Analyst Equity ranked top AR blog for relevance

I just spotted that the Technorati Blog Finder now ranks this blog top for relevance on "analyst relations". Let's see how long it lasts!

30% of overseas firms free to leave New York Stock Exchange

Telecoms and tech companies based outside the US are giving up their listings on the NYSE. PCCW, Telstra, Telekom Austria and Vernalis are the latest to go, following Cable & Wireless and others.

Changes being introduced at the NYSE in June allow firms to delist if less than five percent of their trading volume is in New York. Almost 30% of overseas firms on the NYSE are now able to delist.

In itself, that high percentage explains one of the reasons why these firm are de-listing. Overseas companies list in the US or London exchanges in the hope of increasing their liquidity, and therefore raising their value. Buyers on the New York exchange perhaps show less interest in these firms that might have been hoped, especially considering the leading regional positions held by Telstra and Telecom Austria (which owns Mobilkom, a leading cellular operator in central Europe).

However, our feeling is that the principal reason for these firms withdrawing from NYSE is because of the right level of disclosure and transparency required by US exchanges, especially in the wake of expanding SEC regulations over several years. In the US, a number of pressure groups are suggesting that regulatory oversight should be reduced, to allow the NYSE to attract more overseas capital.

To us, this seems mistaken. Transparent exchanges reduce information asymmetry and allow more accurate asset pricing. Firms on the US exchanges can be valued more accurately and, therefore, command higher prices because of the lower asset risk. Listed companies have to make a judgement, balancing the added value that comes from greatest disclosure against the higher costs of that disclosure. In the long-term, most shareholders would favour more transparency. However, executives often need to weigh up short-term opportunities. Furthermore, in some business cultures managers may resent the demand to become more open to investors.

There's a substantial advantage in having different exchanges with different levels of disclosure: businesses are able to let access to capital at every level of disclosure, and investors should price assets accordingly, so that the level of information disclosure associated with an exchange is reflected in the risk used to value the stock. This would allow transparent businesses to gain by listing in more regulated markets, and in that way to avoid generic country risk estimates. And it would force executives in less open businesses to suffer the higher risk premium that should certainly be associated with greater secrecy and information asymmetry.

Longhaus: what's the difference with open source analysis?

Sam Higgins has written an article evaluating OSA, a project on open source and alternative analysis, in the new issue of Longview, the newsletter of Australian analyst firm Longhaus.

Higgins stresses the need of analysis to be set in context, and how services are often needed to make research useable.

When considering the role of OSA within the open source model, it is important to remember that it is the product that is open source - the whole-of- life costs for open source product are rarely - if ever - offered under an open source model (...) You just can’t have open source services because there is no tangible output. A service is essentially any exchange of money (consideration) for the acts of an individual or group of individuals. To my way of thinking, for a service to be open source it must be volunteer work and I’d love to meet an analyst who can volunteer 100% of their time.

Amusingly, Higgins uses the OSA checklist for open source on his former employer, Forrester Research: he gives them five out of eight.

ICT numbers and their reliability

A new paper from Berlecon is an important broadside against much of the rest of the analyst industry. The paper is only in German, so I thought I'd attempt a translation of the paper, by Dr. Andreas Stiehler.

Of course, also look at our posts on statistics , biased samples and megamistakes.

--oo00oo--

Hunger for numbers is substantial in the ICT market. Whether in specialized technical-, board- or customer-meetings, ambiguous percentages, packed into graceful designed diagrams, are basic equipment. This is understandable, because market knowledge is a competitive factor in the dynamic IT field. Information that supports the company's viewpoint is hot property. Furthermore, managers must make strategic decisions and plan investments - and in the context of rapid technology development and fast changing customer needs.

As there are so many mouths hungry for data, some cooking is worthwhile. Thus the ICT analysts, advisers and market researchers offer an important source of information. For the ICT providers, market numbers are a suitable means to better understand the needs of their target group, and a lever with which to obtain press attention and generate new business leads. In view of the multiplicity of number producers it is no surprise that the technical literature is stoutly filled with up-to-date statistics. However, whomever wants to avail themselves of this rich buffet should treat the data with respectful caution.

Alongside many qualitatively high-quality researchers there are also some 'outliers', whose research is useless for serious investment calculations, strategy decisions or market analyses and - to remain in the language of cooking - are inedible and actually present a case for strict supervision of the ingredients. Such a 'Food Standards Agency' does not yet exist, so enterprises should deal more critically with the numbers being offered. To do so, they do not have to complete a statistical study over several years. In order to separate the chaff from wheat, it is sometimes already sufficient to examine a few indicators in detail.

