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HR Technology Column

Who Are These 'Analysts' Anyway?

Technology vendors spend enormous amounts of time and money keeping industry analysts up-to-the minute on what they're doing. Unfortunately, HR practitioners don't know what these important people do and rarely benefit from their reports.

Monday, June 1, 2009
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After organizing and moderating 79 panels about HR technology since 1995 -- many including industry analysts -- I am convinced that most HR practitioners don't have a clue what they are or what they do. And it's not their fault.

This is particularly ironic because vendors spend enormous amounts of time and money keeping industry analysts -- including me, as an independent -- up-to-the-minute on their current products and technology, as well as their future direction.

In fact, larger firms employ a full-time Analyst Relations (AR) person to manage those relationships, just as they have someone for Public Relations (PR) for the press and Investor Relations (IR) for the financial community.

The perfectly legitimate goal of the vendors' efforts is to gain analysts' positive opinions with the hope they are praised in reports or the opinion is passed on to HR departments when they decide to buy something.

But the leading analyst firms -- Gartner, Forrester, IDC, AMR, Bersin & Associates and others -- sell their research mostly to corporate CIOs (except Bersin), so HR practitioners rarely get to read their reports or get to know them.

At nearly every one of my panels -- especially at the HR Technology® Conference, which held HR's first "Industry Analyst Panel" in 1998 and every year since -- I've asked the audience for a show of hands if they know what analysts do. Never more than a few go up.

I suspect more people understand what financial analysts do because they are often quoted on the business pages. They carefully track the financial performance of public companies, write research reports that sometimes only lightly touch on what the companies actually do, and issue "Buy, Hold or Sell" recommendations on their stocks for their clients. They focus on the numbers.

Industry analysts are very different.

They get paid to spend all their time getting smart about HR technology and the vendors that sell it in all functional areas. Most of them have extensive backgrounds working for software vendors (of various stripes) or with technology consultancies like Accenture.

They spend their time visiting and questioning end-users and vendors alike; seeing extensive product demonstrations but then looking under the hood and taking deep dives into the details; answering hundreds of telephone queries from their clients; attending different kinds of conferences; plus reading, writing and speaking about the judgments they've reached about the vendors and the most critical technology issues you face.

Hundreds of large corporation CIOs subscribe to their services for five figures or more a year. Despite that client population, their reports (at least in HR) are rarely very technical and can be understood by just about anyone. Knock on your CIO's door sometime and ask to see them.

When a CIO gets involved in a technology buying decision, he or she often brings analyst reports and opinions to the table. That's when practitioners get exposed to analysts and may even be on conference calls with them to ask their advice.

Often, what the callers want is the famous "short list" of the three or four vendors to consider (out of the dozens of possibles) in order to make an already lengthy selection process more manageable. That's when the vendors' educational efforts might pay off.

But analysts also have vendors as clients. For them, they provide consulting on how to improve their current and future products based on their deep understanding of market trends and end-user needs.

A conflict of interest, you say? Absolutely. But anyone with power in a small town (which every industry is, though spread across the country) has some kind of conflict of interest.

Inevitably, in a small town, you become friends with people on both sides of the fence or at least know them. That's why Rhode Island has a reputation for political corruption. The state is just so small, everyone knows everyone else!

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So the question becomes not whether analysts have one, but how much integrity and good judgment they bring to managing their conflicts of interest.

In my experience, quite a lot. Personally, I've never seen a vendor's money buy an analyst's good public opinion, though perhaps that's happened. Instead, vendors are buying the analyst's time and attention.

All analysts take briefings from vendors who are not clients. How else could they be so well-informed and write broad surveys of product areas? But those briefings tend to be shorter. Vendors who are clients get a lot more time to explain what they're doing.

Some vendor contracts may also include the analyst speaking at the annual user conference, appearing on a webinar, or writing a case study of a successful client. But in none of those instances is the analyst endorsing the vendor's product.

So I feel comfortable about their objectivity, and you should, too.

Now, I hope you know that if you have the opportunity to attend an analyst panel (live or a webinar), grab it. Or better yet, if you have the chance to question one face-to-face in a group or one-on-one (and you can guess where you can do that), run. They are simply the smartest people around about what we care about, and now you know why.

HR Technology Columnist Bill Kutik is co-chairman of the 12th Annual HR Technology Conference & Exposition ®, whose full agenda for 2009 is now available online. The event is two weeks earlier than usual this year: Sept. 30 to Oct. 2 in Chicago. He is also host of The Bill Kutik Radio Show sm. He can be reached at bkutik@earthlink.net .

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