Telecom Italia moves up in the Lighthouse Telecoms Index

Telecom Italia is the biggest mover this month with a gain of 11 positions. The firm has announced an agreement with Vodafone to share radio access network sites and is also in the news for the splitting up of its top management team.

Motorola which had dropped down 2 spots last month has jumped back with a gain of 4 positions this month. The firm has announced a major contract to deploy a WiMAX network in Pakistan and GSM/EDGE expansion contract for Celtel Nigeria. It would be interesting to see if this rapid expansion in the Asian and African region will help the firm to move further up in Lighthouse Telecoms Index.

France Telecom, the winner of the Clean and Economic Technologies Trophies 2007, has gained 6 positions and has entered the top 25 telecom firms. ZTE has also entered the top 25 with a gain of 3 positions. The firm has announced delivering a record 10 million handsets in India making India the 2nd largest market of ZTE handsets.

Extreme Networks has dropped down 11 positions this month making it the biggest loser of analyst focus this month and wiping out the gain it made last month. PCCW and Qwest have dropped down 4 and 8 positions respectively and have also dropped out of the top 25 telecom firms in the Lighthouse Telecoms Index.

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, subscribe to our Spotlight service for new and interesting analyst research or register for our monthly Advisor Spotlight Webinars.

Our best wishes for the holidays

The team at Lighthouse Analyst Relations sends you, your loved ones and colleagues our warmest wishes for the holidays and for 2008, our tenth anniversary.

We are continuing our tradition of donating our budget for holiday cards to charity. This year we are supporting the Medical Foundation for the Care of Victims of Torture, which cares for refugees and rehabilitates them.

Our headquarters and research centre will have skeleton staffing over the next two weeks. The Analyst Index will continue to be published, but the blog will be quiet until our return in the New Year.

Readership up by a quarter

The readership of Analyst Equity rose by a quarter this year, with the number of unique visitors up from 22,000 in 2006 to 27,500 so far this year.

Growth was especially sharp in the first half of the year, and hit a new high.

What's interesting is that some of our best-read articles this year have been 'classics' from earlier years, such as:

• On the folly of rewarding A, while hoping for B, from 2005
• Gartner Curries the Magic Quadrant, also from 2005, and one the posts I like the most,
  
• Vendors name rising analysts, from early 2006
• Ovum: a smart buy that needs careful handling, from late 2006
• Internet underpins analyst influence on mid-market, which generated a lot of discussion,
  
• and Share of Voice: Useful, Often Vital, which underpins our Analyst Index service.
  

It's especially interesting to see what domains visitors to the site come from. The 25 domains from which the most visits come include those associated with leading vendors, analyst houses, and one of our competitors. Near the top of the list, just above Gartner.com, is a domain being used only to investigate IP addresses (if you have a hypothesis about that, do let us know).

Considering the growing number of sources of opinion about analyst relations, the strong growth in our readership is much appreciated. It's deeply satisfying to know that this blog continues to win the interest of a growing number of new and old readers.

Asia's relationships challenge trans-Atlantic brands

Can brands survive in emerging markets? Today I've been hearing how Katerina Mavroidis, the Beijing-based global brand strategist, answers that question. For the last few years Mavroidis has been helping clients of Saatchi and Omnicom to put down deeper roots in China, the world's fastest growing marketing market (Note: Omnicom owns my former employer).

Emerging, high-growth BRICK markets are of great interest to telecoms and technology companies. However, it's unclear if their existing brand equity can aid the internationalization of their businesses. In particular, it's very unclear to many local managers that strong brand equity is needed in high-growth markets. In particular, Asia's relationship-driven business models mean that marketing budgets are often diverted into commissions for the sales channel and price discounting.

In turn, that places increasing pressures on marketing leaders outside Asia. Many leading organisations use a centralised 'brand-guardian' team as a global hub for creative and brand management.

That's especially common here in London, which some consider to be the birthplace of brand planning. European locations are often favored by US firms too: In Europe, some reasoned, one could more easy remove the US-specific elements of corporates and uncover a more universal brand. Therefore there is an established notion: that a brand that moves trans-Atlantic is one which has globalised. But that was the twentieth century, in which the Western hemisphere was dominant.

Now, in a twenty-first century in which the balance of power will swing over to the Eastern hemisphere, internationalising no longer means moving between the US and Western Europe, with their connected cultures. It's about China, Brazil, Korea, India... very different cultures. So, what happens to superbrands in China? The answer to that questions teaches us powerful lessons about in what way brands have to internationalise if they are to flourish in high-growth markets.