Of course, statistics are not perfection. Market study is also an art of the feasible that - as in every other business - must weigh up benefits and costs. All the more important, therefore, that providers of study results should openly give background information for those who want to use the results. He who broadcasts into the world that 27.276 per cent of the German enterprises will grow to use the XYZ technology, or the market will grow by 2.32%, must say openly how one arrives at this result.

The attributes of such statements include the size of the sample, its composition and representativeness, as well as the methodology for questioning. If these data are missing, then published statistics are not worth the paper on which it was printed. Now, of course, all that will not always fit into a snappy press release. They are however a mandatory part of respectably provided studies, whether offered for the purchase or free download, because that information is significant for the usefulness of the market numbers.

For example, the sample size is a primary indicator for the reliability of the results. Someone who extracts, on the basis of 20 respondents, conclusions for the total market (and marks these statements as statistically relevant with percentages with decimal points) either acts with gross negligence or uses this message to selling crassly. 20 responses is too few to really develop any solid conclusions about a market segment. In this case the researcher should refer to the statistical uncertainty, and consider that in the analysis and presentation of the results.

Of course, you are not always subject to deception when the size of the sample is not an enormous number. Statements for individual groups (e.g. enterprises with a certain size in a country) do not need a x-thousand observations to be sufficient reliable. Many market researchers use a minimum sample size for surveys of 50-100 observations. Upwards of that, naturally, no borders are set. The increased confidence (i.e. the reduced variance of the sample mean around the true mean) offered by a larger sample size is however rather small - in particular when regarded in relation to extra costs of the questioning.

Even if study providers speak of surveys of several thousand enterprises, caution is still appropriate in many cases. It is a popular practice in the statistics 'grey market' to indicate the numbers asked, not the number of answers: "a survey of x-thousand German enterprises shows that...". When looking closely, then frequently we see that several thousand enterprises were asked, however only a small part of these enterprises also answered. That kind of presentation of results does not have to do anything with respectable statistics.

As a further indicator of the usefulness of the numbers, it is advisable to put the design of the survey more exactly under the magnifying glass because the quality of the responses is only as good as the quality of the questions, how representative the sample is, and the methodology for questioning. The firm offers that the results should answer critical questions:

• To what extent are the people asked able to answer the questions posed?
• To what extent is the composition of the sample representative, after characteristics such as business size and industry composition are considered?
• And to what extent is the questioning procedure suitable to support the quality of statements offered?

Getting qualified information from real decision makers, especially from groups of people with no large interest in participation, is hard work and correctly costs money. Online public opinion polls, which are now widely used, are a suitable means to save time and money. They are however hardly suited as basis for respectable investment plans, or as basis for benchmarking, if the method of collection offers little control over the composition of the sample and the quality of the answers.

Qualitatively bad statistics create value for neither the customers nor for the providers of market numbers. Firstly, the risk increases that one could make decisions on the wrong basis and lose money. Bad study quality can have a lasting negative effect also on the perception of future studies. After a short-term gain of press attention, an equally fast loss of reputation can follow for the long-term.

Our core business is to help enterprises in the conception, execution and evaluation of statistics. A loss of reputation in this field would endanger our business. We stand for quality in statistical collection as well as the honest and responsible handling of information.

--oo00oo--

P.S. Thanks to Nicole Duft at Berlecon for her comments on this translation. German isn't my mother-tongue, so please regard this as a precis rather than an authoritative translation. (German-speakers: let me know if you can see ways to improve this.)

Lighthouse and EASTWEST launch AR alliance spanning Asia Pacific

Today I am delighted to announce the formation of a strategic alliance between Lighthouse Analyst Relations and EASTWEST PR which combines our capabilities to offer enhanced analyst relations expertise to clients in the Asia Pacific region.

The strengths of our two companies will combine to provide best practice targetting, outreach, measurement and training services to clients who are looking to strengthen their analyst relationships in Asia. You can read more about these services here.

Lighthouse is now the world's largest analyst relations consultancy and, since our inception in 1998, we have built significant intellectual capital and proven toolsets. Our client roster includes 18 of the 21 top business technology brands, including Cisco, Fujitsu, Hewlett-Packard, Hitachi, IBM, Motorola, Siemens and Verizon.

Our new ally, Singapore-headquartered EASTWEST PR, is one of Asia's leading independent PR firms which has been in operation since 1995. The Company serves clients from 25 offices spanning 14 countries in Asia Pacific as part of the Brodeur network.

