The Changing Rules of Influence

Interesting post and by large we've said similar things for over two years.

More interesting would be to know what you think the impact on analyst firms' business model, especially in case of an economic downturn? A related question is whether there is an economic model allowing them to reach out to SMB's.

Hi Skip, Thought provoking post. I linked to it at The need for speed - Cisco's Skip MacAskill on the changing influence landscape

I think the key aspect is your speculation that the traditional firms will have less influence on tech purchases in three to five years.

If this turns out to be the case, then it has huge implications for the vendor and analyst communities. If the traditional analysts become less influential, then vendors will not devote as much effort on briefing them leading to less insightful research. Also, a key – but unspoken – selling tool the major firms use on the vendors “Buy our research to see why our analysts are telling your customers and prospects” starts to whither. This could have a major impact on the flow of money in the industry with the traditional firms getting less cash from the vendors and thus having fewer resources to do research, client service and so on.

On a related note is my Will established analyst firms become dinosaurs to the new media-oriented analysts?

To some degree, the analyst firms can weather an economic downturn reasonably well because a big portion of their business is wrapped in year-long or multiyear retainer contracts. If the downturn comes at a time when a significant number of renewals are due then you could see more of an impact. Their one-off projects and consulting revenue are more likely to take a bigger hit, however, as users sweat the assets. Most firms also have some type of events arm. The vendors are largely the sponsors of these events and commit at least a year in advance to the major conferences, so there may be little impact on the analyst firms with the exception of reduced attendance from users who would be scaling back on travel.

In terms of SMBs, the analyst firms have been fairly successful in reaching SMBs, especially the top-end of that group, which are really small enterprises. The firms have also developed special off-the-shelf, pre-packaged offers specifically designed for SMBs and their budgets. Many, for example, have developed or are developing SMB versions of their roles-based offerings.

In studies we've seen, SMBs will still primarily rely on their peer network for advice and feedback on products and technologies -- the word-of-mouth strategy. This is especially true in the "S" portion of SMB. They also turn to the trade magazines and various on-line sources for information as well as the financial analyst reports. We've also found them more willing to explore the use of business-focused social networks and virtual communities such as Second Life. That segment will also leverage the analyst events to get access to analysts and input on projects they're undertaking. Some of the new information delivery models, however, will be very appealing to the SMBs in terms of cost, timeliness and ability to customize the incoming data.

Skip, Re. The changfing role of influence(rs): Your point about Web 2.0 and the new influence of business people on corporate tech choices has been widely dessiminated in the analyst community for years - no news there. However, the ability of analysts to engage with their clients and create new synthesis positions is a real challenge. Who sets the agenda? I believe at the end of the day we all have to shift from a tech perspective to a customer segmentation perspective; and our analysis should not be validated by tech performance characteristics, but by the underlying business justification.

Brent, agree with you completely that shifting to a customer segmentation approach is the right path with a focus on the underlying business benefits/impacts. In light of that, I think the clients end up setting the agenda. That's why I think the traditional business models in use at the analyst firms will lose relevance. While that position may be old news to some, my point was that its actually going to happen -- and sooner rather than later. The clients (end users or consumers of technology) will dictate more and more of that agenda. They'll be driven by stuff they want to do, watch, hear or interact with, showing less interest in what the underlying technology engine is and focusing on the "service" they want to access. We used to talk about the value being in the application; in many ways, I believe that's not true anymore. The value is in access to the capability or function the application provides.

Thanks for the comments.

Carter, thanks for the comments. Didn't see your post from the 14th, but it seems we're on the same page on what some of the potential risks are. I certainly don't think the established firms are in danger of disappearing or falling off the influencial ladder. But I do believe their influence will begin to wane unless they adopt new business models that will allow them to deliver customizable, real-time information in digestible chunks via a new set of Web 2.0 tools and applications.

I agree that the whole economics of that industry could change pretty dramatically, and that may ultimately be driven by what the underlying engagement and delivery models will be.

