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INDUSTRY WATCH:
Analyze This
By David Rubinstein
October 15, 2004 — The role of a free press is to provide impartial, objective news and information to the readers of a community, giving them tools to make important decisions that affect their daily lives. Most newspapers remain objective even though they accept advertising from big companies and special interests, because the papers make clear (both to readers and advertisers) there is no quid pro quo, no editorial favors for purchasing ad space. Macy’s, for example, is a huge national advertiser in newspapers, but when the company’s revenues fail to meet projections, or stores are closed or employees laid off, it all is dutifully reported.
In business, this role of providing impartial, objective information is taken on by analysts. In our industry, Gartner Inc, Aberdeen Group, IDC and a handful of boutique shops exist to give executives looking to buy software some understanding of emerging markets, and also to help software vendors compete in these markets through positioning and differentiation. The understanding has always been that although vendors are big-money clients of those analyst firms, the public utterings and enterprise advice that those analysts offer will remain reasonably impartial and objective, without favoring their paid clients.
Somewhere along the line in the IT world, however, this understanding has nearly ceased to exist. Basically, software vendors pay analysts to write favorable reports on their products, which are then pitched to reporters (and presumably, to enterprise customers) as impartial and objective analyses of those products.
This practice has moved more into the light with the recent announcement by Aberdeen that it is slashing the prices on its vendor-sponsored research and services. On its Web site announcing the new Aberdeen Access program, the company explains to vendors how they can increase market visibility through sponsorship of research reports.
I’m sure the expectation of a vendor paying for this research is that his company will therefore be rated favorably against its competition, or as a leader in its particular market.
Aberdeen stands ready to help the company generate leads, train its sales force in business value differentiation, and provide “research-driven case studies demonstrating [a company’s] solution’s impact in the enterprise. At the same time, Aberdeen will presumably continue to offer reporters and its enterprise clients advice and commentary on that market segment.
The practice of paying for a good analyst review hasn’t quite sunk to the level of a game show (“I’d like to buy a leadership quadrant, Pat!”), but it happens far too often and results in tainting an entire segment of the industry to the point that users lose the ability to trust in the information.
This does a disservice to all who work in our industry. If the information decision-makers need to rely on is tainted, it ceases to be reliable. This makes it harder for them to do their jobs, leaving them to fall back on the proven tools they know.
Where can people turn for reliable, impartial, objective information? Where they always have… to the newspaper.
A MATTER OF TRUST
An SEC probe. Fines. Indictments. A shakeup down the executive corridor, resulting in the CEO being brought up on charges. A survey that reveals customers are not happy with the company’s performance. Board-room battles over who should now run the company.
While it reads like a soap opera, it’s actually life as we know it at Computer Associates, an industry giant that has been rocked for the past couple of years by scandal after scandal. And every time you think the saga is played out, another revelation emerges, another investigation launched, and another black mark blemishes the company’s name.
Late last month, former chairman and CEO Sanjay Kumar and former executive VP of sales Stephen Richards were indicted and entered not-guilty pleas on charges related to an alleged scheme to book sales before they were closed to help meet Wall Street expectations. The plot is alleged to have affected US$2.2 billion worth of sales.
Meanwhile, a recent survey by Walker Information Inc. showed CA ranked near the bottom in a survey seeking opinions on 10 top technology companies. While the company didn’t reveal the scores, it was reported in the Long Island newspaper Newsday that only half of those surveyed were satisfied with CA’s product quality, and only about a third were satisfied with the tech support.
Now it is reported that the board is wrangling over who will lead CA from here. Current CEO Ken Cron has support from board chairman Lewis Rainieri and major stockholder Walter Haefner. Others want an outsider.
It is clear that CA has not figured out how to put this mess behind it. Until it does, its stock price will languish, and its reputation will remain stained.
David Rubinstein is editor of SD Times.
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