Periodically SageCircle conducts an experiment to see if there is specific and detailed information on the Internet or blogs that large enterprise technology product and services buyers could use in vendor negotiations. Why do we do this experiment? Claiming to save enterprises money on vendor contracts is the most important selling point that advisory (e.g., Forrester, Gartner, Ovum, and so on) analyst sales representatives can use with enterprise prospects (see Note 1). Actually providing actionable advice to current enterprise clients that can help with vendor negotiations almost always guarantees a renewal of the firm’s annual advisory contract.
SageCircle’s research project consists of spending a set amount of time, in this instance ten hours, searching the Web and blogs using standard search tools. In addition, we use social media to request tips (example blog and tweet) for where to find blogs and sites with this information.
In this example we were looking for websites, blogs, social networks, Twitterers, and such that provide information and advice on SAP contracts and pricing. SAP was selected for this specific experiment because it is a huge global software vendor with complex contract negotiations that typically have large price tags. SAP is also a popular topic of conversation between enterprise IT managers and advisory analysts. However, any large global vendor like EMC, IBM, Oracle, and VMware could have been used. What we were looking for are sites or blogs that provide fact-based detail on, implications of, and advice on how to deal with the following points:
- SAP pricing
- SAP discounts
- SAP maintenance fees
- SAP upgrade fees
- SAP contract terms and conditions
- Above by vertical industry
- Above by size of prospect/customer
As with past experiments of a similar nature with different vendors we found… Nada. Zip. Zilch. Nothing. Nil. Our research came across a significant amount of commentary that SAP’s pricing and maintenance fees were too high (duh!); that enterprises should negotiate harder to reduce prices (duh!); and enterprises should look for alternative sources of the same functionality such as SaaS or open source software (duh!).
What we could not find was a large number of SAP customers or prospects sharing detailed information on what SAP initially proposed, how the negotiations progressed, and the final pricing including any discounts on maintenance fees. We found no specific best practices by size of eventual installation, industry, or modules.
On the other hand, large advisory analyst firms will claim that their analysts routinely provide enterprise clients with real-world pricing intelligence and actionable advice that can help with vendor negotiations and save the enterprise client serious money, in many cases multiple times the cost of the analyst firm contract. The firms and individual analysts will claim that they can provide this advice because they talk to the client’s counterparts in other companies every day and each inquiry is a source of information as well as a way to deliver client service. Clients do share this type of contract detail with the advisory analysts because that information helps the analyst tailor their advice appropriately.
Advantage, advisory analyst firms.
SageCircle hears weekly from skeptics of the advisory analyst model that the information could be found if the end user is willing to put in the time and effort to find it. Our response – why does the end user have to invest that much effort if they can get the information quickly and easily from an advisory analyst? It is important to remember that large enterprises out-task activities all the time from janitorial services, to press release writing, to PC help desk, to travel services, to legal advice. Signing up for an annual advisory contract with Gartner or Ovum is cheap compared with the time that would have to be spent recreating the real-world pricing intelligence the analysts claim to have or the time spent searching for information that might not exist on the Web. Remember we spent ten hours searching and found nothing.
Advantage, advisory analyst firms.
Obviously, this could change overnight if someone was able to successfully create a website or launch a blog where large enterprise technology product and services buyers shared this information. To be useful, this new site would have to have a large number of contracts from companies of various sizes and industries, fresh information daily, and drill down detail. Until that happens, the advisory firms will continue to have a powerful selling proposition to use with large enterprise prospects.
(Note 1) The four basic selling points that advisory analyst firms (e.g., Forrester, Gartner and Ovum) use with large enterprise clients and prospects are (in order of importance):
- We will SAVE YOU MONEY
- We will save you time
- We will help you manage technology risk
- We will help you keep your job
Bottom Line: Questions about the relevance of advisory analysts in the age of the Internet and social media usually focus on “why do the analysts exist when there is so much free information on the ‘Net?” However, this argument falls apart because not all needed information is conveniently available, with established credibility, and in sufficient detail. Currently, the advisory analysts can easily provide unique business value to large enterprises when it comes to real-world pricing intelligence and actionable advice on large, complex vendor contracts.
Question: Can you provide URLs to websites or blogs that provide credible and usable information and best practices for negotiating with large vendors on major enterprise-class technology product or services purchases? Please leave a comment or send an email to “info [at] sagecircle [dot] com”
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Tags: advisory analysts, analyst relations, AR, Forrester, Gartner, Ovum, terms and conditions, vendor pricing
I agree that this well-established RAS-based analyst model isn’t going away anytime soon. Just as the classic mainframe hasn’t gone away….despite many predictions over the past 20 years that it would.
