Analysts’ nasty little secrets

Written by on August 29, 2014 in BillingViews, Guest Blog with 2 Comments

NetScout is crying foul against Gartner. The NetScout lawsuit against Gartner has raised the ‘pay-for-play’ specter once again. Whether this is a case of a vendor just peeved at their spot on the Gartner Magic Quadrant or they have a legitimate grievance, I am not in a position to judge. Whether NetScout will be successful with their legal foray is for the lawyers and judges to say.

However, the latest outcry against Gartner should ring warning bells for the mega-analyst firm and others too. The fact that ‘pay-for-play’ has once again raised its ugly head is symptomatic of the lack of regulation and transparency in the Industry Analyst Business.

The lawsuit calls for ‘structural reforms’ similar to those imposed on the financial system in order to ‘remove the conflicts of interest and unfair and deceptive business practices’. Incidentally, this is a topic that has been discussed on this, and other blogs before.

What’s the BIG Deal?

As long as Gartner and the rest of the industry refrain from implementing some kind of industry-wide ethics or practice code, this will continue to be an issue. I believe that regulation is in the industry’s best interests. After all, if there aren’t really any secrets, what does everyone have to hide?

To start, I would suggest that each firm is required to make public their client list including the nature of that relationship. Of course, analysts will have relationships with all players in the industries that they cover. Knowing who their paid clients are should afford some transparency. This transparency will enable businesses to beware of a possible conflict of interest before undertaking any interaction with the analyst firm (paid or otherwise). Secondly, best practices for separation of church and state (analyst services/sales) should be implemented (granted this will be more difficult in the smaller firms). Analyst companies must make a concerted effort to weed out improper sales practices that may lead to misunderstandings (or lawsuits).

Need for change!

Regardless of the outcome of the lawsuit, Gartner being the industry leader (with no one else even close in their quadrant) must adopt these practices for the sake of the industry if not their own image. It’s time for Gartner and the industry to do away with the smoke and mirrors. It’s high time to pull the curtains back and get a good look at what’s going on behind. Only then can we move past these discussions and focus on delivering credible research.

One thing is for certain, the lawyers are pay-for-play!

 

Tags: , , ,

Jonathon Gordon

About the Author

About the Author: Jonathon has been lurking around the Telecoms and Internet space for the last 20 years. He is now a man on a mission – that being the reformation of the Industry Analyst business. He is working with his co-conspirators on transforming the Industry Analyst world forever as an Expert with EMI. .

Subscribe

If you enjoyed this article, subscribe now to receive more just like it.

Subscribe via RSS Feed

2 Reader Comments

Trackback URL Comments RSS Feed

  1. There are different types of analysis and each has different ethical requirements. We work buy-side so the ethics there are a lot more straightforward. Our model is to do buy-side research but then give it away for free by getting someone to sponsor it. That means it’s absolutely transparent who gave us the money for it and you can judge if we say anything that’s biased. (No vendor has ever asked me to insert something biased into our research by the way. And I wouldn’t work with them if they did.)

    What you’re talking about is sell-side research and it’s true it’s murky ground. However, the solution is in the hands of the vendors. Have the confidence to walk away and say you’re not going to participate in the game. There’s a clear rationale for doing this. Buying patterns and behaviour are changing. Usually I find that these reports are expensive shelf decoration for executive offices. Who have spent oodles of time influencing one word in a bullet point and feel that’s a victory.

    As an independent analyst I hear a lot of moaning from vendors about certain analyst houses while they continue to pay them the big bucks. They rarely do anything about it. So please have the courage of your convictions and walk away if you no longer believe. (Even if just to save me the earache.) All this shows me is that vendors are too heavily invested to do that. Let’s call it – it’s co-dependency.

  2. Bob Machin says:

    Is it co-dependency, or is it that certain leading analysts (admittedly through their own efforts) have the vendors over a barrel? My experience has been that most of the leading vendors participate grudgingly and at significant cost in what is often a very stressful process, hotly dispute the outcome but feel unable to drop it because they are aware (I think probably correctly) that the Magic Quadrant and a small handful of other analyses are the first (and probably last) stop for prospective customers that are creating an RFI list (some notable names have declined to participate, I believe, but have always come back).
    Difficult also for Analyst Relations people inside the vendors to take a principled stand and blank the leading analysts. As far as the company exec is concerned, the job of AR is to get higher on those analyses every year.
    The struggle was memorably skewered in this video, which I’m sure you’ve seen… https://www.youtube.com/watch?v=gjG8KivYFZ0

Leave a Reply

Your email address will not be published. Required fields are marked *

Top
%d bloggers like this: