Is the day of the rock star analyst officially over?

There’s been a lot of backchannel lately regarding high profile analyst departures to vendor organizations, with Thomas Otter, Gartner’s hugely popular VP for Human Capital Management, hopping to SAP’s recent acquisition, SuccessFactors.

Naturally, SAP’s competitors are all freaking out because they’ve invested so much time and attention in Thomas, while Gartner can’t be happy as its clients shouldn’t care whether they’re buying Bill or Ben… they should be buying Gartner.

What’s worrying, is the recent succession of high-profile analyst stars making vendor moves, for example, Jim Holincheck’s switch from Gartner to Workday, Stephanie Moore from Forrester to Ameritas Technologies, Mickey North Rizza from Gartner to BravoSolution, and even one of HfS’ early stalwarts, Euan Davis, to Cognizant, as the latest examples.

Having worked in the big ticket analyst world myself with IDC and AMR (leading up to the Gartner acquisition), I can vividly recall the changing attitude of analyst firms towards their high profile analysts, who commanded top-dollar for their clients to have them on the end of the phone.  When I joined IDC as a mere child, the rock stars analysts were what made the firm – and the fledgling analysts looked to emulate them as they gained experience. Plus, the analyst firms tolerated them because they brought in the clients and created a lot of attention from media. The stars were their real differentiators.

It wasn’t until the last few years, with the advent of analyst blogs and the easy capability for smart analysts to nurture their digital infamy, that the big-ticket analyst firms turned against the rock-star model. They wanted their clients to pay to spend time with whatever analysts they chose to put in front of them – and if there was an analyst departure, they could quickly (and quietly) slot some other individual into that role to fill their place.  No-one should care, it’s all about the analyst firm brand, not the individual analyst, isn’t it?

Big Data... Cloud... Mobility.... will transform the enterprise

It’s my personal concern that the exodus of great individual analysts from the great analyst firms is symbolic of a slow death of the romance and intrigue of the industry analyst industry, as we once knew it.  The tech analyst industry grew up on great personalites and thought leaders, who thrived on innovation and the exciting changes technology was bringing to the world.  Today, the succession of turgid reports, many of which read like they are written by automated robo-analyst applications with the words Big Data, Cloud, Analytics, Mobility  and Transformation being spewed out at periodic moments, is killing research as we know it.

Here’s why the demise of the rock star analyst is depressing for the analyst industry:

1) Clients value relationships with individual analysts more than written research. People don’t have time to read more than a few paragraphs of research these days, and prefer to have the key insights presented as a few bullet points to accompany a live discussion with the analyst.  The watchword of the research sales pros these days is always “research sells, but relationships renew”.

2) People want to trust with whom they share their confidential information.  The best analysts are those who regularly talk to the customers of the vendors and can deliver real insights and opinions of their products and services.  The more a good analyst becomes intimate with the vendors, the more valuable the advice and validation that analyst can deliver to the vendor.  Moreover, the more a good analyst knows the vendors, the better they can inform the customers of software and services offerings.  That means clients need to have individual analysts they want to get to know and trust.

3) Analyst firms are caught in a Catch-22 between their corporate brands and their individual analyst brands. The paradox is that the handful of analysts who reach the status of being “good” quickly become rockstars and get whisked away to the rich vendors.  For example, it’s far more valuable for the likes of SAP to “own” Thomas Otter than to share him with their competitors. So the crux of the matter is, simply, that if the likes of Gartner et al. can’t (or simply do not want to) create an environment where their rockstar analysts can prosper and be happy for the bulk of their careers, then they may as well let them all leave and milk the robo-analyst model that is more scalable and easier to control.  However, if that means they will ultimately lose business because their clients aren’t satisfied with robo-analyst, they have a problem…

4) Rogue analysts of varying quality are setting up their own “boutiques”.  There are a host of individuals who have hung out their own shingles in recent years, and some are forging a living, based on the relationships they developed when they were in the big analyst shops.  While this creates some excitement, especially when a genuinely decent analyst starts putting out some good research and insight, there is also a host of average-to-mediocre “analysts” exploiting social media and vendor ignorance to publish shabby (and often incorrect) research that confuses the market place.  We live in an unregulated world where anyone can suddenly don an analyst cap and pose as some form of “expert”…

The Bottom-line: The information and research industry is experiencing a fundamental shift… surely the analyst firms will have to change their ways soon

However which way we look at it, the sizzle and anticipation when a new analyst report comes out is becoming a shadow of what it once was, and the levels of cynicism and negativity towards analysts are reaching an all time high.  What’s more, the overall desire from companies to read and digest many analyst research reports has dropped significantly in today’s information-crazy world.

