North America is stronger. Events like the one you mention were a great way to get several vendors and analysts together to cover a topic area that was still quite new in those days. However, the outcome of an event is hard to measure other than in terms of awareness (and that can be pushed into the back of the memory by new PR activity or by client interactions where someone asks about the known vendors and you have to dredge your memory for ‘outside the box’ options. But 1-1 meetings and conversations DO stick in your head more than just PR so on balance I’d say the ‘airport’ idea is still a good one. Just pick the theme appropriately.”
Needless to say, such days are a small step forward and have to be part on ongoing relationship-building. As analyst firms start to offer other research lenses and gather different data, their insight will create new value for those organizations that currently don’t see value in the services of US-focussed analyst firms. Only if the analyst firms create a business model to serve the markets they ignore will they have a sustainable pressure to reverse their over-dependence on North American information.