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5/19/2006
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Blog-Based Analysts Shake Up IT Research

A new breed of IT analysts is sharing insights over the Internet, leaving traditional research firms trying to catch up using the same methods.

If you like your IT analysis fast, free, and with a heavy dose of attitude, you're in luck. A new breed of technology analysts has emerged: They use blogs to spread their insights, and they're not afraid to pick a fight with IT vendors or one another. These E-pundits want to shake the foundation of IT analysis and influence the market, forcing conventional firms such as Forrester, Gartner, and Yankee to adapt or get left behind, much the same way the packaging and reach of cable TV newscasts forced network news to rethink its role.

But for businesses to navigate these new information streams, they must understand how the new analysts work, what motivates them, and, ultimately, when they can or can't be trusted.

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E-pundits such as Vinnie Mirchandani, Dennis Howlett, James Governor, and Stephen O'Grady use the Web to promote their perspectives on topics that suit their different areas of expertise. Through blogs, they open up dialogues in which ideas are exchanged with IT pros, bloggers, and fellow analysts. And they rely on their years of experience to give them credibility and win client contracts that fund their online efforts: Mirchandani was with Gartner, Howlett spent 30 years in finance and accounting, and Governor and O'Grady were analysts at Illuminata.

Howlett, in particular, is known for his acerbic comments on his peers' blogs. When Mirchandani last week referenced a Financial Times article written by Accenture CTO Donald Rippert about the benefits of service-oriented architecture, Howlett responded, "I saw this article and only got three lines in before I thought: 'who wrote this crock of ... ' then when I saw it was Accenture's CTO, I clicked away."

Howlett's howls aside, the new-generation analysts he represents have a long way to go before they give Gartner and its kind a run for their money. The 10 largest IT analyst firms, which include Gartner and Forrester Research, account for 80% of the $2 billion in revenue generated by the industry. Although questions persist about whether those firms deliver credible, unbiased analysis (see "Credibility Of Analysts," Feb. 6, 2006) many IT buyers won't open their wallets and many IT vendors won't develop new products without first holding a powwow with one of them. "It's still hard to find free information about market estimates," says Nimrod Reichenberg, director of enterprise marketing for the mTrust division of M-Systems, which makes memory stick technology. "When you want to identify trends, you can substitute other sources of information for analyst firms, but you can't do that when you need hard-core numbers."

Former CIO Steve Pozgaj laments 'dearth of information'

Former CIO Steve Pozgaj laments "dearth of information"


Photo by Stephen Uhraney
And some maintain that free data is worth exactly what IT decision makers pay for it. "Today, there's an abundance of data, but there's a dearth of information," says Steve Pozgaj, a 30-year IT veteran who was CIO at both CIBC and Mackenzie Financial.

Young Turks At Work
The research industry's nontraditional firms borrow a little from the old, add a lot of Internet-based new, and spin out business models all their own.

Mirchandani attracts clients through his industry connections as a former Gartner analyst and his blog, Deal Architect. He's mainly a one-man show, though Mirchandani taps other consultants when he needs someone to serve his international client base of IT vendors and investors. His customers seek him out for advice on setting product prices, investing capital, and moving forward with acquisitions and alliances. Mirchandani's fees are specific to any given contract. "I still have to go through a personal selling process," he says. "The blog is a calling card." He estimates that about 40% of his readers are outside the United States. A third of Deal Architect's readers find the blog through an RSS reader, while the remainder hit the site through links from other bloggers or via search engines such as Google, Yahoo, and Technorati. The search engine channel, in particular, is growing more quickly than channels that established analyst firms use for reaching customers, Mirchandani says.

Governor and O'Grady launched analysis firm RedMonk in December 2002. By the spring of 2003, it was producing four blogs. "We spend a lot of time focusing on more bleeding-edge issues than the larger firms, so speed is important," O'Grady says. Most of RedMonk's revenue comes from strategic and competitive analysis work for IT vendors. RedMonk clients have included Adobe, BEA Systems, IBM, Microsoft, and Sun Microsystems. The company uses weekly podcasts and a wiki to reach out to potential clients. Pricing is relatively straightforward, starting at $5,000 for IT vendors to sit down and talk with O'Grady, Governor, or one of their colleagues.

Burton Group is hardly a startup: It launched in 1990 as a management consulting firm. But Burton underwent a transformation in 1998, when it started to tailor its content for IT architects rather than executives. More recently, the firm began offering a blog called Inflection Point, podcasts, and events including its Catalyst conference to address emerging technologies. Major IT focuses include identity management, Web services, and VoIP. Burton, whose clients include Citigroup, H&R Block, and Wyeth Pharmaceuticals, makes some research available for free to site visitors. Other reports are for clients' eyes only. While the company won't talk specifically about its fees, Burton charges clients annual research subscription fees. The company also makes money from consulting services.

Striving For Credibility
Lesser-known analysts and firms are struggling to achieve the credibility and clout that have for years let the big firms write their own ticket. "Big analyst firms had the network in place to readily get information from sources around the world, even from Korea, China, and Japan, places that were difficult to get information from before," says Paul Dittner, who worked as an analyst with Gartner from 1999 through March, when he left to pursue an MBA. "As information has gone to the Web, the issue has become getting reliable information. Search has a long way to go, but it's gotten better over the years."

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