But similarly to that mainframe analogy, the market is changing. Early and mid-career IT pros (tomorrow’s CIOs & IT decisionmakers) who grew up on the web and know how to obtain information efficiently, share ideas and impressions with their peers, etc., very well *may not* subscribe (pun intented) to the classic RAS model.
Looking out over the next 5-10 years, I think many of the smaller, more nimble firms who employ a more flexible & internet-based model will feed, grow up & prosper by with this trend.
The bottom line is that the analysts will remain as relevant as ever – but in the future IT pros will be more savvy about using the more fragmented analyst/expert model.
Cheers,
Gerry
Duncan Jones on my team just recently wrote about this (confidential software proposals): Software Sales Proposal – Burn After Reading? (click to read).
The key issue here is confidentiality. Software proposals are confidential and therefore most users can’t share this information even if they had a venue in which to share it, like a blog.
Analysts and third party advisory firms generally can see these contracts because of provisions that allow for third party review.
So in this case, it’s a structural issue that will keep this information out of the general public.
Carter, surely analyst firms have to provide some value for the billions they charge versus zero blogs charge :)
If you want a serious comparison compare analyst blogs to those of independent blogs, and compare analyst advisory services to those of independent advisory firms.
Organize a shoot out and a few of us independents will show. On one condition – if we kick ass, we will be written a fair piece of those billions analyst firms charge.
Fair?
Carter, of course, the information/advice available from Gartner is not available for free from blogs or free websites. That finding is also a “Duh” (to use your expression)
The question you should be asking is this: is the information/advice available from Gartner available at lesser cost and at higher quality from smaller advisory firms or independent analysts?
Carter: “…will claim that their analysts routinely provide enterprise clients with real-world pricing intelligence and actionable advice” – really? Claims and reality are surely two very different things. Where’s the evidence?
Characterizing the blogs as making a bunch of ‘duh’ statements is a bit disingenuous. My understanding is that the transparency of blog posts from people like myself, Ray Wang, Tom Wailgum and Vinnie most certainly had a measurable impact. Only a handful of many voices for sure.
It is perhaps interesting to note that Ray keynoted for the UK SAP UG. No sign of Gartner/Forrester et al at that event. Why?
Hi Gerry, Thanks for the thoughtful comment.
Actually, I think that your future is now. Many CIOs and IT decision makers are already drawing up a variety of different sources – and always did. Before the ‘Net and social media it was network building using professional organizations like the Data Processing Management Association (DPMA) and attending industry conferences and meeting peers. Today it is easier and there is an online memory of conversations which adds great value to the networking.
Also, there already are smaller and more nimble firms. However I am curious about what you mean by “more flexible & internet-based model”? What are the characteristics that would permit them to grow and prosper?
Hi Christine, Thanks for the comment and the link to Duncan’s blog post.
Duncan and you bring up an important point about the role of formal client-advisor relationships based on contracts and non-disclosure agreements. This role certainly provides a legal basis for technology buyers to share contract information with advisors, attorney or analysts.
There are also a few other dynamics that could be at play as well:
1. Trust – Often advisory firm clients have been clients for a number of years and have become comfortable sharing confidential information with individual analysts and firms.
2. Convenience – Some people will forward a PDF of a contract to an analyst, but would not bother to type in all the salient detail into an online repository.
Hi Vinnie, Thanks for the comment.
The point of the exercise was not to determine whether blogs or the Internet as a whole have information which is valuable to IT managers and other technology buyers, which I think is well establish. As a consequence there is no need to conduct a comparison between analyst blogs and independent blogs.
Rather the goals were to determine whether or not the advisory analyst firms have any differentiation between themselves and free sources of information, and if their sales messages have any credibility. This experiment and similar ones in the past clearly demonstrate that the answer to these two questions is “yes.” But only for today as this could change at any point, especially if advisory analyst firms become static and do not evolve.
As to your suggestion to “compare analyst advisory services to those of independent advisory firms” that is not relevant in this context. That is because an “independent advisory firm” (i.e., a company that charges clients for advice either through a consulting model or an annual retainer model) is still an analyst firm. The point of the exercise was not to compare which analyst firms (e.g., Gartner, Deal Architect, Forrester, Redmonk, etc) deliver the best business value or client service or whatever.
