Industry analysts and the IT decision cycle

Just how far do analyst firms and their insights reach across the market?

Published/updated: January 2015

By Dale Vile

Industry analysts provide information, insights and guidance to help technology buyers and sellers make more informed and successful decisions. But what does this translate to in practice, and how far does analyst activity reach into the mainstream business community?

Analysts focus and engage in a variety of ways

Some analysts, such as Freeform Dynamics, focus on ’upstream’ decision-making activity. The objective here is to help buyers understand industry developments, set direction, prioritise investments, then go on to crystallise requirements and define selection criteria for feeding into the procurement process. This is an incredibly important role as mind-sets formed and decisions taken early on in the investment cycle have a huge impact down the line as buyers get into procurement specifics.

Most people, however, are more familiar with the ’downstream’ activities of industry analysts, largely because of prominent tools such as the Gartner ’magic quadrant’ that operate at this later stage (long-listing onwards). IT vendors also focus a great deal on the role of analysts at this stage because it is the point at which they are usually pitted directly against their competition (even though a decision taken upstream may mean an opportunity never materialises of the right ’shape’ for them to sell into).

With a few exceptions, industry analyst firms also help IT vendors take their solutions to market effectively. Activity here can range from services to help clients understand the market, assess opportunity, segment prospective buyers, and define or refine solutions and propositions that connect well with the target audience.

Reach of analyst services and content

It is beyond the scope of this article to go into the full range of mechanisms and channels through which analyst firms engage with their own respective audiences. At the highest level, however, we can distinguish between commercial services consumed by clients who pay for them directly (e.g. on a subscription basis), and so-called ’free-to-view’ content, typically funded through IT vendor commissions or sponsorship, or simply made available on a loss-leader basis.

In practice, it is not uncommon for a single firm to deliver both commercial services and free-to-view content, and there are advantages and disadvantages to each. Commercial services, for example, often include a one-to-one advisory element, through which specific clients receive guidance and support on their particular requirements from an individual analyst. This potentially increases their impact, but the need for money to explicitly change hands inherently limits their reach (as many find it hard to justify the expense). By contrast, free-to-view content delivered on a one-to-many basis is by definition more generic and open to the risk of sponsor bias (unless rigorous controls are in place such as those implemented by Freeform Dynamics). The upside is that when content is free at the point of consumption, it on average reaches around three or four times the number of decision-makers, recommenders and influencers (Figure 1).

Figure 1: Analyst reach into the IT decision cycle compared to other key inputs

Click/tap to see full graphic

The data we are looking at here is based on feedback from 1,613 respondents declaring themselves to be decision-makers, recommenders or influencers during an online research study completed in January 2015 (click on the chart for a full-sized annotated version). Further notes on the methodology used are given in the footnote at the end of this article for those who are interested.

In the meantime, the chart tells us that analyst input is directly and consciously consumed by between 3 and 4 out of every 10 people involved in IT procurement in organisations of all sizes. This alone underlines the importance of vendors engaging effectively with industry analysts in a way that’s often highlighted by industry groups such as the Institute of Industry Analyst Relations (IIAR). But there are other not-so-obvious points to consider that accentuate the imperative.

Looking behind the figures

Some might raise an eyebrow at the finding that only one in six of those involved in IT procurement in an Enterprise context consume commercial analyst services. While such services, which are not cheap and are often sold on a ’per seat’ subscription basis, only reach a minority of decision-makers in the market overall, however, this tends to map onto the most important subset of senior people across a broad range of major accounts - i.e. those (in each account) driving larger, more strategic decisions. If you work in a vendor environment and are not tuned into what’s going on here, you could end up with some unpleasant surprises as analysts nudge big deals towards your competitors.

The other thing we need to remember is that analysts reach their audiences indirectly as well as directly. At Freeform Dynamics, for example, we maintain strong relationships with editors and journalists in the mainstream press, and are constantly exchanging views and ideas with that community. We also have a close commercial relationship with The Register and much of our output reaches that 9 million strong readership without many even realising they are consuming analyst content (because it is blended seamlessly into the site). Other firms maintain their own relationships within the broader influencer ecosystem and exploit their own set of partnerships. The point is that analyst reach and influence is almost certainly much wider than that suggested by the numbers relating to conscious direct consumption.