So much data and insight is proliferating the Internet, the LinkedIn groups and other digital communities, that the value of many once-acclaimed analyst reports is simply not what it once was. Sadly, as long as the big-ticket analyst firms are milking their clients and making money, they are unlikely to change. However, research is a discretionary expenditure, and ultimately if the value is diminishing, so will the investment. If clients want to invest in relationships, they will ultimately take their money to those firms who can provide them…. or directly to those individual rockstars themselves, if they are still around.

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15 Comments

  1. Posted April 22, 2013 at 7:48 am | Permalink

    Video killed the radio star. And YouTube killed the video star.
    Relationships will always win the dollars and the day, but relationships are neither as scalable as robo-research, nor as easy for sales to pitch. Also, what constitutes a “relationship” is annoyingly subject to change.
    There aren’t any easy answers. However, navigating these shifts can be made easier through more strategic partnering with Analyst Relations pros. We can advise on how the demands and participants of high-value relationships are shifting on our end, and what analysts can do to remain rock stars in our stakeholders’ eyes.

  2. Stan
    Posted April 22, 2013 at 8:17 am | Permalink

    And, like wrinkled agers from Aerosmith and the Rolling Stones, when did any of these purported rock stars produce anything new of value? And how many turgid rock stars have shriveled once going from chief pontificator to marketing hack overshadowed by upstart tech CEO’s and other bombastic hedonists?

  3. Alan Christopher
    Posted April 22, 2013 at 9:16 am | Permalink

    Brilliant blog! As Gartner as co. look to squeeze as many dollars as they can out of their clients, the more they need to scale a robotic offering across as many clients as possible.

    Rock stars just create problems – they have big egos and don’t scale well :)

    Alan Christopher

  4. Anon
    Posted April 22, 2013 at 9:52 am | Permalink

    Thank you for writing this, Phil, it’s about time someone aired the robotic world analyst firms have fallen into. Once you take away the personalities, what have we left? Briefings are getting increasingly boring, noone’s sharing anything interesting and the value we’re getting has slipped a lot in recent years. We don’t have anything like the relationships we used to with analysts.

    Hopefully you can help change this trend?

  5. Jeff
    Posted April 22, 2013 at 10:22 am | Permalink

    Phil,

    Best article I have read on the analyst business. Sadly, like quality tech journalism, the research industry seems to be in an inexorable decline. I wish the firms would hire some real personalities who can drive new thinking and ideas – but it seems they are reluctant to risk their brands these days,

    Jeff

  6. Richard
    Posted April 22, 2013 at 2:09 pm | Permalink

    Hey Phil, interesting take on the Analyst Biz. I’d also suggest that much of what is driving this change is a) the failed business model of the entire Analyst business, and b) smarter customers. It’s no secret that throughout time (at least my 25 years in the Outsourcing industry), there have been precious few analysts that had ANY experience in the business that they covered, or, for that matter, much original thinking. Many made their “nut” from suppliers who were hoping to get favorable reviews and recommendations, rather than any true insights. At this point, that model has played out. There were always a FEW analysts that really knew their stuff, and worked hard to learn what everyone in their industry was doing, but those gems have been few and far between.

    Next, the buyers are at once “smarter”, as there is more information commonly available on the internet, and less likely to feel pressure to spend a lot of money on research of questionable value, given corporate budgets these days. It used to be that the IT director/CIO spent a LOT of money on research subscriptions to validate their decisions (even though the analysts were often dead wrong in their trends and beliefs). These expenditures are now under close scrutiny, and the new breed of technology leaders don’t need this type of affirmation. To which I say GOOD!

    There are other nuances to this whole discussion, but the question now is; how does any analyst firm remain relevant and provide TRUE value to its intended audience?? Cheers!!

  7. Posted April 22, 2013 at 5:00 pm | Permalink

    Hey Phil,

    Nice title, reminded me of my my own post Analyst firms: rock star bands or record label dinosaurs?.

