Though it’s always true with anything on this blog, i should note here in particular that this post represents my personal opinion on this matter, and not necessarily that of SuccessFactors.  – Max

Why public disclosure of vendor selections will make analysts and vendors more accountable to customers.

Gartner’s Jim Holincheck poses an interesting question. He wonders:

The reality is that industry analyst firms are also customers. We need technology to run our business. It does not make sense for us to build it all ourselves. So, like our clients, we use packaged applications. How transparent should we be about what vendors and products we use?

It’s interesting because Gartner, like most analyst firms, has very specific rules and regulations about when and how vendors can use Gartner’s name in marketing materials. That is to say – basically, never.

It’s not that I don’t understand the dilemma. Surely, in any competitive market, most vendors will be left unhappy when a 3rd party firm (whose value resides in their presumed objectivity) chooses one over all the rest. It can be construed as an implicit endorsement. How can Gartner (and others – like Forrester, Bersin, etc.) be considered objective once they have made a purchase decision for themselves?

But I’m honestly not sure there is a real conflict here. As a professional services firm, Gartner represents a very specific type of company. And, there are other factors that differentiate them as well – like size (medium), industry (technology) and geographic distribution (global). Those factors account for some of the most important considerations in the choice of a vendor for just about anything.

Therefore, the only realistic conclusion is that analyst firms choose vendors that are right for them; for their situation, specifications and needs. Its not logical to assume that the same situation, specifications and needs are shared by every company that might be influenced by a Gartner report. To put it another way, companies that follow in Gartner’s footsteps purely on the thinking that “whatever is right for Gartner is right for me” are probably making an ill-informed decision.

In that way, it can be argued that analyst firms are doing a disservice to their clients by hiding their own choices. By allowing customers the illusion that those choices are the only correct ones, they miss an opportunity to say “here’s why we picked vendor X, but your company is different in this way and so the choice of vendor X may not be right for you.”

Funny enough, Jim makes an innocent but telling misstep at the end of his post. Having apparently posted to his blog from his mobile device, the post is appended with the line: “Sent via Cingular Xpress Mail with Blackberry.” Clearly we all now know that Gartner (or at least Jim) is a customer of both Cingular and Blackberry. They have opened the proverbial kimono. Gartner’s choice of wireless vendor and wireless email service are now public information: Gartner chooses Cingular and Blackberry.

I couldn’t have made the point any more crisply if I wanted to:  Analyst firms don’t risk controversy by disclosing their vendors, they risk controversy by hiding their choices. People will find out. Intentionally or unintentionally their choices will be revealed. But it’s not the disclosure of the information that’s dangerous, its the incorrect interpretation of the information that’s potentially harmful. If Company Y chooses to do business with Cingular because Gartner does, they may miss, for example, the fact that Cingular does not have good coverage in the city where Y’s headquarters are located.

So here’s my humble suggestion for how analyst firms might disclose their own vendors – and how the increased transparency will hold both analysts and vendors to a higher standard for the benefit of customers:

1. Issue a report every time you make a vendor selection that outlines your process and tells customers why you chose that vendor and why others should or shouldn’t make the same choice. This would give customers an opportunity to learn not just about your choice, but how you arrived at it.

2. Update your customers on your experience with the vendor over time. This puts the onus on the vendor to continue to deliver. When an analyst firm makes a choice it’s not only an honor, but a responsibility. If the vendor doesn’t stand up to expectations, they accept that they will be held to task publicly.

3. Note your vendor selections in your reports with an asterisk. Make customers aware of potential conflicts of interest. Let customers make informed decisions.

4. If a relationship with a vendor is terminated, especially when it’s in favor of a competing vendor, use the opportunity to do a deep dissection of each vendor’s strengths and weaknesses – and justify your selection.

Transparency is, for lack of better phrasing, the wave of the future. Blogs are holding companies accountable in new ways. Systems like SuccessFactors are making employees more accountable to their employers and vice versa. Global, 24 hour news is even making governments more accountable to their people.

The era of mutual, public accountability is upon us because information is everywhere and unlimited. And in our very visible technology industry, the analysts we rely on for untainted, objective advice should be using their clout with vendors to encourage transparency for the collective benefit – not hiding behind a wall of information asymmetry.