Because of their rapid growth those emerging markets, and especially China, are very interesting to super-brand companies. By definition, they pose new challenges and new opportunities which differ sharply from mature markets. There's a lot of urgency: the notion of losing - of opportunities that are on the table now, but which are fast disappearing - is powerful. A lot of firms are rushing to get into China, and other BRICK markets. Of course, we might say, it's mistaken to think of a simple land-grab, since relationships are slow to grow in Asia. However, many firms are surging into BRICK markets without laying down strong brand foundations.

Mavroidis shows that brands can completely remake themselves in new markets, especially in China. But sometimes when the 'global' brand comes to China it is so different from the original that it's just the same name but a different brand in most ways, she explains. Which sounds very exciting, and also dangerous. Local Chinese managers will ignore often the global brand essence, no matter how clearly conveyed. They feel that the global HQ don't have anything relevant for them. You can set up a gorgeous brand at global HQ - that was designed with China in mind too - and genuinely would appeal to Chinese locals, but it may never see the light of day because the local management resists the input.

There differences often undermine or contradict the global brand position. Local managers supress the brand, since they are unconvinced in the reality if brand equity. As a result, some firms with niche strategies and premium pricing seem to be different in the BRICK markets, and can be thrown off course.

There are a few lessons that communications and marketing managers can learn from that experience. One is that international collabration is very important. Brand essenses can evaporate in the poor communication that often exists. Often communication managers will be the most highly skilled in maintaining and deepening brand over borders. But even they may not know how to help their colleagues in emerging markets to remake and refashion brands so that they relate better to the local market, yet still reflect the global brand.

The unfortunate reality is that IT and telecom suppliers' brand essences seem rather refracted and differently reflect clients' aspirations and needs. There are some modest immediate changes that organisations need to make now to ensure they become more able to carry establish brands into high-growth markets. However, there are some major trends that they cannot understand on the experience of their key domestic market. The powerful local experience of headquarter markets often undermines the ability to understand the changes that are needed to relate to high-growth markets which are not, emotionally or commercially, like the mature US and European markets.

As a result, communication and brand organisations (both in-house and on the agency side) are posed with some special tasks. They need to change to become flatter and more adaptive to local conditions. In turn that means pushing out a richer understanding of the core of the brand. Furthermore, that means that global firms, both agencies and corporates, need to ensure that the local firms understand and live the brand. Because local offices are too often approached as if all they need to do is translate a campaign, they will often will not be effective are really developing a rich, local understanding of the brand without special measures.

So the global headquarters needs also to be infused with the understanding of how to make the brand life locally. At the strategic level: they need to discover how to understand the high-growth markets and also understand the way that brands struggle to connect with consumers and corporate buyers while maintaining authenticity.

At the moment, says Mavroidis, brand are getting away with little authenticity in BRICK markets. She notes that many Asian consumers are status-driven and any amount of exposure to a brand (especially a foreign brand) is often enough to trigger purchases. Certainly, Katerina argues, the status quo will change. People will expect more with time from the brands they experience.

Despite today's almost-easy entry into Asia's markets, global price premiums will be very hard to defend without real brand equity that is understood in the local markets. In the short term, perhaps that means there is an immediate loss and threat to international brands, which are failing to build strong brand positions. In the medium term weak brands in high-growth markets are even bigger threat. Unless the international brands assert an authentic and defensible brand position, then they will fall rapidly.

So, global brands build on shifting sands and the top brand managers often don't really know it. If the global management does not understand the need to communicate the brand clearly, internally and with agencies, then the brand will not be really established. The global HQ often fails to show, or understand, the universal value of the brand to local managers. On the other hand, often the local managers just do not understand the long-term value of brand as a way to sustain and develop premium prices. Of course, in the eyes of the global team the local managers have gone "anti-brand", but the blame has to go at the global level, because that is where the power is to produce a solution.

Of course there's another aspect of this, which Mavroidis is far too polite to mention. Most expatriate managers working in China have seen major political wars where red envelopes (Hongbao, rather than the original meaning) win over the 'good of the brand'. If local managers feel that bribes are the the key to market dominance, then they might think that the communications budget should go into a better, fatter, redder envelope. However, bribes can work just the same as discount coupons: they discount the brand and can reward mercenary, fickle and disloyal behavior.

And to a certain degree, it's right to understand that the understanding of brand equity is one of the most powerful tools against bribery. Managers in high-growth markets resort to bribes when they need the most 'effective' way of meeting the business objectives that their firms have. One thing that Mavroidis understands, partly from her training at Dartmouth's Tuck school (home of brand guru Kevin Lane Keller), is that the brand becomes a stronger source of defendable markets premiums. With all the copy cats there, Western brands are still doing surprisingly well for the moment. It is certainly hard to tell how the fortunes of these firms will continue without developing strong brand strategies.