All aspects of the high tech, IT and communications industries change and evolve over time. There's no reason to think the influence segment of those industries won't change, as well.

Skip, great post - loving the blog. Completely agree with you on the "spotty evidence" with analyst firms and Web 2.0.

As a tangent, in attending Gartner's Web 2.0 summit last month, there were a few analysts that participated in the "new" Web 2.0 tools i.e. Twitter, Flickr that they were trying to get attendees to create a community around for the conference. I think this lack of participation mirrors their own uncertainty to embrace new communication channels to younger audiences.

Skip, I couldn't agree more that the nature of market "intelligence" is changing, thanks largely to the increasing availability of timely, relevant and free information online, and also due to the fact that our customers don't have time to read "reports" any more. However, making the transition from "old-media" market analysis to "new media" market intelligence is constrained in large part by our clients. Old-media batch-based analysis on tech topics (coming in the form of reports or presentations) is what clients pay for today. We haven't figured out how to fully or consistently monetize New-media, just-in-time analysis focused on markets (and tech), such as in Online Meetings (WebEx), virtual discussions online and collaborative posts (blogs, wikis). And, this mirrors the broader Web 2.0 sector itself. Lot's of ideas but still figuring out the true business metrics and financial models behind them.

Many firms, particularly the boutiques like mine, are attempting to embrace new ways to develop and present market information and, more importantly, just-in-time analysis. I think you'll see even more creativity in the analyst ranks in the coming years as the IT industry goes through the next stage of its evolution brought on by Web 2.0 business models and tactics. I doubt any of the big firms will falter, but you might see some rising stars from the boutiques (maybe mine!).

Anyway, love the blog. Rock on! Looking forward to C-scape.

Hey Kneko! Thanks for the comments. Agree this can't/won't happen overnight. Monetizing new media is something we all -- suppliers, analyst firms, service providers, all end user types -- are struggling with right now. I firmly believe the ones who can figure this out the quickest will get a huge leg up in the industry. And unlike some of the transitions that have taken place in the industry before where you did have the luxury of a little time (SPs embracing and moving to IP infrastructures, for example), this transition will not be as forgiving.

Not sure I completely agree that you are being constrained by your clients, however. The "old media" deliverables are what they're currently buying because that's largely the only stuff that's available to them. If the analyst firms moved more quickly to the new deliverable models, the clients would follow -- enthusiastically. And, yes, I agree boutiques like yours have a great opportunity to capture clients' imaginations right now.

In this case, I do believe the mysterious voice in 1989 film (I know, I know, another dated pop reference), Field of Dreams: "If you build it, they will come."

And speaking of great baseball movies, my revered and beloved Red Sox will take the World Series in five games. A disgression from our topic? Absolutely. But as a dyed-in-the-wool New Englander who bleeds "boston" when cut, I can do no less...

Hi Ruth. Thanks for visiting. I do believe the "big boys" understand this and are looking at ways to exploit it. I guess I'm hoping to see more a sense of urgency in some of their development. When I think how how much faster this industry is moving from just three years ago, it scares me. I'm worried about falling behind and getting bypassed. Granted, most of that may be related to the fact that I'm now in my mid-40's, and my two daughters (15 and 12)increasingly look at me and shake their heads in that I-can't-believe-I'm-actually-related-to-him way when I talk about the "old days." You remember those, right? When you used to leave a voicemail for someone or send an e-mail?

Those who lag will get pipped to the post. It will be intereting to see who gets this new media puzzle figured out the fastest.

Skip,

I'm going to play devil's advocate and incendiary - because I can, and because someone must.

I see [tech] blogging as all but irrelevant to a conversation about influence [except, perhaps, among bloggers and their peers who enjoy patting each other on the back with links, trackbacks, kudos, countercomments, awards, rankings, etc.]. Blogging, generally speaking, is also a major contributor to the Internet clutter that has turned searching and Internet-based research into an exercise in frustration.

