The analyst industry is a three-legged stool that supports a wide-ranging matrix of activities, most of them involving research and decision support for the purchase and use of information technology products.

• One leg of the stool represents the analysts themselves, who are distinguished from financial analysts by their focus on both industry sectors and sub-sectors as well as specific individual companies.
• A second leg represents the vendors of technology products, whose offerings are the subject of the analysts’ research and who themselves are typically clients of analyst firms.
• The third leg, however, consists of the population most in need of weight-bearing support – enterprises across all industries who are large-scale users of IT-related products. 

This third leg is also where the greatest need exists for direction or guidance regarding the labyrinthine analyst industry itself.

To be sure, analysts and tech vendors face issues of their own: analysts as they respond to the democratization of access to market research, data and insights brought about by the digital age; vendors as they jockey for visibility and the favorable analyst assessments their products need to succeed in the market.

But end users must navigate even more uncertain waters as they choose technology platforms to undergird their operations. These are high-risk, high-reward decisions, and not the kind to be made without rigorous research and the benefit of multiple perspectives.

Vendors work with, and usually employ, what are commonly called analyst relations (AR) professionals to maximize the value of their relationships with analysts.

End users, however, lack any kind of comparable resource to guide them. Beginning with the identification of appropriate analyst firms and continuing through contract negotiations, portfolio management, usage assessment, and ultimately determination of ROI, end users are ill-equipped.

But client companies need not be helpless. There are in fact a number of best practices that the most successful companies have developed to guide their relationships with analysts and maximize the value they receive.

Best Practice 1: Create a formal program to measure and evaluate analyst services.

Most end user clients don't have a structured method for quantifying the value they derive from analyst contracts. While some of this value is necessarily of the “soft” variety – i.e., not measured in dollars and cents – clients can still create an effective evaluation program involving internal survey work, data collection and benchmarking. Key elements:

• Isolate the factors that are of value to the firm (i.e., analyst access, niche expertise, service type, price) and compare providers against those factors.
• Identify criteria for measuring value (i.e., usage levels, $$ savings, project time) and be consistent in how they are applied across all advisory services.
• At periodic points during the contract, poll users within the client firm for feedback according to these criteria.
  • Identifying specific subjects or projects addressed by a client’s analyst firms – especially those addressed by multiple firms – can be especially useful.

Most large enterprises have contracts with numerous advisory services – it’s not unusual for a Fortune 1000 company to be subscribing to 25-plus analyst firms. Once you get to numbers like that, it becomes almost impossible to make a useful assessment of the services' value without a formal means of doing so.

Best Practice 2: Triangulate among as many sources as possible.

Don't rely too heavily on one or two analyst sources if your budget allows for more. Take a page from the Wall Street model and get as broad a picture as possible. There are many perspectives, and the warp speed of technology innovation creates room for wide differences among them. Solicit as many inputs as possible and converge towards internal consensus. Avoid relying on the top advisory services as “one-stop-shops.” Just because an advisory service offers great breadth of coverage across different topics and technologies, that doesn't mean it has great depth of expertise within each of them. As discussed in the Key Trends section, the smartest enterprises also engage smaller boutique firms devoted to specialized areas of coverage and use those to complement what they get from the large broad-based advisory firms.

Best Practice 3: Information is power – network, network, then network some more.

Take advantage of the relationships that naturally occur as a part of doing business. Whatever your job function, there are endless connections to be made with people doing the same work via conferences, travel, online communities, etc. Don’t take these relationships for granted; leverage them as additional sources of decision support. Not only is there opportunity for peer-based guidance on difficult technology issues, but you’re likely to find that you have challenges in common regarding relationships with advisory firms. For example, in virtually every client contract there is disuse and inefficiency.  By discussing with peers how these analyst services are used, important lessons on maximizing value can be uncovered.  Go further still – share war stories, assessments of individual firms and even contract details.  The intelligence coming back can be invaluable. 

Best Practice 4: Exploit free and low cost sources.

Some firms with long-standing analyst relationships can get lulled into complacency and become unaware of other, newer options.  Ensuring your own and your colleagues’ familiarity with alternative, lower-cost decision support is an increasingly important complement to a portfolio of legacy analyst providers.  There are many effective combinations savvy clients employ to optimize their IT research spend; identifying which low-cost resources can assume particular roles previously taken by traditional advisory companies is just one.

Best Practice 5: The Squeaky Wheel – be vocal and proactive.

Analyst firms build their contracts around list prices that they represent as fairly non-negotiable. But there is great, often arbitrary, price segmentation within their client bases. Enormous pressure buffets sales departments: This comes not only from fierce competition, but from the still-prevalent business model (variations on Gartner’s original NCVI – net contract value increase) which is built on growing, not maintaining, clients and revenue. When faced with the differences between upgrading, retaining or losing a client, sales teams can discover newfound flexibility, and presto: Similar enterprises subscribing to similar services end up paying very different prices.

It's important that clients recognize that they have more leverage than they think.  A client that has a rigorous process for determining how a provider’s service is being used has the power to tell the provider, "Here's our reality. This is how many people are using the service, and how much they're actually using it. Here’s what’s working and what isn’t; and here is what we need and the alternatives we're evaluating.” Be creative, and insist on flexibility from the analyst firm. Today’s clients have other options – and the analyst firms, even the largest ones, know it.