Key Themes and Hot Topics: Negotiating with Analyst Firms (Part 1)

Situation Room -- From the Ivory Tower in Boston (or Stamford, CT)

We have received dozens of client inquiry calls from concerned parties looking for advice on how to negotiate their 2010 agreements with Gartner and AMR Research. Now that the two firms will be coming together under the Gartner umbrella, there are dozens of clients who remain uncertain as to the best course of action. While our firm makes a lot of money in our consulting practice advising companies on just such situations (trust us; there is separation between church and state here, hahahaha), we need to share just enough insight in paid briefs like this to keep our research clients happy. That is what we will try to do today.

Recommendation: Vendors, Tread Lightly

We have two sets of recommendations for companies considering renewing their 2010 agreements with Gartner and AMR Research. Our recommendation for vendors is as follows:

Even though the current situation might present an opportunity to give the analyst firms a feel-good kick in the you-know-what from a budgeting perspective, halving your combined Gartner/AMR spend next year, we recommend against this course of action. Why? While analyst firms claim to maintain walls between sales and research, we intercepted a double-secret memorandum in this case, which suggests that "analysts of XXXX firm are to find nefarious ways of damaging the credibility of any vendor who reduces its combined budgets ... such activity could take the form of quadrant placements without full explanation, phone recommendations to practitioners informed by guesses rather than fact, and research briefs that do not fully disclose who are clients and who are not." Even though these practices are par for the course today, we are encouraging our vendor clients to be especially wary given the sensitivities around this situation. Pay the money to be safe.

Moreover, as one of our own curmudgeonly senior analysts of the analysts suggests: "If analysts' pre-formulated opinions can't be substantiated with facts during super-confidential end-user inquiry calls or the countless hours of research their summer interns or wet- behind-the-ears college grads dig up, the senior analysts can always use their new (and late incoming) no-holds-barred, quasi-company- endorsed but rarely regulated blogs to scathe those vendors who dare trim their advisory budgets with either firm."

Simple translation: pay the money!

Recommendation: End-Users, Scorch the Earth

Our recommendation for end-user organizations is as follows:

Scorch the earth. Just do it. For years you have paid a fortune to analyst firms for what is likely very little actual usage of inquiry time. The average client generates massive gross margin if they do not use the inquiry service (which is 90% of organizations) as it is sold to them. The amount of Gartner inquiry "shelf-ware" would make the amount of SAP code sitting on the shelf, paid for but unused, seem almost nonexistent by comparison.

If an analyst salesperson is attempting to get a deal done this year, play hardball. Swing for the fences. Emasculate them. Insult them. And tell them any professional-services business model that relies on a roughly 1:1 ratio of sales people to those who deliver said services is as antiquated as a magic quadrant that does not disclose who is a paying client and who is not (and that’s not even mentioning the millions of dollars the large ERP guys pay for access to the analysts).

Stay tuned for Part 2 of this analysis sometime later this week or whenever our boss makes us publish another piece of research. In the meantime, we have business to close, vendors to harass, and simple issues to obfuscate for paying end-users to prove how much they need us. And please remember, we are very busy talking to clients all the time and our time is valuable. Very valuable. Don’t waste it.

Editor’s note: yes, this anonymous contribution was written satirically. And perhaps to make it feel even more genuine, we even should have charged you for it.

- "Paid to Play"