IT Industry Analysts - Falling Into the Bond Rating Agency Trap?

One of the leading causes of our recent economic melt-down was that "independent" credit rating agencies had a conflict-of-interest with the firms they were supposed to be watching.The very firms tasked with objectively gauging risk were also being paid by the firms they were evaluating...And in the end, the big losers weren't either of them... it was the public.

Well, beware that some of the same could be happening in the IT space.

I'll change the names to protect the innocent -- but let's say that I recently attended a day-long IT analyst event, one where all of the senior analysts trot-out their recent research. And to be honest, most of it was of very high quality.

But in one session which focused on an up-and-coming trend in IT, the analyst only cited the major IT vendors (think: HP, CSCO, IBM, Dell etc.) as the leading innovators and players in the space. It was complete Bunk. Of the four "leading" vendors mentioned, only one of them had any significant innovation in the space. Two others so coated their offerings with "marketecture" that real innovation was tough to discern.  And the final crime was that 2-3 smaller vendors I know who actually pioneered the space weren't mentioned at all. And they're the ones providing *real* products with real value today.

Yes, the analyst had a responsibility to his customers (IT end-users) to watch the big players in the industry. And to be sure, the big vendors dominate most market spaces. But the analyst also has a responsibility to truly master his market space and to report-back on the true leaders, innovators, and visionaries. Instead, I believe he unwittingly fell prey to the big vendors that pay much of his firm's bills in order to stay in the analyst's limelight. The failing here is industry-wide, and the IT consumers of the analyst's information are the real losers. Innovation isn't recognized, and therefore value isn't really transferred. And nearly all large industry analysts are guilty of this at some level.

In contrast, another friend of mine is a technology industry analyst with a major international financial institution. When he interviews me on my industry, company and product, he's clear that his reports are not commissioned by vendors, nor even by his bank's clients. There cannot be so much as a hint of conflict-of-interest in his work. Think about it.

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Major IT Industry analysts have been my friends for years. I've worked for IT vendors small and large, and IT analysts have been (and mostly still are) great sounding boards for new ideas, helped identify market opportunities, and have added lots of marketing value if/when they approve of your product. And IT analysts add value on the IT consumer side too -  by identifying trends, pointing-out leading vendors, and recommending best-practices.

But sometimes these folks fundamentally fail at what they're "paid" to do. My advice: Always get a second opinion.