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November 15, 1999

Analyzing The Analysts:
The Knowledge Merchants
continued...page 3 of 7

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When asked to identify the most important criteria for selecting a research and analysis firm, survey respondents cite quality of advice and the firm's overall reputation. A relatively small number of managers give importance to such factors as accuracy of product forecasts, reliability and trust, and experience.

"The way we see it, the better the firm's reputation the more likely it is to be accurate and credible," says David Robbins, chief technology officer at Conning Corp., a St. Louis provider of asset-management services for insurance companies, which has used Forrester, Gartner, Giga, and Meta at various times for advice on Web activities, Y2K work, development of an IT architecture, and implementing new platforms.

Data quality and accuracy depend a lot on the source of that information. Most, if not all, analyst firms do research work for IT vendors, helping them plan product development and marketing strategies. Some even specialize in working with vendors. The analysts then use those close relationships with vendors to aid in the analysis they do for users. It's a complex, co-dependent relationship with significant ramifications. "Analysts need to know what we're doing, and we have a need to tell them," says Debra Wood, an analyst relations manager at Sun Microsystems.

Sun has research relationships in particular with Forrester, Gartner, Giga, and IDC, as well as smaller, vertical-market-oriented firms, Wood says. Sun buys research reports from the various analysts, and its product groups work with the firms in planning and developing products, she says.

chart Hewlett-Packard also uses the firms for help in developing and marketing products, says Bonnie Rogers, director of analyst relations. "I look at our relationship with them as a partnership," says Rogers. "They help drive our strategy and future plans. They also take a lot of our plans to the users." HP spends millions of dollars annually on its analyst relationships, Rogers says. "These relationships have always been extraordinarily important to us."

Compaq works with all of the major analyst firms, and even includes them on its advisory counsels to help with product analysis, says Ken Conway, manager of analyst relations. "We've made changes in our products based on analysis, particularly with our mobile products," Conway says. Generally, the firms "are fair in their assessment of our products and services," he says. "But we don't always agree with them."

Microsoft works with analyst firms to refine its product plans and marketing strategy based on extensive feedback from users, says Karan Khanna, a lead product manager in the company's business and enterprise division. "The individual product teams regularly engage analysts" to find out what customers want and what trends could have an impact on Microsoft product development, she says.

ERP software developer SAP relies on the firms to fine-tune its product marketing strategy, says Nicole Milstead, director of analyst relations. "We use them at the end of the product cycle, when we're ready to go to market," says Milstead. "We test the solution and the message out on the analyst community."

chart For example, SAP recently brought in AMR and Forrester to examine the marketing strategy for its mySAP.com Web portal. "We had been suffering from market confusion over mySAP.com, and the analysts helped us to understand the severity of that confusion," Milstead says.

Other major IT vendors--Dell, IBM, Oracle--were reluctant to comment on their relationships with analyst firms, other than to say that analysts provide useful information on marketplace trends and product demand.

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