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In my more than a decade of writing on the trends and direction of the technology industry, occasionally I have talked about the dark side of technology industry analysts. In that vein, I wrote about the diminishing science of research in technology analyst firms, which has impacted the quality of the analysis and advice given by analysts. It built on my previous post on Why Bad Research Could Jeopardize Your Business. Unfortunately, the ethics and morals in the technology analyst industry have not gotten a lot better since I wrote those pieces, especially when it comes to the objectivity and independence of the research. Now it is time to provide shed light on the financial bias of written research and blogs by industry analysts and the firms they represent and publish under in coverage and rating of technology vendors.

What qualifies me to make that assessment? In my career I worked at technology vendors, among them Oracle and SAP, before I became an industry analyst at META Group, now part of Gartner. After a stint as a solo independent analyst and after spending some time reflecting on cleaning up this industry, I started Ventana Research a decade ago. Our firm focuses on supporting business and IT with in-depth fact-based research, including primary research and deeper analysis of technology products to help assess and recommend better technology strategies and plans.

Information from industry analysts can provide critical input for technology decisions. Given the rapid pace of technology change, it is not easy for businesses, no matter how large or small they might be, to determine what technology trends and vendors they should work with. Yet despite the increasing need for informed help on the part of businesses and IT, the volume of timely research from the large analyst firms has gotten smaller, not larger. Granted, the business of reviewing, editing and publishing research is no easy task, and the larger the research firm the more challenging the process. But nowadays one insidious factor is having a pernicious impact on not only the timeliness of the research but its honesty as well. The dirty secret is that some of the largest technology vendors have forced industry analyst firms to contractually agree to the right to review, edit and approve any written research that references their name or products before it is published.

Technology vendors claim this is because they want to fact-check industry analysts’ work before it is published. However, it is the job of research analyst managers and their operations staff to ensure that what is written is accurate and properly stated. We have done it that way for a decade and refused the financial control of our research just to get access or to have our research purchased. And vendors, even the best-intentioned, cannot escape the biases they bring to reviews of their products. Vendors’ heavy oversight has led to less research from industry analysts being written that offers a useful level of detail or analysis, let alone opinion. Moreover technology vendors use their influence to control access to their executives, offering interviews to those who agree to play this game and leaving out those who do not while leaving executives in the dark about the decisions about who is being scheduled.

Nowadays, Internet information has significant influence on technology buyers. Social media dialogue and blogs have surpassed the influence of industry analysts. Here again, though, some vendors are bringing money to bear to influence this channel. We have technology vendors now who are paying for seemingly independent blog entries to be written in order to gain visibility and promote their latest announcements or marketing activity. If you read a blog entry that ends in a promotion of a vendor activity like a webinar or event that seems out of place – well, it probably is. Any coverage of technology vendor products should be based on the merit of the technology and its impact to the market, customers and the analyst research agenda and not the result of the financial influence of a technology vendor. Blogs and written research that has been funded should have a disclosure at bottom disclosing it has been funded directly by the specific vendor no matter where you read it as they are distributed and syndicated across the Internet.

I feel personally obliged to help reestablish the standards of the industry analyst business, as it plays a critical role for research buyers and suppliers of technology. This is an industry that I passionately enjoy working in, but it needs cleaning up. Individuals and firms that represent themselves as industry analysts and influencers should not allow vendors to use editorial or financial influence to shape their research. Technology providers should stop demanding contracts that allow them approval of research or paying covertly for written coverage and should cancel existing agreements that do so immediately. If industry analysts and teams cannot apply quality control to their own research or correct errors after publication, and if the head of research is not able to stand by the research written, you as a company executive should not work with them. Unfortunately, today you still have to scrutinize everything you read from what you might think is a trusted provider, and certainly from any new source, to ensure you have analysis and opinion you can trust and not propaganda that has been edited, cleansed or manufactured.

Many of we newer analyst firms refuse to play into this game of contractual review of research as it crosses the line beyond which we stop being independent and objective research and advisory services firms. It also tilts the markets because the power of a very large vendor to control industry analysts creates an unfair situation for smaller vendors that do not have similar power to influence the written research of industry analysts.

It is time for change. I hope business and IT increasingly will demand to know if some vendors have edited and changed research that assesses or rates them as a vendor or in some other way put their thumb on the scale. Maybe the answer is for analyst firms and analysts to disclose when research has been reviewed and edited by a vendor before it was published or if it was paid for advertising disguised as a blog. We take the opposite tack, declaring that our Value Index research on vendors and Benchmark Research on buyers has not been edited or reviewed by vendors and we do not allow our blogs or research notes to be scrutinized by vendors before they are published. If we make a mistake that is factual, then we correct it. Our goal is just to ensure the best possible research and insights from our firm that is independent, not skewed by technology vendors.

I, Mark Smith, approve this message and verify that this article was not reviewed, edited, paid for or approved by any technology vendor before it was published.

Regards,

Mark Smith

CEO & Chief Research Officer

The annual Salesforce.com Dreamforce conference (Twitter: #DF12), just underway, may be the largest software conference ever, with attendance, physically and on the Internet, expected to be 90,000. Certainly, as one of the largest software events of 2012, this conference will be heavily covered via social media, while under the roof of the Moscone Center and surrounding hotels Salesforce will be demonstrating the power of using social media concepts in the enterprise and combining those concepts with collaboration software. Salesforce, which has become a cloud computing and software–as-a-service force in the industry, is publicizing its new efforts in marketing and in work applications. Once a conference for marketing and sales professionals, Dreamforce is now a technology and IT event that interests many IT organizations that are examining how renting software on the Internet can help their efforts and support their business priorities more efficiently than purchasing it.