I previously led Brodeur Worldwide’s analyst relations work and have known EASTWEST PR for several years. Our alliance creates the first fully-regional practice of analyst relations experts. It gives our clients local expertise in engaging the hundreds of analysts across these distinctive high-growth markets. Our common clients, and shared heritage, mean that Lighthouse and EASTWEST PR have had common processes and methods since 2002. Our clients were asking us for more depth than our interim partnership based in Australia; EASTWEST PR gives us regional reach.

The new practice will offer Lighthouse’s Asia Pacific analyst attitude surveys and share of voice evaluation, which allows technology companies to track their progress with the region’s growing analyst community. While EASTWEST PR already offers analyst profiling and analyst relations engagement, the new partnership will allow its clients to develop and evaluate the value of analyst relations.

Analyst relations forms the cornerstone of a corporate communications programme. I know that EASTWEST PR is pleased to have this alliance with Lighthouse, and sees us as the acknowledged thought leader worldwide. Working together, we look forward to extending Lighthouse's offerings of counsel, measurement, and training through their network of offices in Asia Pacific. Together we will be able to bring clients a higher level of professionalism and local availability in Analyst Relations than is currently available in the market.

Of course, let me know if you would like to find out more about the new alliance, or just leave a comment below.

Tiers before bedtime

An unfolding discussion on how to tier analyst firms has some AR professionals close to tears. Two directors at noted PR firms, Jonny and Dom, are of the opinion that one should tier analysts, and ignore the firm they work for. Jonny seems to feel that analysts should be placed in the top tier if they are taken seriously by part of the buyer, or media, communities.

However, very many analysts are important in one or both of these ways, since analysts with a high media profile tend not to be those with a high influence on sales. Such a broad definitionof the 'top tier' would be unworkable, since most of the analysts that firms currently have relationships with could, in this way, be seen as top tier. However, our feeling is that, for tiering to be workable, a small number of analysts need to be in the top tier.

In our opinion, influence is a function of both the analyst and the firm. One amplifies the other. Most importantly, the analyst firm is an important amplifier of individual analysts: Analysts at large firms do become less influential after they set up independently, for example. Furthermore, in B2B markets, analysts’ comments in the media may have little impact on buyers. As a result, it would be disorienting to not reassess analysts' importance when they move between firms.

What would happen if tech vendors started to place analysts in the top tier on the basis of media profile alone? They would focus on analysts most frequently cited in media releases, i.e. those who are least independent and most tied to vendors' viewpoints.

The opposite danger is one reflected by ARmadgeddon, a habitually contrary site with views generally opposite to our views -- and everyone elses'. ARmadgeddon proudly parades its ignorance of a leading niche firm. While we struggle to think that any niche firm can really be considered as part of the global top tier of all analyst firms, ARmadgeddon's comment reflects the shallow pro-Gartner 'groupthink' of those analyst relations professionals who try to simplify their lives with the convenient fiction that only Gartner and Forrester have real impact in the world's varied national markets.

Verizon goes up to the 3rd spot in the Lighthouse Telecom Index

Tele Danmark (TDC) is the biggest gainer in this month's Telecom Index with gain of 14 positions. The firm has certainly been busy after the organizational changes announced in January. The firm has posted some exceptional growth and has also been mentioned in Gartner's Magic Quadrant for Mobile Service Providers. Telefonica, which has also been mentioned in the same Gartner research, has also gained 6 positions.

Cegetel is another top riser this month as it gains 9 positions based on news that it is acquiring Erenis. The firm plans to increase its broadband market in Paris and launch its FTTx offer in April. Verizon is the most high profile mover this month as it jumps up 2 positions to land at the 3rd spot. All is not perfect for the firm though as some research and media references give quite a negative picture of the firm.

Embarq, the former local telephone division (LTD) of Sprint Nextel, is the biggest loser in this month's Lighthouse Telecom Index. The firm has fallen 10 positions to end up at 52nd spot this month. The firm's flow of information into the analysts community doesn't seem to be as powerful as previously. Cisco which was also mentioned in last week's post on the Lighthouse Software Spotlight has dropped 1 position. Apparently the WebEx buy that spurred a lot of interest in WebEx has not translated into a real jump for Cisco.

In the top 25 this month 3Com and France Telecom have been dropped this month while Alcatel-Lucent and Telefonica have entered the top 25.

If you wish to be sent the top 25 firms in Telecoms Index each month, email us at analysts at lighthousear dot com. You can also read how we do our Analyst Index rankings.