The data we have been discussing clearly has limitations (as outlined in the footnote), but given the dearth of research in this space, it does shed some light on the role of analysts in supporting buyers, and particularly the importance of free-to-view content to reach broader audiences. But what does the research have to tell us about how analysts can support their vendor clients?

Leveraging analysts in the marketing and sales cycle

Apart from consulting activity and vendor variants of subscription services, analysts can help vendors connect with customers and prospects more effectively through mechanisms such as digital content commissioning or sponsorship. While some commentators in AR circles look down their noses at such services (how can the output possibly be taken seriously as independent insights and guidance?), it is possible to produce high quality objective material if the right degree of professionalism and rigour is applied. And, quite frankly, there really is a huge need for research, papers, articles, webcasts and so on that connect with buyers more effectively than a lot of vendor collateral is able to do directly.

With this in mind, it was no surprise to us to see free-to-view analyst driven market research (which is typically sponsored by vendors) reaching over four times the audience of vendor-driven surveys, e.g. in which a generic market research agency has executed a study under the vendor’s control (Figure 2).

Figure 2: Analyst research and content services in context

Click/tap to see full graphic

(Again, click on the chart for a full-sized annotated version).

In case you are wondering, the two free-to-view options on this chart are simply a breakout of the overall free-to-view content source shown in Figure 1. In practice these two work hand-in-hand, e.g. when we conduct a sponsored research study at Freeform Dynamics, we publicise it through commentary and discussion on mainstream news sites, blogs and other social media (hence including the ’General news and content from web’ source again for reference).

The main takeaway here is that an analyst firm with a credible independent brand and a progressive approach to digital engagement can help IT vendors to significantly broaden the reach and impact of their marketing activity. And when it comes to commissioned or sponsored research, working with generic agencies might save a few pounds, euros or dollars, but it is false economy leading to a much lower ROI. The irony is that all too often, vendors end up skimping on the research element, getting little more than a few press headlines in a single news cycle, then commissioning an analyst to write a more credible paper on the same topic for use in the sales cycle.

Final thoughts

While the research we have been discussing by no means delivers the definitive view on the role of analysts in the IT marketplace, it does provide some basic data that underlines the imperative for vendors to engage with analysts objectively and effectively. Lots of consulting firms and agencies exist that can help with this if you work in a vendor environment and know you need to get smarter in this space. A good place to start is with the IIAR. You can get a feel for who’s who from some of the great discussions on that site.

If you have questions on the research in the meantime, feel free to contact me. You can find my details here.

Footnote on research methodology: Data was gathered via The Register IT news site, specifically during its annual reader profiling survey, which is one of the many studies Freeform Dynamics executes with this audience each year. It’s worth noting that the total study sample was 4,094, but 2,481 respondents said they weren’t involved in IT decision making at all, so were excluded from the charts presented in this article. The advantage of this particular study is that any self-selection skew towards those predisposed to engage analysts will be minimal as analyst-related questions formed a tiny component of the overall content and were buried deep in the survey questionnaire. As with most larger-scale online studies, however, we are relying on self-declaration, and it’s reasonable to assume that some respondents may have inflated their own level of importance. Having said this, experience over the last decade with The Register readership has shown this to be a minor factor; after taking self-selection skew into account, results from this source are generally consistent with more rigorously controlled research based on interviews with highly qualified/verified samples of senior respondents. Furthermore, the ratio of those declaring involvement versus no involvement in procurement seems reasonable given the level of delegation that takes place in IT departments in relation to operational and project-level decision-making. Contrary to the misconception that often exists in marketing circles, IT procurement doesn’t generally revolve around the CIO - a wide range of people are involved in defining requirements, evaluating options and tabling business cases and proposals for sign-off. It is important to consider the role of industry analysts in this broader decision-making context.

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