Ariba shoots up in the Lighthouse Software Index

Ariba, the leading spend management solutions provider, is the most prominent gainer in this month's Software Index. The firm has gained a massive 14 positions as it aims to help companies compete and grow in the era of high crude oil prices. News of the increase in demand for Lawson Software's "QuickStep Offerings" solution has helped the firm gain 13 positions this month.

Aspect Software has also climbed up 13 positions and is now ranked at 35th spot. The firm has improved its ranking in the Digital Software Magazine's list of top 500 Software Firms and has also been listed as a leader in Gartner's 2007 Contact Center Infrastructure Magic Quadrants for APAC, EMEA and North America.

IFS, which has been selected as the "Company of the Year" by the Construction Computing magazine, has gained 6 positions and is the only entrant to the list of top 25 firms in the Lighthouse Software Index. Sybase has also improved its position by gaining 7 positions. The firm has been positioned as a leader in Gartner's Magic Quadrant for Multi-Channel Access Gateway, 2007 report and has also improved its position in the Gartner’s Magic Quadrant for Data Warehouse Database Management Systems 2007 report.

Trend Micro is the biggest loser this month in the Lighthouse Software Index. The firm has dropped 9 spots and is now ranked at 42nd position. The firm has just announced a new email security solution named "Trend Micro eMail ID" and also announced its first data leak prevention solution so a rebound for the firm cannot be ruled out next month. Sage which had managed to get back in the top 25 just last month has once again dropped out and is now at the 30th position.

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, subscribe to our Spotlight service for new and interesting analyst research or register for our monthly Advisor Spotlight Webinars.

SageCircle relaunches

Valley-based AR gurus Carter Lusher and Dave Eckert have relaunched SageCircle, an analyst relations service which closed in 2003. Amongst other things, we are interested to see what these two noted gastronomes have planned for their first soirée.

In its early years, as a 'pure' consultancy, SageCircle played a crucial role in developing the analyst relations discipline. Lighthouse's 'obituary' analysis of SageCircle's rise and fall remains one of our most requested white papers (you can get it free here). Since then, we're also discussed SageCircle in several posts on this blog.

But our white paper makes interesting reading: we were critical of SageCircle's choice to take venture capital funding in order to develop software. Comparing the new SageCircle site with the old SageCircle, it's clear that the new firm has a stronger, tighter business focus: advising and training.

More good news is that SageCircle has also launched a blog. We wish them every success in the years ahead: the market for analyst relations services is still growing, and there's a strong need for a choice of consulting and advisory approaches, as there is in the analyst industry itself.

Xerox makes it to the top 10 in the Lighthouse Systems Index

Xerox, the world's leading document management company, is the biggest gainer this month as it up 4 positions. The firm appears to be on the roll with the introduction of new printing solutions and its acquisition of Image Quest Inc has also helped it to raise its profile.

Asus, the winner of the 2007 China IF Design Awards and Four Prestigious 2008 International CES Innovations Design and Engineering Awards, has also gained 4 positions. The firm is now positioned at the 28th spot and with its Eee PC Top being billed as the America's Most Wanted Christmas Gift the firm may even make it to the top 25 next month.

Vmetro which has announced new storage devices for use with its Vortex data recording solutions has also gained 4 positions.

Oce is the only new entrant to the top 25 this month. The firm has announced the opening of its first liaison office in Bangalore and analyst focus on its distribution strategy in India has immediately helped it to gain 3 positions.

Lenovo is the biggest loser this month and it has dropped down 7 positions. The firm's announcement of a new plant in Poland has yet to get the attention of analysts. AMD which has announced the opening of a research and development (R&D) facility in Bangalore has also dropped 5 positions. Texas Instruments(-3) is the only firm to have dropped out of the top 25 this month and is now ranked at 26th spot.

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, subscribe to our Spotlight service for new and interesting analyst research or register for our monthly Advisor Spotlight Webinars.

AR institute launches blog

The Institute of Industry Analyst Relations has launched a blog for its members to share their opinions.

According to a report to the IIAR's members last week, over 85% of Europe's analyst relations managers are now members of the IIAR. Membership is also rising in Asia and North America.

As the activity of the IIAR's working parties grow, so will the quality of the insight and discussion that the IIAR's members can share through the blog.

In particular, starting next month IIAR webinars and conference calls will be opened up to non-members too - for a fee. However, by outlining their discussions on the blog, the IIAR wil be able to give AR managers a better idea of the value the Institute can offer.

