Personal Log: The Sad State of The Industry Analyst Business And The Need For A Code Of Ethics
Unchecked Bad Behavior Plagues Both Vendors And Analysts.
I've dreaded writing this post for a long time. I normally think the best of everyone. Yet, in the course of building our business at Constellation Research, I have to say I've seen everything that can go wrong with the industry analyst business. I'm almost embarrassed to reveal the shady tactics on both the vendor and analyst side that perpetuate. But for the sake of airing it all out so that we may have a better industry, I'd like to start the conversation and then invite those analysts and vendors who agree to come up with a solid code. Once we have something, let's take the pledge on cleaning up the profession.
Examples Abound And We Have Had To Say No.
To be clear, there is a massive self-interest in my putting this out there. Now some of you may still be asking why would I do this? What's in it for me? I'll be very transparent, we've built a business that has:
- Shrugged off writing white papers for hire;
- Avoided pay to play for content;
- Covered vendors who were not clients;
- Cancelled contracts when our objectivity would have been compromised;
- Rejected stock in start-ups in lieu of payment, even a few pre-IPO's that would have made us millions;
- Fired clients who threatened to cancel our contracts despite our putting out factually accurate defensible research;
- Refused the pay for lead business;
- Turned down pay for quotes and refused to endorse vendors in quotes unless we had evaluated their products in a side by side comparison;
- Fired sales people who alluded to pay for play;
- Fired analysts who did not understand we were not a pay to play white paper shop even after repeatedly telling them this.
I'll be honest. In order to uphold our integrity, we've lost a lot of business. I'd estimate in the order of $2 to $3M a year. Now, I am comforted in the fact that I do know we are not the only ones who have done so. However, I have sadly discovered that this is few and far between in the business. I am both shocked and disappointed.
Integrity of the Industry Is At Stake.
Now at times, competitors have laughed at us for doing so. But, we have worked hard to uphold our code of ethics. We have stayed objective. We have remained fiercely independent. Talk to our sales folks. They live it every day. Talk to our analysts who wonder why they have to work harder.
We can continue doing this alone and have a differentiation in the market, but I think it's time the industry takes a pledge to end this bad behavior. It's important for buyers to know that there is a professional code. Why? It's critical to the survival of the industry analyst profession.
Now I'm not talking about a code that's la-la and fluffy. I'm not talking about a code of respect for other analysts. I'm not talking about playing nice and looking the other way when an analyst screws up or abuses the system. I'm not talking about being stalked by sock puppets and sock puppet wannabes! (inside joke but enjoy it, whoever you may be!) I'm talking about addressing the real issues, right now!
I'm talking about calling out folks who screw up, including ourselves. It's bound to happen. But let's get something out there so we can all understand what a standard is. Then we can work towards there. Some folks will have higher standards. Others will choose to bend the rules. But let's set the goal posts and hopefully set them high.
A Start For A Code Of Ethics.
Now the components for these code of ethics have to work on both ends. Vendors and analysts have to agree. Otherwise, we will have an imbalance. Let's start with the vendors because they have a lot of the money and most analysts derive a high percentage and in some and exclusive percentage of their business from the vendors. Analysts could try to earn the end user business and reduce their dependency on the vendors, oh but wait, that's hard work and some folks just don't want to work that hard. I digress...
Let's start with four simple rules. Feel free to add more in the comments section.
- Agree not to support the pay to play game. Stop asking analysts to write custom white papers that are glowing to yourself. This pay for content approach is tired. In fact, when buyers see this, they mostly reject it. If you choose to go in the pay to play game, then make sure you disclose it. A better option is to suggest topics to analysts that you think would be useful to your marketing campaigns. Have the analyst write a report. Do not pay for the report until written. Put the report in their regular review process. Purchase the report reprint rights upon publication. Do not bribe the analyst during the process with the potential to buy the report. Respect the process and provide good input. Expect the analyst to make their own call from their primary research panels and conversations with your clients, partners, and yes - even other vendors.
- Call out bad behavior. Over the past month, I've heard about a few analysts and sales reps at firms, threatening to not cover or not write good things if the prospect did not subscribe. Now some have had very subtle threats. Others, like a certain analyst this week, have made these threats as his business has plummeted as clients have discovered he does not influence end user buyers. I'm not going to name the analyst because while I respect the work he does when its objective, I do realize how hard it is to make a living in this business. Yet, vendors should call this behavior out and stop doing work with pay to play analysts. It jeopardizes the vendor's reputation and it jeopardizes the good analysts who do not subscribe to this model. (see selfish plug here).
