The Loneliness of the Independent Analyst – and Why We Matter Now More than Ever

I’ve been an independent industry analyst since 1991, a niche I began to carve out for myself when I was based in Europe as a freelance journalist and turned into a full time job by the time I returned to the US in 1994. Needless to say I’ve seen how the world of industry analysts has changed – and not changed – over the course of several decades.

The job of an independent analyst has always been fraught – no big firm, no big brand, no clout beyond what the analyst can muster for himself or herself through a lot of hard work. I’ve been in more meetings with more heads of AR trying to justify my existence than I care to mention. After 30 years in which I managed to work with over 150 different firms – vendors, their customers, and their partners, many of which through multiple engagements – I sometimes think I’ve finally and forever proven the point that independents matter. Especially with friends from the AR community like AR veteran and guru Peggy O’Neill opining on our value.

But like clockwork, the question keeps coming up. I’ve had a rocky time at some point over the years with most of the top vendors, many of whom have struggled understanding who I am and want I do. One of the more ironic problems over the years is that an independent who consults with one firm is considered unable to have an objective opinion about that firms’ competitors, despite the fact that, of course, that’s what the big firms do all the time. The leadership of Workday, for example, still can’t get over the fact that I have a real problems with how they work with their customers: they would much rather think I’m paid by a competitor than face the music that, heaven forefend, they might actually have some strategic issues worth dealing with. Meanwhile, Workday continues to reap what it sows….

But the biggest problem has always been about understanding the unique role an independent analyst can play: we’re not hidebound by rules about engagement and advocacy that limit our opinions on products and vendors. We can literally tell it like it is in ways that analysts in big firms can’t. We’re more useful that way, especially those of us who cover issues, topics, and technologies in a holistic way rather than in the siloed hierarchical fashion that large firms use to synch their analysis with the products they sell. I like to say that in a meeting about a complex technology strategy, a customer (vendor or end user) can have an individual like me in the room or they can have as many as five analysts from one of the large firms there, none of which may really understand the big picture but all of which will be happy to pontificate on the details.

(One of my favorite aphorisms is that the most common mistake vendors make is that they try to sell product they way they build it, not the way it’s consumed by the customer. Large analyst firms compound that mistake with one of their own: they try to analyze vendor offerings by siloed product category instead of by what customers really want or need. The buzzword bingo that comes out of this dance macabre is as humorous as it is indicative of failed perceptions about customers’ reality.)

Unfortunately, all too frequently, a vendor wakes up to the realization – more often false than real – that they need a “new” perspective on their analyst outreach and they hire a go-getter to shake things up. And the first thing that dynamic new leader does is cut out the independents. And the battle for recognition is joined again. To no one’s benefit.

I think the most egregious example of this for me happened with Microsoft Dynamics, which I covered closely until I effectively had to “fire” them last spring after years of fighting to explain what 30-plus years of coverage should mean to them and their customers. Like Oracle and a few other tech companies, my coverage of Microsoft goes back to the 1980s when I was a journalist covering the software industry. I’ve spent a day shadowing Bill Gates, jogged with Steve Ballmer, and I was there for the Windows III launch, the debut of the “multi-media PC”, the SQL Server brand takeover from Sybase, as well as a host of more recent events that were highly germane to enterprise software buyers: the launch of what eventually became Office 365 (I was a beta tester) and Windows 8 (I bought the first touch-screen enabled Lenovo laptop to run it), as well as the acquisitions of Great Plains and the rest of the products that would make up the Dynamics 365 product line I was eventually cut-off from covering.

When I was “allowed” to cover Dynamics under a previous regime, one of the things I was pretty good at was understanding how the increasingly vast Microsoft product line could be applied to the enterprise software market, a market far removed from Microsoft’s consumer/PC DNA. I even did a fascinating feasibility study on using Kinect and the rest of the Microsoft gaming tech in hardcore manufacturing environments – I voted no in the end, too many tech constraints. (It was fascinating when Hololens showed up to resolve the problems that Kinect suffered from. And to see that it brought with it some of the same problems that Kinect suffered from, problems as yet unresolved.)

This broad range of knowledge wasn’t just good for Microsoft, it was good for its partners and customers – both of which became important sources of business for me. Having someone who could traverse the vast range of Microsoft products and discern their value to enterprise software buyers turned out to be pretty important: More often than not few inside Microsoft could help an enterprise software buyer or influencer understand how the highly siloed product lines could come together for a customer in a synergistic way. And most of the analysts covering Microsoft were narrowly focused on a specific Microsoft line of business – Windows analysts only covered Windows, Office analysts focused on their broadly narrow domain, gaming analysts had no concept of the enterprise, etc. Someone like me – and a few others, but only a few – could really pull things together and describe the opportunities Microsoft technology provided in the language of the enterprise, something Microsoft really struggled with outside the Dynamics group. And inside too.