AR managers rate Forrester, IDC, Ovum and Yankee as risers

I've just been looking at the results from a recent survey of vendor-side Analyst Relations managers. It asked how influential they rated certain analyst firms as being, and then whether they are rising of falling in influence.

I don't know the criteria for which firms are, or are not listed, but the main firms are all listed.

The chart below shows the results, after the 'falling' percentage' has been subtracted from the rising percentage.

For those in the know, the results are not too surprising: Forrester is the big riser, with IDC, Ovum and Yankee all doing well. The big losers are no surprise either: Bloor, Frost and Butler.

But what interests me is the trend line: generally, AR managers fell that the smaller and less influential firms are falling in influence, while the larger firms are generally rising in influence.

This really reinforces our opinion about the smaller analyst firms that trade on free research and internet profile. While their research is certainly worth reading, some vendors' inflated expectations of 2006 now seem to be turning into sober judgement about where the real influence is building up.

Unisys gets to the second spot in the Lighthouse Services Index

The most high profile mover this month in the Lighthouse Services Index is Unisys as it jumps up 2 spots to get to the 2nd position and replaces EDS. The firm has just concluded an outsourcing deal with Diamond Trading Company and is also working to overhaul the Spanish airport security system. EDS, the firm losing the number 2 spot to Unisys, has slipped 1 position and is now at 3rd spot. The firm has won the IDC Award For Best Practices In Infrastructure Outsourcing and may well be expected to regain its coveted spot in the coming months.

The biggest gainer this month is Siemens IT Solutions and Services. The expanded Siemens Business Services has been the focus of analysts as one of the premier vendor of IT solutions and services and has jumped up 9 positions to get to the 22nd spot. Orange Business Services, once Equant, is another big mover and has jumped up 7 positions. The firm has just announced a new service known as "IPVPN Protected" and has immediately garnered analyst interest in the product. Incidentally these 2 biggest movers are also the 2 new entrants in the list of the top 25 Services Index.

The biggest loser in the Lighthouse Services Index this month is Xansa as it slides down 5 positions to end up at the 29th spot. The firm has been acquired by Steria and appears to be losing its brand value. Fujitsu Services, which managed to get to the top 25 last month, has lost 2 positions and is out of the top 25 this 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, subscribe to our Spotlight service for new and interesting analyst research or register for our monthly Advisor Spotlight Webinars.

AR Intranet coverage expands 50%

Things slow down a little for our primary research team during the holiday season, and so we are completing two major updates to our AR Intranet this month.

The AR Intranet is Lighthouse's online continuous information service, which we launched publicly in 2003. It contains those databases and CRM features AR managers need, profiling hundreds of analyst firms and thousands of analysts. In 2006 and 2007 we have expanded the coverage of the service by half: from 505 firms in 2005 to 745 companies, and from 1,972 analysts to 3,211. That makes it much easier to identify the most influential analysts. Since our database also ranks each firm (reflecting influence, geographical reach, and customer base) it also helps managers to conduct triage of in-bound inquiries, and thus prioritize the analysts who are used most by their clients.

The first major update is expanding our library of marketing collateral and sample research from analyst firms. Many analysts firms give us access to their research in order for us to conduct share of voice analysts. Of course, copyrights means that we can't share that research directly with clients. Therefore we are asking firms to selects some samples to give our clients a better feel for their approach.

We are also asking firms if they have credentials packs and other materials that give a high-level overview of their services. Our researchers often use those materials to better understand these analyst firms, however the frequency with which marketing materials go out of date mean that it's a good habit for us to update them regularly.

The second major change is a number of improvements in the way the AR Intranet estimates the ranking of each firm. We collect almost every number we can about the analyst houses, and use complex statistics to give a single overall figure to average the firm's standing in various measurements of the firms profile and influence. That's especially tricky, because around one-third of the organizations we track are virtual firms, kitchen-table operations or other micro-firms. Up until now, our policy has been to exclude micro-firms from the ranking.

This month we will change our policy on micro-firms, and add them to the ranking. Increasingly our clients are conducting analyst relations at more granular levels, often with a business-line or national focus. In such contexts these micro-firms can be influential. Therefore we will also start to use a different numerical method to present the influence. At the moment we use an ordinal ranking, where the firm in 1st place is the highest ranked. However, feedback from our users suggests that they want a series where more influential firms get higher numbers, rather than lower numbers. As a result, we will be moving over to using standard scores. That will also have the benefit of being more proportional. The gaps are not the same between the 1st, 2nd, and 3rd firms as between the 400th, 401st and 403rd. Using standard scores will more easily show the reality: that a small number of firms are highly influential globally, and that the influence of other firms is more limited.