Admittedly, we had a company blog a few years back but we quickly killed it after much back and forth about the long-term value. In the time since we have watched hundreds of analyst blogs pop up like digital daises, but we do not regret our decision. It has not affected us at all as far as I can tell. In fact, I also began moving my company away from a heavy publishing schedule and frequent media quotes to focus more on direct interactions. We have found no appreciable correlation between analyst blogging, press quotes, or publishing frequency and front-line end-user influence. Needless to say, we are much more selective these days about what we say to the media, and what we choose to publish.

Now, about influence...

Those who believe they know what they're doing [i.e. the so-called insurgents and "non-traditional" analysts] will eventually figure it out on their own, or fail trying. But I can write with a great deal of confidence that blogs and podcasts, webcasts and a published book or two are not going to differentiate analyst bloggers from their non-traditional counterparts. I've personally visited quite a few of their blogs (and listened to some of their multimedia) to see what the fuss was about, and, quite frankly, there's very little in the way of original thinking unavailable elsewhere on the Net (I suppose it's a good thing much of their insight is freely available). The old adage "you get what you pay for" does apply. This is, of course, just my brutally frank opinion.

Carter, over at HP, mentioned the importance of new media. I think he's putting the cart before the horse [I believe there is a "quality of insight" issue that must be addressed first]. It is important to understand that new media channels cannot turn lead into gold. It will only enable the lead manufacturers to distribute/disseminate their product more quickly and efficiently. Right now, there are a few billion tons of lead weighing down the Net. And it doesn't help matters that some analysts choose to give a blow-by-blow account of their personal lives on their professional blogs (i.e. more lead, more litter on the information superhighway). I could go on and on about that one.

Regarding Second Life..please make it stop. I know Cisco invested heavily in it, but Second Life is not the future of business communication. It's a distracting, geeky, nonsensical method of socializing never intended for business. If Cisco engineers want to mess around in virtual meetings, or teenagers want to wreak havoc (I know of three), have at it. I would not, in the foreseeable future, attend a Cisco analyst event or any serious business function held in a 3D virtual world.

If ever you are interested in discussing these topics further, drop me a line. I have far too much to say [about traditional industry analysis and the wannabe "insurgents"] to capture it all in a blog discussion.

Hey Joseph. Great post. Especially love the "digital daises" phrase. Agree that without solid analysis and insight, it really doesn't matter how something is delivered or conveyed. Garbage in; garbage out. And I couldn't agree more that the content of the interaction itself is the most important aspect of the formula. That said, I do believe that new media will have a major impact on the influence industry because it can take that great content and deliver it in a way to make it more useful, more effective, more timely, more extensive, more shareable. Whether things like blogging or Second Life figure into that mix or some new Web 2.0 mechanism emerges over the next year or so, remains to be seen. I may not be sure what the storm looks like at this point, but I definitely believe one is coming.

Hi Skip,

I think you correctly identify that analyst influence is diminishing. In fact, I think you might mean share of influence. The totality of influence on a market is always 100%, so the question is, if the share of analyst influence is diminishing, who's going to replace them? I have not seen evidence of social media impacting influence substantially, other than in specific tech-driven fields. For example, CIOs don't (generally) read blogs.

My experience is that markets are influenced by a wide variety of types of influencer. It just so happens that analysts (and bloggers, and journalists) are well-known. What of the other, less obvious, influencers that impact decisions?

I've linked to this post here - you raise some important questions on the influence of analysts.

Hey Duncan! Figuring out those "other, less obvious" individuals is really the key. We've kicked off several projects here at Cisco to examine that changing landscape and see if we can define what these emerging profiles look like. It will be hard to pin them down because we believe they're really a blurring or melding of several existing profiles. Defining the different media types and the various circles of influence is not as clear cut as it used to be, which can make it more difficult for users to figure out who they can trust and who has credibility. But that's what makes my job all the more interesting!

Skip, Carter,

You might find this post of interest, as we've reached similar conclusions over a year ago:

ARmadgeddon: Step up a geAR or disappeAR!