How much to spend on analyst contracts [AR practitioner question]
Inquiry: SageCircle received the following inquiry via e-mail: “Is our use/cost of the major analyst firms at about industry standard or better – especially as it relates to analyst contracts?”
“Are we spending the right amount on analyst contracts?” is a common question that SageCircle receives. This is one of a group of “standards” or “benchmarks” inquiries (see The Size of the AR Team [AR practitioner question]) that many AR managers wrestle with, often in response to their management’s demands for justification for budgets. While clients want us to provide a simple rule-of-thumb for analyst contracts (e.g., as a percentage of vendor revenue), we cannot provide it. Through our research, we have discovered that comparable vendors (in terms of markets, total revenues and number of employees) can have dramatically different analyst contract requirements.
The more important questions that need to be answered are: “Are the contracts providing us the services we need to reach our defined goals? Are we managing the contracts to get full value?
For end users clients, usually IT managers at large enterprises, the answers are much more clear cut. Even though enterprises use analysts for a variety of purposes (see Why technology buyers use the IT industry analysts), these purposes basically fall into either strategic and tactical decision support. Thus, spending can be focused on active topics and activities, especially where internal expertise is not available.
How much IT and telecommunications vendors spend on analyst contracts is dependent on a variety of factors. In this SageCircle blog post, we will focus on identifying the factors.
Breadth of usage – How many different functions in the company will analyst research and advice be supporting? The broader the usage, the more […]
Since 2000, SageCircle has helped analyst relations teams to focus on business value by encouraging innovative thinking that leverages insights and drives revenue.
One method for avoiding the price increases that Forrester and Gartner are initiating on a regular basis is to diversify your sources of analyst research and advice. The one usual negotiating trick of playing one vendor off another probably won’t work with Gartner as CEO Gene Hall has been quite emphatic in his quarterly earnings conference calls that discounting by sales reps has been and will continue to be sharply curtailed. This means you may be better off looking to “boutique” firms for some services. There are hundreds of analyst firms in the market, many with very smart analysts and interesting research. Besides a lower price, there are other potential benefits to going with other firms including: flexibility in service delivery, better customer service, and unique insights.