May 19, 2004

Why IT managers value analyst firms' conferences

Author: Robin 'Roblimo' Miller

ORLANDO, Fla. -- "You can't trust vendor marketing material at all," said the CIO for a Midwest-based manufacturing company over beers at the GigaWorld 2004 conference. It costs around $2,000 to attend, and 710 people paid to be here. And this isn't a big analyst-sponsored conference, either. Gross revenue of $1 million (not taking into account sponsorships, advertising sales, etc.) strictly from attendees for a four-day conference -- that looks like a profitable enterprise.

Several people I met here say larger analyst firms' events often draw 5,000 or more, and that the last time they attended one in Orlando the firm rented all of Disney World for an evening. But conference amenities aside, analyst firms large and small are increasingly important to IT decision makers who are trying to figure out what the future holds and how best to prepare for it, and their conferences are an important part of what they offer.

Looking for a new 'vision'

This word was thrown around a lot, as in "I'm looking for vision. I already know what's available today. I need to know what will be going on next year or in five years."

At least three GigaWorld attendees I spoke to said they didn't find as much visionary thinking here as they'd like. Two others said they thought there was plenty, but one said, "Too much of it is too high-level, not practical enough," and other heads nodded.

Everybody is trying to suss out the future. A rough consensus, articulated well by Unisys Server Platform Marketer Mark Feverston, was that increasing standardization was the "next big thing" in enterprise computing; that consolidating everything on a few platforms, with one or two carefully-selected operating systems, and as few (and as tightly-integrated) applications as possible was becoming increasingly necessary in a time of growing expectations and shrinking budgets.

"It's something we have the power to implement today," Mark said, separating the standardization/simplification goal from pie-in-the-sky approaches that depend on technology and software that hasn't yet been developed -- or has been developed but hasn't yet proven itself in real-world applications.

Linux and open source applications have a place in that standardization process, and a growing place at that, but they are not all of it. No one operating system or licensing scheme can do everything a CIO for a medium-sized company needs to get done. There is going to be a mix. The trick is to have as few ingredients in the mix as possible, so that the recipe can be simple as can be. New hardware and software purchases are increasingly being made with this thought in mind.

Note that outstanding innovation is not being mentioned. The people at this conference like new gadgets and cool technology as much as anyone else, but when it comes to the stuff that runs the factory and warehouse, they want it all to work smoothly -- and work smoothly together, even if that means sacrificing a place on the cutting edge. Their paychecks and bonuses don't come from getting awards as IT innovators; their livelihood stems from helping companies achieve their main mission -- whether it's making motorcycles, shipping restaurant supplies, or providing retail banking services -- as reliably and seamlessly as possible, and at the lowest possible IT cost. Give them this, they say, and they love you. Give them grief and they don't. It's that simple.

Hot topics: Outsourcing and offshoring

These are two of the hottest topics in IT manager/CxO circles today, and the two that are getting the most attention at GigaWorld. But remember, "outsourcing" and "offshoring" are not synonyms.

Example: The CIO of an auto parts OEM is here to ask several Forrester analysts in person what they think about outsourcing virtually all of the company's IT needs to IBM. He's thinking it might be more cost-effective and simpler from a management perspective to simply call IBM and say, "Here, you run it. All of it, from desktops to servers. We'll sit down and figure out exactly what we need, and you give us a bid. If the bid's okay, we'll sign a purchase order and not worry about IT at all, except to make sure you're doing what the contract says you should."

(Analyst conferences such as GigaWorld give IT managers a chance to meet one-on-one, in person, with analysts whose reports they've read and whose opinions they respect and get specific advice. Sometimes that advice can influence millions of dollars in corporate spending, as in the case outlined above.)

Outsourcing is getting more and more consideration. This doesn't necessarily mean sending jobs to India. In fact, for smaller businesses it usually means hiring a local IT specialty company to manage a company's computing resources, the theory being that the end-user company can concentrate on its core business instead of worrying about whether the network is secure. Multinational businesses considering IT outsourcing are turning to multinational IT vendors. These vendors tend to have presences in China, India, Vietnam, Russia, New York, California, and almost everywhere else. They are "offshoring" when they get a contract in the U.S. and some of the work on that contract is done in Bangalore, but they are also "offshoring" if they get a contract in Taiwan and some of the work is done in Texas.

The end result is that we're moving toward true globalization. In a technical sense, it no longer really matters where servers are located (as long as there are appropriate backups somewhere else), and most of the people who maintain the software on those servers no longer need to be anywhere near them. Internet-based open source development is being mentioned as a model for some of the globally distributed IT scenarios being presented and mulled over at GigaWorld.

And, of course, there are people here who have a strong stake in moving IT functions to India -- and who recognize that open source helps make it possible to build contract shops in parts of the world where large amounts of investment capital are hard to come by. Ronojit Mukherjee of ITC Infotech said that without open source development tools, his company would not have been able to grow nearly as rapidly as it has.