    In a nutshell, I was saying “it’s not the research, stupid, it’s all about the experience”. You make the point that experience is provided by experienced rock stars.

    Can’t agree more. Firms hiring grads with no “real life” experience struggle to provide that experience. Research firms clients tell me the same: reading report is interesting but networking and talking to analysts take it to the nth level.

    But that doesn’t agree with an accountant view of the world, which is a all about “leverage”, i.e. milking as much as possible from repeatable deliverables. And experience is hard to scale.

  8. Spinal Tap
    Posted April 23, 2013 at 7:57 am | Permalink

    This article is so, so true. While there are some rock stars we can be relieved to see put out to pasture, you hit on a very good point in your article: where are the good analysts, the ones with their fingers on the pulse, the ones who inspire with their insight and enthusiasm? Clients do not want this treadmill of mediocrity.

    There’s a reason this exodus has been happening – vendors pay more and make the analysts feel appreciated, as opposed to putting them in a box and told to avoid rocking the boat. Unless the large analyst firms address their internal cultures to develop the rockstars of the future, the analyst industry is headed on one direction and it’s not “up”.

  9. John
    Posted April 23, 2013 at 8:51 am | Permalink

    Phil – a fine blog!

    One reason you overlooked is the fact that IT leadership has less consulting budget these days, so relies increasingly on Gartner to do “more themselves”. Plus, Gartner consulting revenues are flat, so you can safely assume IT users are using their Gartner inquiry lines very heavily, hence the continual revenue growth.

    While this is good news for Garter research in the short term, this could also be their buggest threat as the large IT consulting firms will look to get in on the action. I notice firms such as Deloitte are looking increasingly at subscription models for their IT clients,

    John

  10. Phil Fersht
    Posted April 23, 2013 at 11:19 am | Permalink

    @alyssa: we certainly need good analyst relations pros to create and manage rock star relationships! I don’t think it’s any coincidence that the shrinking of the pool of good analyst relations pros is directly related to the robotization of research ;)

  11. Phil Fersht
    Posted April 23, 2013 at 11:25 am | Permalink

    @ludovic: are the “right” people who these analyst firms should be hiring just too expensive, or not the right personality? Or does these firms think they have the right people already?

  12. Phil Fersht
    Posted April 23, 2013 at 12:10 pm | Permalink

    @John: A very astute observation, and I have seen this evolving myself. You have to hand it go Gartner for creating an almost-monopolistic situation for themselves with IT research – they are in the perfect position to mop up all this new demand where their clients can simply make incremental increases to their current contracts.

    PF

  13. Posted April 26, 2013 at 11:50 am | Permalink

    Phil-

    I really liked this post. My experience with the firms I have represented with the analyst community (HP & EDS) have found the most value in analysts that have broad & deep IT industry experience, an ability to share unique context and perspective on evolving industry trends & technologies and the ability to develop & maintain relationships with senior corporate leaders. I too have noticed that as experienced analysts with these characteristics leave the analyst ranks, their firms aren’t replacing them with analysts having similar levels of experience. The resulting trend appears to be analyst firms providing more tactical rather than strategic advice which, quite frankly, decreases their value proposition because there are many other avenues for both vendors and end-user clients to get tactical insight. It also makes the firms vulnerable to disruptive market forces (meaning free or almost free written research) which leads to uncertainty about their long-term viability.

  14. John Leigh
    Posted May 10, 2013 at 7:02 am | Permalink

    Perhaps it’s a generation change. Rock star analysts thrived when buyer skills were low and vendor power was high. In this world short, charismatic interventions offered a perception of value.
    Not so now, when in mature markets companies may be on their third, fourth or tenth contract renewal. Now on the buy-side there’s the day to day grind of operations, the relentless pressure from end users and demands for better value from procurement specialists. The sell side is undifferentiated and performing mainly low-value work. Contracts are tight.
    Bringing a temperamental and demanding star into this situation actually makes little impact: neither side has space to change all that much. Long-term negotiation and skin in the game is required. The mammals have arrived and the dinosaurs are disappearing. Their time is over. Probably for the best.

  15. Phil Fersht
    Posted May 10, 2013 at 8:20 am | Permalink

    @John – I thought you were a rock star?
    :)

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