P.S. As you can see, we are still refining the way we present the data on the chart. On this chart, top right is better - and bottom left is worse. Please give us your feedback about the chart.

Lighthouse extends its reach into Asia-Pacific

An increasing amount of analyst relations effort is being focussed on Asia-Pacific, and Lighthouse is extending its reach into the region (more of that alliance with EASTWEST here). Over the last two year, we've had three researchers working in the region helping clients to respond to the market's growing opportunities. We also expanded our 2005 Singapore training programme in 2006 and again in 2007.

A number of trends are driving that growth. Many of them are quite specific to Asia. Needless to say, Australia and New Zealand function very differently from Asia. Tactics that are effective 'down under' might not work in Asia.

• Firstly, buyers in the region have specific and distinct information needs and decision-making styles. As a result, the number of analyst houses headquartered in the region in growing, something which has been underestimated by some. US analyst firms are fighting back, and an increasing trend can be seen towards regional-specific research, even at the level of the Magic Quadrant.
• Second, economic growth is strongest in Asia, as we commented in January.
• Third, there's a particular kind of interest in niche research and consulting in Asia, and over the last two years a number of firms started to capitalize on that, especially RHK, XMG, Mercator, Ovum and Orbys, building on earlier growth in Korea, Hong Kong and Japan.
• Fourth, we think that there's a strong opportunity for a wave of acquisition of local firms. We first noted the feelers working their way out from Forrester and Gartner last year.

There's a further point we should add, which isn't a trend but an accomplished fact: local analysts dominate across Asia-Pacific.

Should AR strategy prioritise initial planning or developing rapport?

This weekend I'm re-reading Market-Driven Management by Frederick Webster, the core book in his MBA elective on business-to-business marketing which I took at Dartmouth. It focuses on the major shift in the 1990s away from strategic planning and towards customer-orientation. That's a shift than analyst relations has yet to complete.

In a nutshell, the strategic planing approach, which was dominant in the 1980s, emphasized long-range planning that was centered on the firm and its competition. In contrast, modern marketing is based on the notion that analysis of wants and needs has to come first, since the task is to develop to fit the customer's notion of value. Lighthouse takes that latter approach, in which strategy is about program development rather than a static initial blueprint.

In a couple of discussions this week, I've found myself talking at cross purposes with some AR managers about strategy. Many folk here understand strategy as an individual, initial engagement that reviews a SWOT or PEST analysis and then tests messaging, differentiators and presentation content. At Lighthouse, we call that positioning.

We have a broader idea of strategy: our concept focusses on ways to deliver increasing value to analysts, and internal stakeholders. It's about delivering what they want with quality, rather than serving them up only what you have, but with the best possible presentation. Think of the whole hotel experience, not just the bed.

For us, strategy is about engineering into your program the goals, capacity, culture and tools to benchmark what you're going and to regularly refine and adapt to meet the changing needs of analysts and advisors. Analysts are not buying your products or services, so strategy has to be much broader than understanding what you'll say about them. That content is just one part, a small part, of the value the analyst gets from the AR relationships with the most rapport.

Nuclear winter? Technology has a micro-climate

Vinnie has kindly written on our Recession communications course. There's very deep interest in this topic, and our webinar on the topic had our highest-ever number of registrations.

Vinnie compares the cooling of the high tech markets to the 'nuclear winter' of January 2002, when that course last ran. However, there's another climatic comparison that can be made. In he US in particular, high tech is something like a microclimate. As a whole, the US economy should continue to grow modestly. The Dow Jones index, which tracks industrial stocks, hit a new record yesterday. Unemployment has just dipped slightly, partly aided by tight quotas restricting the hiring of foreign talent. Military spending plays an important role for US industry, since orders for non-military capital goods have declined. Indeed, there some inflationary pressure: In discussions here in California this week, senior staff complain about the rising cost of staff.

However, technology and telecoms remain under pressure. The Nasdaq index slipped for the third day in a row, and still remains below the level from which it fell sharply in late February.

Consumers' expectations are negative in the US, which is especially difficult for firms in consumer markets. For example, stock in Apple Inc. has fallen over the last month ending a long rise in the share price since last summer. It is now back at $90, where it was in November. So far this year, the Amex computer and network indexes are up by less than one percent, which must be building up shareholder pressures on executives.

So, while generalized recession seems unlikely buyers, suppliers and analysts in the tech industries are living in a challenging microclimate that is creating growing pressures for AR managers and their communications colleagues.

P.S. Of course, the softer tech and consumer markets overlap doubly here in the Bay area: Mortgage defaults here have risen, to an 11 year high, while housing rents are (according to the Metro, a local paper here) one third higher than the national average.