BTW, I did check your blog and I did not see any detail about pricing intelligence, contract terms and conditions and so on. Can I assume you save that detail for your clients?
Hi Dennis, Thanks for the comment.
SageCircle used the word “claims” to describe the broad advisory analyst marketplace because not all advisory analyst firms have the type of client base that facilitates the sharing the of vendor contract information. However, I know for a fact – personal experience as a Gartner analyst and a large vendor AR executive, experience of our vendor clients, as well as recent conversations with analysts at Gartner and Forrester – that the largest firms do receive detail descriptions of contract proposals if not the actual proposals themselves for major deals. It is important to note that not all large firm analysts have equal access to vendor proposals and pricing intelligence. It depends on the size of their client base for a particular market. Even the largest analyst firm cannot cover all IT and telecommunications markets.
The use of the “duh” was specifically in the context of advice and intelligence on pricing and contracts. In our research we did not find specific detail about SAP contracts and pricing and what advice there was consisted of well know best practices.
BTW, what techniques do you use to demonstrate “measureable impact?” Can you share those studies with SageCircle?
As to why Ray Wang was a keynote speaker and not a Gartner or Forrester analyst, that is a question for SAP. It could have been a matter of fee structure, availability of analysts, or any a number of other reasons. However, this could reflect the success that Altimeter Group has had in leveraging its partners’ reputations built at Forrester along with savvy social media use and press quotes. As we have commented in the past (see this analysis of Altimeter’s announcement and this prediction), Altimeter has the potential to really develop a profile much closer to a major advisory analyst firm than the typical analyst boutique.
yes, details are often covered by client NDAs so cannot be generally shared. Also, we help negotiate a variety of tech contracts – some with SAP, some with IBM for SI, some with Accenture for data center outsourcing some with Verzion for MPLS etc…these are complex deals I doubt any site would be able to share details given the wide range of clauses, price points that vary by industry, geography etc on even if the NDA issues could be resolved. And then with new SaaS deals you are seeing convergence between software and outsourcing and network contracts and SLAs…so the market is in constant churn. It’s far from being codified and just searchable via Google.
Hi Vinnie, Thanks for the answer for my question.
So, you would agree that advisory analysts like Deal Architect and Gartner still have a differentiator from public blogs and websites? Otherwise, why would your clients pay for your services?
In today’s world, time and speed have more value than ever. Thus, by a “more flexible and Internet-based model” I mean a model that allows analysts:
- to interact more directly & immediately with their clients (as opposed to going through a formal inquiry/SAS/briefing scheduling process, which can take weeks to get on analysts’ calendars)
- to publish research and commentary much more quickly (as opposed to the peer review process)
- to charge less because less overhead and structure exists, or because of a more flexible licensing arrangement
Take today’s HP-Microsoft announcement as an example. Almost immediately upon conclusion of the call, RedMonk’s @cote published quite an insightful blog post (http://www.redmonk.com/cote/2010/01/13/hpmsft/) about the announcement that broke it down, analyzed the various key facets of its implications, offered “next step” action plans to IT and the industry at large, and concluded by offering a healthy array of supporting/informational links.
Now, I also saw a few other blog posts (none as insightful and all shorter) from “smaller, more nimble firms” which summarized and offered an initial take, perhaps with a bit of philosophizing. However, I have yet to see anything out of Gartner, Forrester or IDC on the event — blog-wise or published research flashes/notes. This is because of the peer review and editing processes (overhead) involved.
And I posit that @cote’s [free] blog piece will hold its own against anything that comes out of the Big Three in the next few days….or weeks.
To your original premise though ….
I think “paid” advisory analysts often (but do not always) have greater value than “free” sources, but this formerly clear-cut, incremental value has eroded. There are also many variables that IMHO make it impossible to make an iron-clad rule to this end. An exploration of these variables would be beyond the scope of a simple blog comment.
Cheers,
Gerry
Hi Gerry, Thanks for your thoughtful post.
There is no need to defend bloggers and independent analysts as I mentioned in a response to Vinneie that their value to IT managers and technology buyers is well established and not in question.
This particular post was about a particular type of informaiton: pricing intelligence and relevant negotiation advice about vendor proposals to large enterprise contract requests. This you did not address in your comment. If you can direct me to blogs or websites with the type of pricing intelligence I discuss in the post I would appreciate it. Otherwise, my position stands as is: providing pricing intelligence and detailed negotiation advice are major differentiations and selling points of the large advisory analyst firms, especially Gartner.