Wednesday, November 11, 2009

Next Practice Industry Analysis

Is the business model broken for traditional industry analysis? Or is Carter Lusher right to argue that the traditional advisory analyst model is thriving?

It is certainly true that the large analyst firms continue to make money from a largely symmetrical analytical model. As I see it, the problem with this symmetrical analytical model is that it fails to deal with some of the critical complexities (asymmetries) of the software market, and therefore falls short of providing genuinely useful guidance to its customers.

  • The first asymmetry is that the product is not the technology. Software products do not always fit into neat technological categories, but typically provide a shifting and overlapping bundle of features.
  • The second asymmetry is that the business is not the solution. Classifying a software vendor is not much use, when the relative advantage of one vendor over another changes dynamically with each announcement (especially mergers and acquisitions).
  • The third asymmetry is that the value of a given solution is relative to the context-of-use. As @monkchips puts it, business success is not a function of IT purchasing. That's why the traditional IT analyst business is broken.
Furthermore, the symmetrical analytical model is not compatible with a multi-sided business model, in which analyst firms may appear to have a conflict of interest between taking money from vendors and providing disinterested advice to purchasers.

@mcgoverntheory reckons analyst research tells you what people were thinking about yesterday, not tomorrow. It's like driving a car using a rearview mirror. 

If all you want is an expensive analyst report that absolves you from blame if you buy the wrong product, then you can spend your money on the large firms. But if you want to engage critically with technology and make intelligent judgements about what you are going to do with present and future technologies, then you need to participate in a different kind of conversation.

2 comments:

redrabbit said...

Thanks for that, surprisingly enough this has been circling in my head for the last week or so. Not a fan of Richard to be honest.

In regards to industry analysis you might want to check out this Niche Generator which provides comprehensive statistical and graphical information about any industry.

Cheers

redrabbit said...

Thanks for that, surprisingly enough this has been circling in my head for the last week or so. Not a fan of Richard to be honest.

In regards to industry analysis you might want to check out this Niche Generator which provides comprehensive statistical and graphical information about any industry.

Cheers