Category Archives: News and Media

A few days ago I read this post, The Fast and the Furious, on CMS Watch. It was the one-too-many-eth industry analyst piece I’d read on the situation at Fast Search & Transfer that basically said “I hope all this nasty business stuff goes away so we can get back to analyzing technology.”

While I know and respect CMS Watch and its founder Tony Byrne, I don’t know Adriaan Bloem, and I don’t know the scope of his analysis. But here’s what I’d say to him and every other industry analyst on this topic:

• If you are going to purely analyze technology, then I fully understand the viewpoint that business issues in any form are a distraction to that technology analysis.

• If, however, your organization produces any maps (e.g., rankings, quadrants waves, charts) that include “execution” or anything akin to it, then you have extended your scope from technology analysis to overall business analysis and — like it or not — you’re going to have to analyze vendors from both technology and business viewpoints at all times. Simply put, if you’re going to include execution in your map, then you’ve given up your right to dismiss business problems, uncomfortable as analyzing them may be.

Make no mistake. This is not another post about Fast Search & Transfer (here’s my most recent one for those interested). This post is not about Mr. Bloem or CMS Watch. (Happily I’m not sure if they provide a map; maps certainly aren’t the first thing that come to my mind when I hear CMS Watch, who I associate more with comprehensive reports such as The Enterprise Search Report or the The ECM Suites Report.)

This post is about my general reaction to the “failure to analyze” displayed by most industry analysts / groups when Fast Search got in trouble. From where I sit, here’s a not-too-exaggerated parody of what the story looked like over about a 12 month period.

• Phase 1: Rumblings of problems, Norwegian financial analyst starts to ask questions. Industry analysts: Yeah, but they have great technology and happy customers.

• Phase 2: Quarterly misses, receivables write-downs, large operating losses. Industry analysts: they have “accounting issues” but it’s OK, it’s just accounting.

• Phase 3: Restatement of earnings. Industry analysts: OK, they have more “accounting issues,” but don’t worry they’ll turn it around soon.

• Phase 4: Criminal investigation. Industry analysts: Whew, all this business stuff is getting boring, can we talk about technology again?

Excerpt from CMS Watch:

I hope we’ve pretty much heard the last of it and can return to simply discussing the merits and demerits of the technology. So even though I have this lingering image of the last scene of “Carrie” in the back of my mind, after this short break, we’ll return to our regularly scheduled programming.

Again, I don’t know Mr. Bloem at CMS Watch, and if his analysis is purely technical then I have absolutely zero problem with this viewpoint. But if an analyst organization is in the business where profiles, maps, or recommendations have a vendor execution component, then the above viewpoint is simply not tenable.

Why? Because “execution” is invariably related to growth claims. Example:

• Company A is $50M in revenues, growing at 50%, and profitable.

• Company B is $35M in revenues, about flat in terms of growth, and has -100% operating margins.

No analyst in the world is going to rank these two vendors the same in execution. But what if company A is actually company B with a wig and lipstick?

That, ladies and gentlemen, was roughly the situation at Fast Search, and, once revealed, nary an industry analyst made a radical drop in industry map position or had an unkind note to say about their execution. To me, most industry analysts took the Fast Search investor relations messages hook, line, and sinker.

Now, let’s try and integrate the above into a single argument that serves as advice for the industry analyst business: beware the fate of the B2B computer trade press.

IT B2B trade magazines are pretty much all gone. Computerworld, InfoWorld, InformationWeek, Transform, Intelligent Enterprise, PC Week, Network World, DBMS, Red Herring, the list goes on and on. I read them every day for years. I had piles of them on my desk. We laughed when we got great customer stories and we cried when the lab panned our new product. But the magazines were everywhere. They were an integral part of IT life.

Now, seemingly in an instant, they’re all gone. (Yes, a few live on as skeletons of their former selves.)

Why are they gone? Because they didn’t add enough value.

I’m not sure how it evolved over time, and as an idealist I tend to believe that in the early days the IT pubs had real reporters and real labs and real value (it sure seemed to me like they did but I was young then), but by the time the Internet was posing a huge threat to their business, most of the IT trade press had degenerated to the following formula:

• Hire 20-something English majors as IT trade journalists
• Have them filter vendor press releases deciding which to cover
• Write stories based on the press releases, one live analyst interview, and one to two customer interviews
• Make money by selling advertising to the vendors
• Don’t rock the journalistic boat too much because of the prior point

Net: they didn’t add much value. Once the Internet and Google Alerts made press releases easily accessible, the “value add” in distributing vendor news along with an added quote or two disappeared. Some say the Internet wiped out the IT trade press. I think the IT trade press wiped out the IT press. They catered too much to vendors. They cut costs and value commensurately.

And they found themselves pretty much out of business, ironically replaced by vendor press releases (which at least you know are vendor-biased), bloggers (who weren’t afraid to call it like they saw it), industry analysts, and a few hybrids like The 451 Group who live somewhere in between the previously existing boundaries.

But now that B2B trade is pretty much gone, I think the industry analysts are the next ones to experience real pressure. The M&A wave of a few years back was just the start of it, not the end.

Here’s my advice:

• Keep analyzing. That’s the value-add. The IT world remains complex. Customers and vendors still need you.

• Make the rough calls. Avoid the tendency towards conservative, middle-ground analysis. Take stands.

• Generate a headline or two for yourselves. The old Gartner was great at stirring the pot in the days of Mike Braude. Regain that spirit. Not only should you take stands, but generate some press in so doing.

• Restore the vision. The original Forrester had great vision. With all the M&A, everyone looks more or less like everyone else. In my mind, the vision niche is now
  open.

• Respect the intelligence of your customers. (Everyone knew that the old Aberdeen was a white paper factory. Everyone knows you have vendor clients and user clients. Take a stand on how you manage those conflicts. Disclose your vendor/user breakout percentages and your conflict-of-interest policies. Everyone’s a grown-up; they understand the tension. Show them how you manage it.)

• Be scope consistent — either entirely include or exclude “execution” / business performance, but don’t include it when it’s convenient and turn a blind eye when it’s not. And if you’re goign to analyze the business, make sure your team has the skills to do it. (On a few occaisions, I felt I’ve had to explain finance/business basics to analysts who seemed not to understand revenue vs. cash, receivables write-downs, or what it means to re-state revenues.)

• Don’t be afraid to present both sides of an issue. You can see both sides of the coin, explain them, and take your own stand all at the same time.