But one day a new AR lead showed up, under new executive leadership, and that all changed. Years of trust evaporated under a controlling, “my way or the highway” AR program that focused on working closely with the big analyst firms and defocusing on the independents like me. Much of this had to do with a fallacy many vendors fall into: if you pay an analyst firm enough money for research and reports, you’ll have leverage over how they rate your products and services. We independents, who eschew publishing unread and unreadable “research reports” in favor of more tailored, client-specific services, don’t play in that sandbox, and therefore we can’t be “influenced” by threatening to cut a large report budget amidst a little arm-twisting about “can we have more favorable coverage.”

But a mistaken vision of a “pay to play” analyst world – despite the reputation of some of the large firms, it’s a fool’s errand to think this can be a strategy for working with large firms – meant that Dynamics’ new AR management, focused on controlling messaging and shutting down the kind of frank and sometimes brutal advice that independents are particularly well-suited for, started cutting the independents like me out of the picture.

There were other reasons too – deal flow analysis often pretends to analyze the influence of analyst firms in deals, despite the complete idiocy of the idea that an AE, hustling their ass off trying to close a deal, is an objective source of which outside opinions influence a deal, for the win or for the loss. I’ve had more than one AR head tell me I’m not important because I “don’t come up in the win/loss analysis” despite the fact that I know I’m influencing buying decisions in their customer base all the time: that’s a big part of what I do, day in and day out. Is my influence the same as Gartner’s? Of course not. But how many deals are you as a vendor willing to simply write-off because of the misguided notion that an independent isn’t worth the time relative to a higher-volume large firm?

I have a simple metric – look at the per analyst cost of your program and do the math: how many deals are you willing to forego to save you the cost of working with an independent analyst? Take the expected margin on a handful of deals and ask yourself why, even for someone who “only” influences a few deals relative to a large firm, is it cost-effective to exclude him or her? It quickly becomes penny-wise and pound-foolish to think that keeping a handful of independents out of an existing program is cost-effective in light of their ability to influence even a relatively small number of deals.

Consistent quality and customer-centricity is another reason to work with independents. The backdrop to having no major firm or brand to fall back on is that an independent lives or dies by the quality of their work: you don’t get a lot of second chances as an independent. Some of the things that I see large firms getting away with – let’s just say customer “disdain” would be a polite way to characterize it – aren’t going to happen with an independent: we simply can’t afford to screw over our customers. Or their customers, for that matter.

The other fallacy of cutting off independents is that, quite simply, we often know more and work harder. Many of us have decades of expertise and more than a little grey hair that you simply can’t replicate by spending more with a large firm: we know your customers, your ecosystem, your competitors better than you do in many cases. Cutting off the institutional memory of people who’ve labored in your industry with your customers and your competitors’ customers for years makes no sense – unless the goal is to totally control the message and pretend that customers are too stupid to care about supporting their efforts by listening to outside, objective analysis.

And that’s apparently what happened with Microsoft AR: the new team made it clear that independents weren’t important or necessary, and in fact as they were hard to “control” and too damn likely to speak their minds, it was just better to cut them off. And so they did. Not just me, pretty much all of us. Little by little, cut by cut. Until last spring I just called it quits. The Covid experience has taught me that life is too short to deal with these problems, so I fired them, cut my losses, and moved on.

As this death by a thousand cuts got into full gear, when it came time for me to advise clients on whether they should look into a Microsoft enterprise software solution, I had to advise against their products. Not because they suck – on the contrary, other than Teams, the product line is pretty top tier  – but because the lack of transparency and trust made it not just hard for me on a personal level. The lack of trust made it genuinely hard to recommend Microsoft as a “partner” to an end-user company. Companies looking to make important buying decisions often come to analysts like me in part because they want to cut through the bullshit and get a clear-eyed view of what a vendor is really up to, and not have to rely just on what PR and marketing says they’re doing or the few paragraphs in an MQ or Wave report that describe their attributes. But if the only message that’s allowed to get out is the official, approved, well-scrubbed message, what does that say about customer trust? About how willing a vendor is to take real criticism and try to make things better for the customer, even if it’s initially a bitter pill to swallow? Everything, unfortunately.

It’s a shame really. In part because I still have friends who work at Microsoft, who actually believe that the company should take a broader view, and with whom I try to remain in touch. One of my mottos has always been that the tech world is about people, not companies. To quote an exec I knew in Europe who went from one Unix company to its chief rival: “I didn’t change religion, I’m just attending a different church.” I always liked that perspective: vendors come and go, but the relationships you make person to person are the ones that endure, precisely because they’re the ones that count.

Unless you subscribe to the “my way or the highway” version of an analyst relations. In which case, at this point in my career, you’re fired.

I’ll close by quoting Peggy’s aforementioned article about independents: Analyst relations is a long game. So is being an independent analyst. In fact, you can say the same about being a successful enterprise software vendor. After 30+ years at the job, independents like me have never been in more demand on both sides of the aisle – vendor and customer. As enterprise software buying decisions become more and more complex, it’s important to have a more diverse set of eyes on the problems and an equally diverse set of opinions on how to solve them. Otherwise you may think you’re in it for the customers, but in reality you’re just talking to yourself.