It’s a tough job to explain. Analysts write and speak and pontificate – all the things you see in the news – but their true value lies elsewhere.
Companies pay analysts the big bucks to provide educated gut checks before making major strategy moves, for help mapping competitive landscapes and to get the dirt on vendor features and pricing you can’t find anywhere else.
Analysts deliver numbers to justify your hunches, and they can even take the fall when execs need to save face with board members or investors. The best ones make life easier and more productive, but how do you tell which analysts are worth your time and money?
Well, analysts are fond of lists, and old habits die hard, so here’s a list of key criteria:
Don’t Believe the Hype
When I was young and green, I spoke to a crowd of IT managers about testing tools. They nodded, took notes, asked questions and seemed satisfied with my answers. An analyst from a rival firm followed me and ranted for 20 minutes. He was way out of his depth in the QA, and was obviously making up answers when he got stumped. He fell back on “You don’t understand – the Internet changes EVERYTHING!” several times. The guy was a jerk, but I felt bad for him.
When the lights came up, the “jerk” had 15 people waiting to speak with him. I had four. Afterward, he shared some wisdom I’ll never forget.
“Always tell them it’s different. Especially when it’s not.” He may have been a goon, but the guy knew how to sell. Seeds of doubt grow into juicy contracts, and for marketing purposes, a controversial statement is worth 10 correct ones.
Marketing is the highest-profile part of an analyst’s job. Don’t get sucked in by the controversy. When evaluating an analyst firm, you can safely ignore just about any controversial headlines or projections, particularly if they show up in the subject of a press release. Whether you agree or disagree with an analyst’s published findings, you’ll need to dig deeper to see whether there’s a useful business partner underneath.
The one exception to this rule is a finding so patently off-base that it’s just silly. You know the ones: “80% of commuters will be using hovercrafts by 2015.” In these cases, the analyst lacks either a brain or a spine. Any way you slice it, that’s bad news.
Examine the Goods
When you buy a subscription to an analyst firm, you’re buying access to the analysts themselves. The research is secondary.
Before you plunk down cent one, set up a call or face-to-face meeting with the analysts who interest you. You might not get to meet everyone you’d like, but the sales team will bring someone with an A-game. This will give you a good idea of the firm’s character and how well its analysts can work with you.
Assuming an understanding of your business and their coverage areas, the basic ingredients of what an analyst has to offer are pretty simple. Look for communications skills, a network of vendor and client relationships, and a healthy dose of business sense. The trick is finding someone who balances all three in a way that works with your business.
1) Communication
Your first introduction to an analyst will probably be a written report. This can help you assess the firm’s target market and general level of technical understanding, but a face-to-face meeting is essential to gauge his or her communications skills. You should feel comfortable explaining your issues, and the responses to your questions should seem considered.
The analyst may not be able to answer all of your questions, and that’s fine. An “I don’t know, but I know who to ask, and here’s why” is infinitely better than getting steamrolled with pat answers or desperate fakery.
Beware of overused buzzwords and cliches, and don’t be afraid to ask analysts to explain their statements in greater detail. Absolutes and one-line mandates are for sales pitches and keynote addresses, not one-on-one conversations. Analysts who won’t listen to you probably won’t listen to vendors or customers either, so they won’t have a lot of secret wisdom to broker.
2) Connections
Prominent analysts at powerful firms command greater respect from vendors and can dig more details from them. This doesn’t mean the analyst needs to be in bed with the vendors it covers. Some of the best, most respected firms are the most resented by vendors. For example, Real Story Group (formerly CMSWatch) is fairly small, but it covers only content management, and it’s never taken a dime from a vendor. This focus and objectivity has earned the firm an incredibly devoted following, forcing CMS vendors to show their cards.
On the flip side, an analyst who consults with a large number of clients in a particular area will be able to broker a lot more collective experience on your behalf. One disgruntled customer of Vendor A could be a fluke, but knowing that 10 have complained to your analyst in the past week could save you from a very expensive mistake.
This is probably the biggest value an analyst brings to the table. We all learn from mistakes, and a well-connected analyst is learning from the mistakes of dozens of clients all the time.
3) Business Sense
Analysts will never know your business as well as you do, and you shouldn’t expect them to. But they should be able to see patterns and linkages you haven’t. The best question you can ask an analyst about anything during a meeting is “How does X apply to me?” X can be a report, a competitor’s press release or something you heard on the news. It’s always a valid question, and the answer isn’t always the most important thing.
What matters is that the analyst listens to your question, considers your specific circumstance and comes to a logical conclusion based on the information provided. If you get an answer that’s counterintuitive but still makes sense, even better. You want someone who can shake things up. If you get back a rehash of the same pitch you heard from the sales rep, move along.
Analysts aren’t superheroes. At their best, they’re smart people who sit in the middle of a lot of valuable information, which can make them a valuable asset to your business. And doing a little homework can help ensure you get what you pay for.