Salesforce showcases its cloud computing partners in Dreamforce’s Cloud Expo, providing partners exposure before a large crowd of attendees – and not incidentally earning Salesforce large fees, as Salesforce is known to have the highest prices for exhibit space. Partners collectively will be spending tens of millions of dollars to be part of the event and entertain current and prospective customers. For others, the evening parties take on the life at Dreamforce which for most is the social highlight of the conference.

Salesforce still maintains that it is a “no software” business, but it is actually a “no on-premises software” business. The “no software” theme is tired; it was effective many years back against Siebel, Oracle, SAP and others, but now those companies have cloud-based application portfolios too. Nevertheless, Salesforce has been a leader at demonstrating how poorly IT sometimes performs at deploying applications and tools within the timeframes needed. This failure is not always the fault of IT, but purchasing, installing and deploying software has its challenges.

At Dreamforce Salesforce will demonstrate the power of using collaboration methods such as instant messaging, activity streams, web conferencing, video streaming, forums and other social techniques. This demonstration started in earnest last year with Salesforce Chatter Enterprise. Our benchmark research across business areas such as sales, customer service and workforce efforts finds that businesses are interested in taking advantage of these methods, but they are not yet on the top of anyone’s list.

In the sales organization, the applications that have the highest priority are sales forecasting, sales analytics, lead management, sales planning and tracking, commission and compensation and proposal, quote and contract. We found the importance of forecasting sales to be so critical that we are introducing a new benchmark in sales forecasting. Sales organizations are not putting a high priority on collaboration or social media, according to our 2012 benchmark measuring sales organization priorities, but they are increasingly interested. Our benchmark research found that analytics is the top priority in 77 percent of sales organizations, with collaboration at 63 percent, mobility at 50 percent and social media at 38 percent. Our research also found that 41 percent of sales organizations now prefer the software-as-a-service approach over on-premises for the first time. My dialogue with organizations using Salesforce is to get sales forecasting like Cloud9 Analytics provides today.

Sales organizations that do want to leverage social collaboration are most interested in broadcast, wall posting into activity streams and application sharing. All of these are part of Salesforce Chatter, which is tightly integrated into its applications or can operate in a stand-alone environment.

Salesforce will be introducing its Marketing Cloud suite and showing off the social media and collaboration methods it has expanded since its purchase of Buddy Media, which uses techniques and services to boost a company’s or product’s brand across social media and to drive traffic to a desired location on the Internet. Its digital inbound marketing techniques move beyond the outbound marketing method of electronic mail that the majority of Salesforce partners use, including Eloqua, Marketo and Pardot. While Salesforce is promoting social media-based inbound marketing, others still have reservations about its near-term potential. Facebook serves as a cautionary example; it has not been able to grow its revenue to its Wall Street financial expectations using this new approach. Salesforce hopes that getting individuals to do its marketing can help. Whether or not that proves true in the short term, social media-based marketing efforts still have some maturing to do; individuals will have to learn to respond to and click on promotions.

Salesforce will also introduce its new Work.com efforts, which are focused on building a portfolio of social collaboration applications designed to engage a company’s workforce directly in a range of employee and business process efforts. Salesforce has been evolving this approach after spending several years providing web-based methods to build custom applications on Force.com. With experience in this realm and after many acquisitions, the company will demonstrate how a new breed of business applications will evolve to be part of a computing environment that also includes mobile technologies like smartphones and tablets. Salesforce earlier this year acquired Rypple, as I assessed, which provides social activity and goals management – functions that are not managed well in organizations on a daily and weekly basis. Rypple’s approach is not designed to replace traditional annual performance appraisals, which will be around for some time, but will help increase productivity by providing managers and employees more direct guidance and recognition using social collaboration inside the enterprise.

I expect to hear more from Salesforce on human capital management, as this segment has been heating up with acquisitions by IBM, Oracle and SAP. Salesforce partner Job Science is among those looking for a boost. Our benchmark research on social collaboration and human capital management finds that knowledge sharing is of the highest importance to organizations. Salesforce is working to promote knowledge sharing with its social collaboration technology Chatter. Its enterprise version is about building a people-based backbone for organizations to more easily interconnect than they do through email and telephones, which are perceived as antiquated and not appropriate for organizations today. Our recently released next-generation workforce management benchmark found a growing swell of organizations looking to embrace social collaboration and mobile technology to promote manager-to-worker collaboration.

I also expect to hear more on Salesforce’s advancements in the recently launched Service Cloud for social interactions with customers, along with its use on mobile technology platforms.

Even if you are not eagerly awaiting any announcements, this year’s Salesforce Dreamforce will keep your interest with speakers such as General Colin Powell, Jeff Immelt, Sir Richard Branson and Tony Robbins. Even if you are not coming to enjoy the chaos of conference, you can tune in from your desk and watch the keynotes live or on replay with links at the Dreamforce 2012 site. If you want to hear my sarcastic optimism about software in the cloud, follow me on Twitter (@marksmithvr) or look for the hashtag #DF12.

Meanwhile, away from Dreamforce, Ventana Research is measuring the advancing role of business technology innovation. We invite you to participate. Our findings will be unveiled at our grand technology innovation event on November 8 at the Tech Museum in San Jose, CA. At the event we’ll also be celebrating our tenth anniversary. My colleagues and I would be delighted to see you there.

Until then, look for more in depth analysis and objective analysis of Salesforce this week, since this is what everyone has come to expect from me and the entire Ventana Research team!

Regards,

Mark Smith

CEO & Chief Research Officer

Mark Smith – Twitter

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