- Train and educate internal sponsors and stakeholders. Vendors who have educated executives that understand when and how to work with analysts tend to avoid this issue of pay to play. This requires good training. Strong and mature analyst relations programs coach their executives on what is fair influence and what to expect. They explain how the influence process works and how to provide access for analysts and how to provide transparency without marketing hype. I do suggest that vendors find experienced Analyst Relations professionals and avoid the converted PR professional with 2 years or less of experience now forced into analyst relations. It never works well. Read our board of advisor, Paul Greenberg's Guide to Influence to get started!
- Disclose the analysts you work with and are on paid contract. It's time to come clean and share with buyers who are the analysts on your payroll. Let the buyers determine the analyst's objectivity. I'm asking the analysts to do the same. Share with the end users what free products are in which analyst's hands. Yeah, it can be a demo but make sure the users know the analysts have your demos.
Let's start with four simple rules. Feel free to add more in the comments section.
- Just say no to pay for play. Stop cheapening your brand with pay to play. If you are a white paper whore for hire, you will notice that your business will continue to sink. Your writing will be less valued over time. Vendors will start pitting you against other analysts. You will lose your most valuable assets - your objectivity and personal brand. Now, you probably think that it won't happen. That you are better than that. That you are still can write an objective paper. After talking to 100 independent analysts before we started Constelaltion, I can tell you why even the top tier legacy analyst firms avoided that game. Sadly, we've had to deal with a few folks like that at Constellation who could not get it out of their system that they write first, then get paid for reprints if a vendor wanted to use it in their marketing materials. They did not get paid first to write. When that happened in our case, we had to either drop the client or tell the analyst that they could not get paid upfront. If you still want to be in the pay to play game, then just be an awesome marketing consultant. Get out of our business as an industry analyst. You don't deserve the moniker.
- Call out bad behavior. If a vendor decides that they will drop you even after you disagree with them and have objective, factual based analysis, you need to speak up. Tell other analysts. Call out the vendor. We all know who the bad vendors are and the bad analyst relations managers who play those games. I had to deal with one while working as an analyst at Forrester. This analyst relations person at a large firm and her boss threatened to get me fired because I would not change my opinion, even after talking to 100 clients and reaffirming my stance. For a whole year, they stopped briefing me. They stopped inviting me to their events. They blocked all formal access to executives. They bad mouthed me to the press. They kept pressuring my bosses to fire me. The result - their bone headed move reaffirmed my standing. They put me on the market and to this day, I have to thank them for raising my profile to standing up to them. Now my job would have been on the line had I not driven a lot of revenue, but you know what, I'd have gone out fired with a fight. My brand and reputation was worth it.
- Train and educate your team. There are a lot of bad analysts and bad sales folks. Let's not have that be your sales team. Set your boundaries high on what you can do. Today, our sales guy was refused a contract for a strategy day by a product marketing guy who would only sign if the analyst provided a deliverable that was a pay to play content fluff piece about the vendor. Both my sales guy and I made it clear to him, copied his CEO, and let her deal with this. My sales guys knew how I would react and realized he might miss his quota, but we made sure we took care of our sales team for doing the right thing. Lead by example. I've determined that many legacy analyst firms have very objective analysts. However, the shady sales guys give them a bad reputation and most analysts don't realize how their sales folks represent them.
- Disclose your vendor client list. At a minimum let users and buyers and the media know who you work with. While the FTC disclosure policies have not been uniformly applied to analysts and bloggers, a best practice is to publicize this list. Constellation's client list is here. We know about a new analyst firm in Boston starting up. They plan to use the database of a vendor for their insights service. We expect that analyst to disclose what they use and what products they have freebies from. It's only right. We're waiting to see if he 'fesses up.
Now wait, you are probably wondering why the Analyst code and the Vendor code look the same. Well they do because it's all interrelated. It takes two to tango and we need both vendors and analysts to take the pledge.
The Bottom Line - It's Time For Authentic Business
I know I've shaken up a few folks here. I'm sure I've made many angry. Once you get over this, and though you may still be angry at me, let's get rational and clean up the business. Send me your ideas. Challenge the premise. But in any case, let's start this dialog. I'm going to be in business for the next 25+ years and I don't want to see the profession tarnished. It's time for authentic business.
Are you shocked? Ready for a code of ethics? Do you think this is even possible? Have I just created a sh!t storm?
I'd love to see your suggestions, comments, and feedback in the comments. I'll aggregate and put out the part 2. Then we can decide if you are ready to take the pledge.
Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) com.
Related Resources And Links
Paul Greenberg's Guide to Influence
Rethinking the IT Analyst Industry by Zia Yusuf
Monday’s Musings: Putting An End To The Conflict Of Interest Among Some Sourcing Advisors
Trends: Influencers Aspire For Market Maker Status
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