Ronojit is not the only representative of an Indian company at GigaWorld. There are several dozen, all eager to make contacts and get new business. So are many other companies.

Manning and 'womanning' the peds

"I have to go do ped duty now," the IBM guy says as he moves away from the miniature golf-style putting green in the middle of IBM's display area.

"Ped duty" is our buzzphrase of the day. It's used by some IBMers to describe the time they spend at the "pedestals" that make up the product-specific displays within their meta-display. Each one must be manned or womanned at every moment when an eager CIO might walk over and say, "This looks like something I've been waiting for all my life! Sign me up!"

The reality is that enterprise-level IT vendors have no idea how well they "did" at a conference for 60 or 90 days. They don't expect on-the-spot sales, but to make contacts and generate leads for future follow-up.

Apparently GigaWorld is fertile ground for at least some vendors, because they come back time after time, year after year. If nothing else, a display at GigaWorld makes sure Forrester pays attention to your products, says one vendor: "We, like, need to make sure we're on their radar screen, that they mention us a lot in their studies. If they see us here, it makes sure they do that. We set up at a lot of the analyst conferences. It's a lot of trouble and money, but it's worth it."

Earle Humphreys of "e-security" firm Solutionary says that he likes GigaWorld-type events because they put him in direct contact with people who can actually sign checks. Yes, he loves to talk to the techies ("I was one myself before I got into marketing," he says), but he also says that even if you get all the tech guys on board with your product, they can't actually buy it. However, if you get the risk management people to buy into your idea, purchase orders get issued.

For Earle, risk management people are the true marketing targets. His services are tailored for the financial services industry, where risk management is a big deal for obvious reasons and network security is obviously a huge part of that section of the business. Essentially, Earle is one of the many vendors here offering an outsourced service -- but it can only be considered an "offshore" one if you're not in the U.S., because Solutionary's main Security Operations Center is in Omaha, Nebraska.

Too much emphasis on project management?

I heard this complaint from at least six attendees. They think Forrester and other analysts are focusing too much on -- even pushing -- rigid process and project management styles that don't work out well in the real world. These can often lead to organizational conflicts when developers and system maintainers are asked to report to different managers for different projects.

"This thing of having a 'project management office' for each large project that's separated from the IT management ... it's supposed to cut through red tape and organizational problems, but all I see it doing is creating political feuds and confusing everyone," said one government agency software development manager. He also worried that by creating separate management fiefdoms for each project, the goal of simplification would get lost; that if each project was run independently there would be less integration across his agency, and that costs would rise. (This is an agency that quietly uses an increasing amount of open source code and is big on code reuse.)

Several private industry users questioned the emphasis on management style rather than on training developers or putting the developers directly in touch with the people in their companies who actually use their applications. "You can do more good by having two of your developers sit next to the warehouse manager for a week before they start writing a new warehouse management system than you can by implementing all the management theory in the world," one said. "Making sure your developers know what the actual users need, directly, and making sure they have a chance to keep their skills up to date are the two keys to efficient development, at least where I work."

Grueling duty for the analysts

One feature of this conference (and perhaps of other analysts' conferences; this is the only one I've been to, so I cannot say firsthand) is that Forrester analysts spend at least some of their time sitting at little tables with their names on them, where they meet one-on-one with attendees and try to answer specific questions.

Some of the analysts consider this a grueling duty. "I'd rather do research than sit here," says one. "This is not my prime skill. It's something you have to do to keep the subscribers happy, part of the job, something I can't beg out of."

Other Forrester analysts -- indeed, a majority of those with whom I spoke -- appreciate the chance to meet people who otherwise would only be names on emails or voices on the phone, to get their feedback, and take their requests for future studies.

What's not often apparent from the outside is that the analyst business is as competitive as any other segment of the IT industry. Analysts are under fierce pressure to put out report after report, and analyst firms' marketing people are under pressure to bring in an increasing number of subscribers -- and to sell "custom" reports to specific companies, including the ones that are often touted in the client companies' ads -- and just as often decried as unfair or biased by the client companies' competitors.

But the heart of the big-time analyst business is turning out unbiased reports and predictions that subscribers to the firm's "products" can use to make intelligent decisions. These subscriptions are not cheap when you think of them from an individual's perspective, but in the context of a decision maker whose choices can have multi-million dollar ramifications, their cost is negligible -- assuming the information gained is on target.

In that context, face-to-face meetings between analysts and their clients have more value for the analysts than for the conference attendees. The questions asked by clients give the analysts and their firms clues about new directions in which their research should go. The current emphasis on outsourcing and offshoring, for example, didn't come about because a secret analysts' cabal decided to push this as an agenda, but because clients have asked an increasing number of questions about these topics in recent years.

Anyway, that's enough rumination for today. There's a discussion titled "Your Open Source Strategy" coming up shortly, and I think I should be there to report on it for you.

Category:

  • Management
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