The Practical Reality of How Buy-Side Analysts Work

There is no school where you can learn to become a buy-side technology analyst. Most buy-side analysts, in fact, end up surprised that they have this job in the first place. How, then, does a person end up creating and tracking IT markets, influencing decisions on the buyer side, and wielding such substantial power over vendors?

Since the job involves tasks that normally professors perform-research, teaching/speaking, and writing new ideas-the field often attracts pedagogical types who perhaps were not thrilled by the dismal money paid to teachers and opted for an analyst job. In addition, our research shows that many have been analysts from the start with no vendor side experience at all. Even fewer are from the ranks of technology buyers and many are young - just out of college in fact. Then, there are IT analysts who might have fancied themselves financial analysts, but who were afraid to join that cutthroat industry. Instead, they decided to be a pundit in the more flexible, rules-free technology sector.

In any case, no analyst will ever know more about the products you are selling than you do. What an analyst can give you is perspective on your company, relative to other companies in your market. How?

These analysts act as the gatekeeper to their firm's client base, one that is likely to contain your prospects and clients as well. Often, the analyst will hide this information from you, usually for one or more of four reasons:

• The prospect or client has requested anonymity.
• The analyst is lying about the extent of the relationship.
• The analyst wants to maintain power over you so that you will continue to purchase his or her research.
• The analyst hopes to hide his or her lack of knowledge by using the client base as a smokescreen
• An analyst also receives information from all vendors, including your competitors, and frames them in radar, much like an air traffic controller. Each of these vendors offers information about itself in order to achieve favor with the analysts.

Therefore, the analyst, who has no formal training outside their particular firm's research methodology, sits in the middle of a needy client base and eager vendors. But how can someone who has never used your product and only talked to three of your clients for perhaps thirty minutes each (if that) suddenly influence the decision of the next buyer?

The most accurate analysis comes from examining the link between the client base and vendors, and the best analysts serve as interlocutors between the two groups (the lesser analysts simply pretend that they

do). How do you deal with an analyst whose knowledge and client bases are suspect? Here are some practical realities and best practices for dealing with this:

Analysts know less than you do-Do not assume that analysts know more about your company than you do. They may have information on your competition or clients, and this access gives them some authenticity, but client access and subjective references alone are not a sufficient research sources from which to make recommendations.

Analysts use most meetings as intelligence gathering- You expect cogent recommendations from a briefing or inquiry. However, the analyst uses these very meetings to do his or her primary research, while later complaining that the interactions are "vendor-centric," and, hence, non-objective.

Analysts will lie to you-Stay in touch with your client base so that you can call an analyst on a suspicious recommendation or assessment.

Best Practices

Manage and know your references-If an analyst calls you for five references, you need to ask how they will be used and when they will be called. Stress the processes and policies you have in place for handling references and ask that the analyst respect them. Analysts use client access as a main research resource. Neglect of these relationships with customers will hurt you in the end.

Do not let the analyst contact the references directly- Although they will object, ask the analyst for a standard list of five to ten questions he wants your clients to answer, send them to the clients and then mediate the relationship between the two factions very closely.

Follow up with both analysts and clients-For the client: Did the analyst call? What can you share from the meeting? For the analyst: were all of your written questions answered? Can we help you get any more information?

Question analyst research methodologies-Just because the analyst firm is respected does not mean the analyst knows how to evaluate you effectively. How long has the analyst been there? Is he or she prepared to offer relevant, well-researched suggestions? Has the company had an exodus of senior analysts recently and given you a young analyst who has just begun to research his or her particular market?

Understand the intangible aspects of technology research- As a vendor you drive the creation of markets and analysts follow you. Often, your meetings with analysts become future research. In the past vendors sometimes wrote reports for certain analyst firms and the firms simply put their names on them. While this practice is rare, immoral and illegal, it still effectively occurs in verbal exchanges of information. Know that you have influence because you are a creator and not evaluator of software.

Publish white papers and case studies-Analysts can utilize this collateral to see you as a thought leader in your market.

Tie these to your reference base. Bottom-line, understanding the inner workings of analyst firms and how the analysts approach their work is a key ingredient in gaining positive rapport with the analysts, and leveraging their impact on your company's success. Know what to expect when going into an analyst meeting or briefing. Understand the analyst expectations prior to making your pitch or presentation. And do your homework when researching the relationship between your current and prospective clients and the analysts. These initiatives are imperative if you are to optimize your investment in analyst relations and your relationship with the analysts. Stay well informed and you will be well armed when engaging the analysts who shape and influence the perception that your customers have of your company and its offerings.