Maximizing the Value of Analyst Relations

One of Lighthouse's traditions is the Boardroom: an annual working lunch for AR professionals, hosted in San Jose, CA, the week before Gartner's Symposium. This week, we met to discuss ways to maximize the value of AR in a recessionary environment. Geoff Roach is an wonderful host, and arranged a private boardroom for us in the Silicon Valley Capital Club.

From Europe, it's hard to understand how deep the recession anxiety is here. Much of the anxiety has a personal expression for home-owners because of the long general decline in Bay area house prices, and in the number of houses being sold, since May last year. Bankruptcies have doubled over the last year. However, a number of local business indicators also show a downward trend over the last year: passenger travel is down, while air freight is at its lowest level for nine years. Also down are hotel occupancy rates and revenue. Since August 2006, consumer prices have risen much faster here than in the rest of the US. Over the last month, both the Nasqaq and the SV150 stock index are down, the amount of business space to let has risen to 17.4% of the total, and even the population of Silicon Valley has dipped. On the bright side, the Administration has succeeded in bring the dollar to a 26-year low (discouraging Americans from importing) and the weather's lovely.

However, our feeling is that this recessionary anxiety will be maintained for some time. Wall Street shares that feeling, and the future values of US tech stocks are falling. Our discussion on Monday was very wide-ranging, but there was general agreement that AR managers need respond more to analysts' needs. A lot of 'communication' is actually one-way broadcast. Rather than simply ship out their own corporate information, AR managers need to better understand what analysts really want.

I think that Geoff's book, coauthored with Lisa Perri, is an excellent guide to that. Their book outlines a survey of hundreds of analysts, across over 100 firms. They use their experience as analysts to show what analysts do, and then use their research to show the analyst firms' business models. They show some useful approaches to quantify the value of AR, and Return on Investment, including a worked example that show one small firm showing a $8,597,179 return from analyst relations.

The two chapters I found most valuable were 'What drives analysts crazy' and 'Secrets of the inner sanctum'. Those use comments and statistical data from analysts who show what analysts hate, and love, in their interactions with analysts.

Obviously, a book based on extensive bottom-up research will cost more than one based on anecdotes. However, their book gives great insight into the needs of the US analyst. It's an excellent companion to Efrem Mallach's book and seminar, Win them Over, which is the original and best book on analyst- and consultant-relations programs.

The eBook version of Geoff and Lisa's book is available online. For the same $748 price, Analyst Equity readers can get a hard copy of the book, and a copy of Efrem Mallach's book. Just email us your order.

P.S. You can also read up on the 2006 and 2005 boardroom discussions.

P.P.S. Apologies for our RSS readers. We have just added a tag for Experton to several articles: those are now at the top of the feed.

Yankee and Jupiter focus on online consumers

Two firms that have both reoriented themselves over the last year, Jupiter and Yankee, are developing similarly deep focus on online, business-to-consumer, technologies. It's less of an evolution for Jupiter (whose announced name-change from Jupiter Research to JupiterKagan seems to have not appeared) than for telecoms-specialist Yankee. That business now focuses on "anywhere" business, where businesses and consumers are connected by a network.

I now say that that Jupiter faces Yankee as one of its most direct competitors: I would not say the inverse, because Yankee's most direct competitors are firms like Ovum and Analysys. (Similarly, if my uncle makes furniture his major competitor is Ikea, however Ikea will be see him as a competitor).

I'd say that Jupiter and Yankee's common approach is defined by four features:

• - a focus on online business
• - an emphasis on business-to-consumer markets
• - strong services for vendors
• - data-driven by consumer research.

Taken together, I think that these are two sizable firms out of very few with such a level of focus in that online consumer business niche (Forrester would be another, but its focus on online business is less central to its business). Yankee has taken a sharp turn to broaden itself from telecoms to "anywhere". Its has a major, strategic, orientation towards business to consumer interactions over networks, and its volume of online research is becoming substantial. It also conducts large-scale attitude surveys of consumers.

Of course there are several firms looking at online consumers seriously, including Datamonitor, eMarketer and IDC. However, they are not all of any real scale, and few are using a similar large-scale research approach to Jupiter, Yankee or Forrester.

This deepening focus on B2C ecommerce shows the maturity and stability of the sector. However, will other firms be able to overtake the lead that Jupiter and Yankee are establishing?

