Are you paying for an industry analyst in 2024?

ByPaul Christiano Last Update on

Industry analysts have long played an influential role in advising enterprises on technology purchases. Magic Quadrants, weighty research reports, and pricey consulting engagements have become fixtures of the IT procurement process. But in 2024, is paying top dollar for industry analyst services still necessary?

The dominance of legacy analyst firms like Gartner and Forrester is being challenged like never before. Meanwhile, enterprises are embracing more data-driven decision making, reducing reliance on the opinions and relationships of individual analysts.

In this in-depth guide, we‘ll analyze the evolving role of industry analysts and equip you with strategies for getting the technology insights you need without overspending.

The rise and influence of industry analysts

To understand the current state of play, it helps to look back at how industry analysts gained such clout in enterprise tech in the first place.

In the 1980s and 90s, IT buying grew increasingly complex with new categories like client/server, networking, and enterprise software. Technology buyers had a glut of vendors to evaluate and lacked independent perspectives.

Research boutiques like Gartner, Forrester, and IDC emerged to fill this need. They provided comprehensive research on technology vendors and trends. While buyers paid for subscriptions to research, vendors paid for inclusion in research and access to clients.

This pay-to-play model funded rapid expansion of legacy firms. Gartner went public in 1993 and surpassed $1 billion in revenue by 2000. Today it generates over $4 billion annually.

Though competition has grown, Gartner maintains enormous influence. Its Magic Quadrants drive millions in sales, while 77% of CIOs rely on Gartner reports.

Why enterprises stick with industry analysts

Given the rise of alternatives, why do enterprises continue investing heavily in incumbent analyst firms?

Heavily ingrained habits: For decades, relying on firms like Gartner has been baked into tech buying habits. Breaking routines is difficult.

Vetting and validation: Analyst reports provide a sense of objectivity and validation, rather than just trusting vendor claims.

Efficiency: Going through analysts provides a pre-filtered shortlist of options to evaluate.

Relationships and services: Analysts offer personalized advice and consulting beyond reports. Large firms have expertise across a vast range of technologies.

Industry standards: Reports like Magic Quadrants have become industry stamps of approval. Vendors heavily market leadership positions.

Cracks are showing in the model

While industry analysts maintain a hold on many enterprises, some cracks are starting to show in the traditional model.

Lack of transparency: Criteria behind rankings are vague and subjective. Limited transparency into analyst incentives and relationships.

Lagging digitization: Analysts have been slow to leverage modern data sources and analytics. Advice can seem anecdotal rather than data-driven.

Business model conflicts: Vendors pay for access and influence. Do analyst incentives align more with vendors or enterprise buyers?

Emerging alternatives: New choices range from review platforms to freelance consultants to data-driven advisors.

The shifting technology landscape makes relying solely on traditional analyst firms more dubious. Digital transformation requires more timely insights, objectivity, and quantitative analysis.

Alternatives to traditional industry analysts

While industry analysts still offer value, buyers now have more choice than ever before:

Review platforms – Sites like G2 Crowd and TrustRadius provide transparent peer reviews and comparison data on products. Reviews are free and vendor-agnostic.

Freelance consultants – Independent experts for hire on platforms like Comatch offer project-based advice without long engagements.

Data-driven advisors – New entrants like AIMultiple algorithmically analyze buyer needs and product/market data to generate recommendations.

DIY intel analysis – Leveraging free information from vendors, open source, journals, blogs, and conferences. More work but avoids analyst fees.

Peer networks – Many enterprises are joining informal networking groups to share intel on vendors and best practices.

The ideal approach combines analyst and advisor relationships with DIY intel gathering and networking. This blended model provides the benefits of external expertise while minimizing overreliance on paid advisors.

Tips for leveraging industry analysts effectively

For those still working with incumbent analyst firms, here are some best practices that deliver value without overpaying:

  • Compare research from multiple analyst firms rather than solely relying on one for objectivity.
  • Prioritize functional/niche analysts over broad strategists to get depth on your specific technology domains.
  • Extract and aggregate findings from reports instead of paying for entire bundled documents.
  • Limit open-ended consulting/inquiry engagements without clear scoping and metrics.
  • Negotiate enterprise pricing rather than paying list rates which can run into the millions.
  • Demand more transparency on analyst incentives and relationships that may introduce bias.

The future role of industry analysts

While industry analysts will continue advising enterprise tech buyers, their influence is unlikely to return to the near-monopoly of the past.

Forrester predicts that 15% of global IT services revenue will move from traditional firms to alternative models by 2025.

As price pressure increases, incumbent analysts must reinvent themselves to provide more measurable value. This means embracing digitization, transparency, and leveraging modern data sources.

We see the most forward-thinking analysts shifting their models:

  • From opinion-based to data-driven insights
  • From speculative reports to quantitative recommendations
  • From manual processes to AI/ML augmented analysis

Leveraging technology to unlock value, not act as gatekeepers to it, will need to become the new analyst mantra.

Conclusion

The days of enterprises writing blank checks to incumbent analyst firms are coming to a close. Savvy technology buyers are finding ways to tap into expert advice without overpaying.

But industry analysts still deliver unique value that should be incorporated, not completely discarded. The most effective approach blends analyst relationships, new advisors, data resources, and network intel.

By implementing a balanced strategy, you can make the most of industry analysts while optimizing your tech buying for the modern digital era. The choice comes down to judiciously leveraging, rather than blindly following, those who claim to be industry experts.

I am Paul Christiano, a fervent explorer at the intersection of artificial intelligence, machine learning, and their broader implications for society. Renowned as a leading figure in AI safety research, my passion lies in ensuring that the exponential powers of AI are harnessed for the greater good. Throughout my career, I've grappled with the challenges of aligning machine learning systems with human ethics and values. My work is driven by a belief that as AI becomes an even more integral part of our world, it's imperative to build systems that are transparent, trustworthy, and beneficial. I'm honored to be a part of the global effort to guide AI towards a future that prioritizes safety and the betterment of humanity.

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