The Value of Analysts

So if analysts are one of the biggest culprits when it comes to the proliferation of acronyms, in light of today’s ready access to information on the internet, do analysts still have value? They must seeing that Gartner is over a Billion Dollar company and companies readily pay tens if not hundreds of thousands of dollars in fees to access analysts and their reports.  Clearly for vendors analyst firms represent a form of competitive intelligence.  Vendors typically class analysts similar to the press - as industry influencers.  As such vendors must keep analysts abreast of their strategy and plans so analysts give their subscribers a good review of the vendors future prospects.  Since the vast majority of vendors engage in the briefing activity analysts have insight into the strategy for most of the vendors.  While a vendor might brief a prospective client on their strategy during the sales cycle they certainly won’t brief their competitors hence the analyst becomes the best source of strategy insight most vendors have about their competitors.  What about value to the end user?  In today’s hyper connected world with Facebook, LinkedIn and other social media networking sites, including communities like ControlGlobal, what is the appeal of analysts to end users?  

It used to be that analysts had a unique position in that they had the largest community of users and acted as an information hub.  When I started in the analyst business in the mid 1990’s the claim was always not that analysts were all that much smarter than the average user - it was that we talked to so many more people we had a bigger picture.  Today that is no longer entirely true - well connected users may actually know a larger community than any given analyst.  So the value of analyst firms is something other than insight based on knowing a large number of users of a given solution.  For many companies analyst firms are primarily a form of insurance.  Analyst firms claim that as objective third parties with no biases they provide opinions that enable a firm to make a better investment decision.  For many companies then, the analyst firm is both a sounding board as well as a scape-goat.  If a decision is questioned as it progresses up the hierarchy it is always easy to say “well ‘analyst firm’ says that this is a good path to follow” providing third party validation and off-loading some of the responsibility.  So yes analysts firm do, at least in today’s business model where responsibility seems to be as much a liability as a positive factor, provide “insurance” value which is why so many end-user companies subscribe to analysts.  As information aggregators they relieve users of having to do the hard work of networking themselves and can act as surrogates for being well-connected.  So clearly they do provide value - otherwise how could they command so much money for basically rendering “an opinion”.


Dan Miklovic is blogger contributor for Control's blog Manufacturing 2010. You can email him at danmiklovic@gmail.com or check out his Google+ profile.

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