Acquisition news raises profile of WebEx Communications in the Lighthouse Software Index

This month the star performer of the month in the Lighthouse Software Index is WebEx Communications. The firm has been acquired by Cisco for a hefty $3.2 billion in cash and has the analysts focusing on both the firms to see how the acquisition will affect Cisco and its current strategy of developing solutions with IBM. It would certainly be interesting to see how Cisco fares when we present the Lighthouse Telecom Index next week.

Also new this week is a different way of charting the Index. We'd love reader's feedback about the diagram. The chart shows the top 100 firms, and then spotlights the 10 or so which have the greatest variance from their position last month. That means that we may pick out different numbers of risers and fallers. Should we make into a 2x2 quadrant? Or go back to the traditional listing?

Another high profile mover this month has been Hyperion. The firm is also riding the acquisition wave as analysis pours through about the potential impact of this $3.3 billion acquisition. Of course, the news has also resulted in the boost to the rankings of Hyperion's rivals in the Business Intelligence market with Cognos and Business Objects increasing their rankings by 5 and 9 positions respectively. Oracle which has been on a roll on acquiring firms has not had any change in its position near the top of the Lighthouse Software Index.

The most notable decline in analyst focus has been in mentions of Gemalto, the firm formed by the merger of Axalto with Gemplus last year. The firm had a brief surge due to it being mentioned in some industry reports but due to no major news coming out, Gemplus/Gemalto has fallen 21 positions to end up at the 93rd spot. Amongst the top 10 Symantec has lost 2 positions to drop back at the 8th spot. This is the very position it held back in February 2007 before climbing to the 6th spot last month based on its announcement to acquire Altiris.

Firms that dropped out of the top 25 Software Analyst Index in April are Veritas (which is now part of Symantec, so its fall is unsurprising), SPSS and mySQL while Sage, Infor and Hyperion joined the top 25 list of firms.

If you wish to be sent the top 25 firms in Software Index each month, email us at analysts at lighthousear dot com. You can also read how we do our Analyst Index rankings.

Océ rises in the Lighthouse Systems Index for April

Océ is the hot topic for many analysts as it manages an impressive gain of 7 positions to end up at the 35th spot in this month's Lighthouse Systems Index. The inking of a strategic partnership with Founder Group certainly helping it to gain analyst focus as the firm now seemes poised to further explore the high growth Chinese digital printing market.

Another notable gainer of analyst focus this month is Qualcomm. Qualcomm had lost 4 positions last month but is back up with a 5 positions jump as the news of its strategic investments in AMEC filter in and its tensions with Nokia develop.

In the top 10 firms of the month, the most notable change is NEC as it gains 2 positions to end up at the 9th spot. The firm has been busy with some novel ideas such as its Automatic multi-media blog creation system and the new optical tranceiver family of products.

Matsushita has slid to the 38th spot by losing 6 positions as the news of its February announcement to double its production capacity of multi-layer printed circuit boards materials grows stale. LSI Logic has also slid down 5 positions to the 43rd spot. It would be interesting to watch analyst focus on this firm in the coming months as it has now completed the merger with Agrere.

In the top 25 Lighthouse Systems Index, SanDisk is the only firm to have dropped out. BenQ, which has also won accolades for its products at the iF Design Awards, has entered the top 25 Systems Index.

If you wish to be sent the top 25 firms in Systems Index each month, email us at analysts at lighthousear dot com. You can also read how we do our Analyst Index rankings.

What most AR managers do NOT consider important

Phew! We've just finished the number crunching from our readers' survey. We've asked readers to rate the importance of 75 topics covered in analyst relations training courses. Participants have already received the results.

We had an excellent response, with respondents spread fairly evenly between AR managers in telecoms, software, storage and 'powerhouse' technology providers. Around a quarter of the data came from AR service providers and consultancies (Lighthouse colleagues did not take the survey).

The data were not normally distributed (for example, we expected to see lots of topics being seen as of average importance but that was not the case). In fact there are a tight cluster of highly-important topics, and then a long tail of less important topics. In fact, that long tail is more interesting that the top-topics. The dozen topics of the least interest to AR managers are principally about techniques:

• Advance reviewing of briefing collateral
• Analyst databases and CRM tools
• Collateral development
• Developing common budgeting models for influencer activities and events
• Distribution of analyst research
• Moral and commercial pressures in AR
• Overcoming internal resistance to create an integrated approach
• Peer review methodologies
• Portals ­ internal for associates, external for analysts
• Processes, procedures, tasks
• Public relations firms ­ roles and how to manage
• Understanding the wider influencer community

However, it's fascinating that moral and commercial pressures is rated so low. Some vendors and analyst firms engage in the sort of tough love that would look inexcusable to some outsiders. In many businesses, ideas about morality really reflect what is legal in the firm's domestic market. In the US, for example, even the most respected book on international business ethics skips over dumpster diving because of its general legality. The flip-side also crops up, when acting ethically is illegal. Few business have strong safeguards that defend themselves against reputation risks. We think that should be higher on AR managers' agendas, and even higher on the to-do lists of their directors.

