• 10Dec

    If you have visited this blog before, you may recall a posting in October that profiled the lawsuit filed by ZL Technologies against Gartner Group. In the original lawsuit, ZL technologies challenged the validity of Gartner’s Magic Quadrant methodology (which ultimately resulted in poor rankings for ZL’s product).

    Well, this week I received an update from ZL Technologies. (They must have added me to a mailing list based on my blog post – gosh, does that make me a journalist? More likely it makes me a pawn in SL Technologies’ misguided marketing efforts, but I digress.) Apparently, ZL has amended its lawsuit, arguing that Gartner’s research is based on more opinion than fact. In earlier court testimony, Gartner alleges that its Magic Quadrant reports are opinions not based upon fact, although their marketing materials indicates that the opinion is actually based on a body of facts. This from the cover note from ZL Technologies that I received this week:

    “While this case is focused on ZL’s dispute with Gartner over the erroneous statements in Gartner’s publications, the issues here also implicate Gartner’s larger business model. Gartner plainly admits that it attempts to leverage value from its largest clients, many of whom are also vendors covered in the company’s research. ZL’s legal filings describe how that business model causes Gartner to favor those large companies at the expense of identifying the best technologies, thus misleading not just the vendors who are inaccurately reviewed by Gartner, but the consumers who base their IT purchasing decisions on Gartner’s biased research.”

    So, basically, the lawsuit is alleging bias based on the size (and presumably the spend) of Gartner’s clients.

    Well, duh!

    This is not a new challenge. One of the lessons that I have learned working in trade publishing, both as an editor and as a PR professional, is that money can’t buy me love, but it can buy me access!

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    If my client is a major advertiser with a publication, I know that it usually is easier to get a hearing with the editorial staff. The same is true with analysts. I have represented a number of smaller clients who don’t buy market research. I set them up with very successful analyst meetings, and more often than not the technology gets included in the next report. However, the quality of the coverage will be better if you have access.

    And let’s face it, the big vendors get access because they pay for the privilege. If I am a Gartner subscriber, then I can contact the analysts when I need an opinion or when I want input on a new product. That’s what the subscription is for. And because it is a paid engagement, the analyst will learn more about your company, its strategy, and its products because that’s why you pay him. Whether it’s intentional or not, access tends to promote bias – the fact that analysts have more contact with and insight about paying clients probably means that those clients will get better treatment in reports. It’s human nature.

    So does that mean if you can’t pay to play, you don’t play at all? Of course not. Analyst research continues to provide an invaluable service to the marketplace. However, the analysts’ role is changing. I recently attended a Forrester Research discussion about predictions for the market in 2010. One of the insights that came to light was that more and more technology buyers are turning to social networking to find new IT solutions. They are going to LinkedIn and their peer networks asking about the best enterprise proxy servers or how to deal with cloud computing. There was a time when the first place these buyers would go was to their friendly neighborhood research analyst to get their take on the market. Now the analysts are becoming market validators more than predictors. The social media networks are providing information on the latest trends, and the analysts are handicapping the players.

    So what does all this say for the ZL Technologies lawsuit? Although the lawsuit is alleging research bias, the real issue is how much power Gartner has in making or breaking sales in a specified market. Is this lawsuit just sour grapes on ZL’s part because they didn’t get the ranking they wanted? Probably. Gartner uses a number of factors in handicapping vendors in any market, including how deep their pockets are (i.e. will they be around tomorrow to service what they sell), and how good their marketing and sales strategy is (which helps assure they will be around to service what they sell). That’s part of the reason that it’s hard for start-ups to rate well in analyst comparison reports, no matter how innovative their technology.

    So from the e-mail I received this week, it strikes me that ZL is using this lawsuit as a focal point for its marketing program. I am sure they are getting a lot of attention from the lawsuit, but I doubt that they are selling much e-mail archiving software as a result.

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    Posted by Tom Woolf @ 3:09 pm

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