Shock, horror! Some vendors have bought the right to ”edit” analysts’ research…


Mark Smith is CEO, Ventana Research, and doesn't hold back…

Ventana Research CEO, Mark Smith, convincingly blogs that some major vendors actually have contracts with some analyst firms that give them rights to review, edit and approve research written about them.

Mark should know, having made third place in the analyst of the year in 2011 and boasting an impressive analyst resumé that spans SAP, META Group (Gartner) and Oracle, before starting his own successful analyst venture, Ventana Research, 10 years’ ago.  In his industry exposé, he claims:

The dirty secret is that some of the largest technology vendors have forced industry analyst firms to contractually agree to the right to review, edit and approve any written research that references their name or products before it is published.

So this means that some vendors actually have the right to alter, or even veto, analyst insight on them, if they don’t like it. I have no reason to believe why a veteran analyst of Mark’s standing and experience would make this claim if he did not have irrefutable evidence that it was true.

The fine line between influence and coercion

Having worked for some of the traditional research firms myself in my earlier career, I can recall the pressure to shower the top paying clients with praise and frequent coverage… “Phil – you need to write more about xxxx as the renewal is coming up soon” was the frequent request from sales. I rarely complied, unless there was actually something worth writing about.

However, it is the unwritten rule that several leading vendors have, for years, paid handsomely for analyst firm access, where the analysts are lavished with ego-stroking, first class airfares and marketing hype to write lots of nice things about them.  If anyone wants to challenge this fact, be my guest. Ask any vendor marketeers, analyst relations professionals etc, over a discreet bottle of wine, and some will proudly regale stories of how skilled they are at “influencing” certain analysts.  Many stake their reputations and careers on getting their firms praised in puffy reports and placed in favorable corners of scatterplot charts.

However, what is completely unacceptable (if true), is Mark’s claim that some vendors have actually purchased the right to change what an analyst has written about them:

Many of we newer analyst firms refuse to play into this game of contractual review of research as it crosses the line beyond which we stop being independent and objective research and advisory services firms.

While we haven’t been approached directly at HfS to enter into such a contractual arrangement, I have been convinced that this is going on at a widespread level.  Moreover, I am also hearing about industry analysts being given payments in vendor stock and other sweeteners.

Industry analysts are completely unregulated, so beware what you read

It’s come up in several discussions that today’s industry analysts should be regulated, such as equity analysts are, whose analysis can directly impact stock prices.

I am not sure how enforceable this is (or whether it would do any good), but there is little doubt that the traditional analyst business is at an all time low when it comes to credibility.  Moreover, in today’s social world, there is a proliferation  of boutiques and individual “influencers” who are able to get their research and insight to market quickly and easily.  How can you gauge whether their work is credible or not?

Three simple steps you can follow to assess the reliability of research, if you are impacted by the analyst’s research

1) Request to talk to the analyst about her/his research.  Most analysts worth their salt are happy to talk with someone who actually bothered to read their spiel.  Get them on the line and ask them to elaborate further on why they said what they said… hearing it from the horses mouth will help cement their credibility.  If you paid for the report, it’s your right to at least get a phone call with the author.  If the firm /  individual from where you bought it will not talk to you about the findings directly, demand a refund and find another analyst somewhere else to talk to you.

2) Ask the analyst how many buyers they talk to on a regular basis, how experienced they are in the subject matter, their methodology behind the findings.  Do not accept pages of canned bullsh*t to explain how their firm does research either – demand your simple questions to be matched with simple answers.

3) Ask the analyst to disclose whether they/their firm take money from the vendor they covered.  A pregnant pause will speak volumes.  There’s nothing wrong if they do, but they should disclose it without hesitation.  Ask them about their business model and what is their revenue split between buyers and vendors.  All analyst firms in tech and services take money from both – and many actually make 100% of revenue purely from vendors.

All-in-all, the research world is the wild west – you believe what you want to believe – you decide if the research is credible.  You may live and die by their insight, so you need to be smart and form your own judgement whether said analyst really knows what she/he is writing about.

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  1. Phil – this makes depressing reading for the analyst business. Will you reveal who the main offenders are?


  2. @Paul – you’ll need to ask Mark Smith. I sense he’s already pushed the boat out by revealing this is going on.


  3. Phil,

    This doesn’t surprise me with the diminishing number of vendors and the increasing power of the major ones to influence what they want analysts to say. How do you see the future of the analyst business with this type of thing going on?


  4. You really didn’t know this was happening??? Or at least there was a lot of pressure on analyst firms to accept such demands? Some valiantly resisted, and some capitualted opportunistically.

    Good on you in bringing it out. I could actually share names, as I am sure many of us could – curiously enough both start with O!

  5. @G – you are welcome to share names here – this is an open forum. The “pay for play” has been going on for years – but it’s easy for any discerning research customer with half a brain to decipher the fantasy from the fiction, however, actually purchasing the right to modify/veto analysts’ independent reports?

    All the I can read from this is the desperation of some analyst firms for revenues. Once they reach a point as low as this, you have to wonder whether they are on a slow, painful road to extinction, like a couple of other famous analyst brands of recent years…


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