You can't win a "military victory" against the competition

A "military victory," in the sense of total control over the whole territory imposed on the entire population, is not possible.
Henry Kissinger, former US Secretary of State, quoted in this week's Marine Corps Times.

Competitive approaches in tech market reflects military doctrine in two ways. First, there is great variance between the dominant doctrines found in different countries and organisations. Second, most organisations assume that one approach can effectively guide highly different conflicts in widely-variant environments. While Kissinger's comment above relates to Iraq, our feeling is that few combatants in the tech market realise that total control is unwinnable in any part of the market and that, correspondingly, their approach towards competitors needs to accept that.

Nevertheless, many organisations consider marketing to be a form of warfare. Some companies mistakenly set the goal of eliminating their competition, even if that goal is unrealistic. Many even go further, and communicate this goal to the market.

Many organisations in the English-speaking countries aim for employees to be emotionally engaged. In the US, this is frequently inflected with military idiom. In the US, civil society is militarised to a degree unparalleled in almost any other country. The percentage of people who are in military service, in reserve or who were, is high. Military spending is a large part of the US economy (50% more than the rest of the world added together), and laid the foundations for many of the high tech clusters in the US.

This is not the case in other countries. In Germany, for example, using military idiom and speaking from the basis of deep emotional commitment comes across as oddball, if not pretty scary.

I saw a good example of this when sitting in a meeting in continental Europe where a highly-qualified senior executive, visiting from the US headquarters of a large public tech firm, was briefing a local analyst. This briefing did not go well. She was aggressively contrasting her firm's strategy to that of a powerhouse competitor. This executive reflected her firm's culture, in that her goal was to destroy the competition, and present their competitor's technology strategy as crazy.

This executive had found this a highly effective strategy in the US, where speaking with conviction, and understating competitors' strengths, is more effective. In the European context, however, it sounded like a fantasy. The competitor was dismissed, even though it's a powerhouse whose profits exceeds her firm's already substantial revenue. Obstacles to her firm were ignored and sidestepped. Her firm's goal of winning market leadership seemed, to the analyst mindset, to be a disorienting weakness rather than reflecting of her will to make things happen.

Few buyers, and even fewer analysts, feel that any vendor can win total control of a market, or should aim for it. However, some firms still explain themselves this way. Sadly, they don't appreciate that the message they send is quite different from the reaction by the listener.

Of course, powerhouse vendors rarely speak so aggressively about the competition - for a range of reasons. Many vendors make a point of complimenting other suppliers. They understand that few, if any, of their stakeholders feel comfortable with a supplier fighting for total control.

Re-opening on Tuesday 10th

Our London office is closed on Friday and Monday for state "bank holidays", so calls will be routed through to Sharon in our US client service team.

Invites to Wednesday's free conference call will be mailed out on Tuesday morning.

Five innovations define multi-vendor briefing days

Some folk think we are over-impressed by the novelty of Forrester's move towards multi-vendor briefing days. Thanks to Barbara for her comment: "I'm surprised that you don't see the Forrester Briefing Day program pretty much as an analyst implementation of a vendor AR briefing day.I don't see much common ground with the 3rd party multi-client/multi-analyst briefing events."

Lighthouse's view is that the key message for AR managers has to be this: multi-vendor briefing days are an innovation that they should expect to encounter with increasing frequency. There are five reasons why Forrester's event is not simply an analyst reworking of a vendor's event:

1. First, these events are primarily not there to sell the sponsoring firm.
2. Second, competitive vendors are there, allowing analysts a more critical and rounded selection of data.
3. Third, these events will be mainly aimed at mid-market attendees and those from smaller firms while vendors increasingly aim for fewer, but better analysts at their events.
4. Fourth, some analysts will be more resistant to attend these events, because of their less selective nature, which will produce both self-selection (more open-minded, less time-oriented analysts will attend) and friction in the analyst house (some teams of analysts will be more open than others: for example software analysts are more open to smaller firms than are IT services analysts). Vendors' executives love to attend these events, even if it's just to network with their colleagues: organising these events with analysts is much harder.
5. Fifth, in the future Forrester could invite analysts from other firms to attend. We don't think it is thinking along those lines but, for example, that might allow it to build up alliances with national boutiques in other regions, firms it has co-operated with and independent analysts it might want to work with more closely in the future.

Barbara is right to suggest that these are not third party events, however Forrester's event shares the unusual feature of being a multi-vendor briefing opportunity. We think they are here to stay.

Communicating in the face of recession: Free call on Wednesday, April 11

In the last five weeks, most of the world's technology and telecom markets have experienced a fall. In a free conference call next Wednesday, April 11, we will discuss what the threat of recession means for technology solutions providers and their AR directors.

Lighthouse's clients report that many buyers have become notably more cautious over the last weeks. As a result, the influence on buyers of industry analysts, and sourcing advisors, is increasing on most of the major deals current in play. Investors feel the pain too, since most tech stocks have not recovered even half of the losses they suffered five weeks ago, and remain flat.

In next week's call, I'll discuss the impact with Geoff Roach. Geoff was previously vice-president for Aberdeen's private equity services. He and I have recently completed research to see how analysts' attitudes and needs have changed. We'll focus on what these changes mean for communications directors and AR managers, but what we have to say will interest a wider audience.

Topic : Recession AR
Speakers: Geoff Roach, Duncan Chapple
Date: Wednesday, April 11, 2007
Time: 8 am Pacific;11 am Eastern; 4 pm UK; 17.00 European
Cost: Free

Our comments come out of the work done to prepare our new training course Recession AR: Maximising the Value of Analyst Relations. To find out more about that course, which will be held in California, London and Singapore over the next few weeks, visit the information page.

To register for the call, just send us an email.

T-Systems and Getronics rise as Orange Business Services drops in the Lighthouse Services Index

This month's Services Index is really a reversal of fortunes for quite a number of firms featured last time in our March index. Interestingly Orange Business Services, which shot up 8 positions last month, is now down by 6 positions as the biggest loser in our Services Index rankings for the month. The fall may be attributed to the lack of any new ventures or announcements since the January announcement by Orange to hookup with Fujitsu.

The biggest leaps this month have been registered by T-Systems (+6) and Getronics (+6). The announcement of new video-conferencing solutions is certainly one reason for the recent attention of analysts on T-Systems, as is its win of Centrica as a client. Speculation about the acquisition/collaboration of the firm by TCS is certainly in the news and if an announcement is made then it will surely be a juicy story for all analysts. Getronics,, which had fallen a tremendous 7 positions last month has rebounded this month as news surfaced that the firm may be taken over by KPN.

In the top 25 Lighthouse Services Index Patni is the only firm to have dropped out, while HP Services has re-entered the top 25 league after falling out last month.

If you wish to be sent the top 25 firms in Services Index each month, email us at analysts at lighthousear dot com. You can also read how we do our Analyst Index rankings.

Pro's and Con's of multi-vendor briefing days

Tekrati's comment on Forrester's multi-vendor briefing days interested us. Last year's HFN meeting day in Frankfurt was very successful: it allowed a handful of vendors and 22 analysts from many countries to gather together.

Both Forrester's events and HFN's are thematic, and allow the opportunity for analysts in a defined research cluster to be briefed by multiple vendors in one day. The days also include 'plenary' presentation sessions for all the attendees.

It's a good riff for the two of them to work with, and I would not be surprised if the idea had spread between these two organisations: Forrester is a HFN client, and their Frankfurt offices are a few doors apart.

Tekrati explains that the advantages of this approach are clear. Small and medium-sized vendors, and their agencies, will feel more comfortable trying to get onto the analysts agenda. They are specific, punctual opportunities, and will attract those who don't meet with the analysts attending on an ongoing basis. Face-to-face evens transform the ability to build rapport, so they are also a great advantage for the analysts for build more candid relationships with vendors. However, there are some weaknesses. Tekrati point out that it may be harder to be memorable at these events.

Our view is that many large firms will reject on principle the idea of sharing a platform with smaller brands. That, therefore, gives challenger firms the opportunity to look more candid and open.

As the numbers of analysts working remotely continue to grow, the opportunity to organise further events like this sees to enlarge.

However, as I discovered on a visit to HFN's office this week, the logistical and diplomatic obstacles to organising these events are massive. Forrester will not make money with these events, and the major benefit from HFN must also have been the generation of goodwill, since the organising work started in the summer for their mid-November meeting. Co-ordinating spokespeople and analysts from different firm involves much more complexity than Forrester's events, where the overhead in organising them is much lower.

These events will initially be very hard to organise, however they look promising.