The Wall Street Journal-20080130-Vendors Still Paying For IT Research That Flatters Them

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Vendors Still Paying For IT Research That Flatters Them

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There were many excesses during the Internet bubble; one involved the Aberdeen Group, which passed itself off as a technology consulting and research operation, but which was for the most part a "pay-for- praise" operation. If you saw an Aberdeen report saying that Acme MicroMacro sold world-class solutions, you could be sure that Acme had written Aberdeen a world-class check.

Times have changed. Harte-Hanks, which bought Aberdeen in 2006, ended the practice. There is a new Aberdeen, with a new business model, one that it calls "sponsored research."

The new Aberdeen is better than the old one. How much better, though, is the question, because the new reports also seem conspicuously flattering. That may well be a problem for their readers, tech buyers inside big companies, who often struggle for objective help in making massive buying decisions.

The current Aberdeen comes up with a research topic, typically involving some new technology trend, and then approaches tech companies selling products associated with the trend. For what customers say is roughly $30,000 a company can become a report sponsor. Aberdeen, which wouldn't discuss its fee, then sends questionnaires to tech users, asking about their current activities and future plans for the area in question. The reports are meant to be a snapshot of the marketplace and don't mention specific companies.

The sponsors' funding is fully disclosed. Sponsors have their logos on the report's front page and are passed along with the contact information of everyone who downloads it.

Most of the half-dozen Aberdeen sponsors I talked with described the attraction of sponsoring a report as a chance to rise above the noise of the marketplace by being associated with something customers consider "research."

The potential conflict in this approach, though, is clear. The reports are big business -- there were 212 last year -- each typically with four or five sponsors. But if much of your top line is dependent on getting tech companies to sponsor your research reports, you've got quite an incentive to design questionnaires that will yield the kind of reports tech vendors will want to sponsor.

In that regard, Aberdeen delivers. The reports seem to invariably discover that "best in class" companies use, or are thinking about using, or somehow embody, whatever technology the report happens to be discussing.

Here is an example, from the executive summary of a report on "compensation management technology" funded by companies selling the same: "The research reveals that Best-in-Class companies have implemented organizational processes which support compensation management-technology adoption."

The summary of another report reads: "Best-in-Class enterprises have contract compliance rates 70% higher than their competitors." Companies with contract-compliance products paid for that one.

While there is a great deal of unobjectionable and straightforward information in them, if you look through Aberdeen's summaries of its reports, you'll see many examples of corporate self-improvement, all courtesy of some new tech trend. Reports linked to by one Aberdeen Web page are studded with phrases like "Improve Process Visibility," "Reduce the Time to Issue Credentials to New Employees," and "Cut Administrative Costs."

Sponsors can put out a news release announcing the report, and this is where the dovetailing of a report and a sponsor's marketing message becomes explicit. A recent example: "Blink Logic Inc - Sees Eye-to-Eye With Aberdeen Report"

Considering all the fads, trends and flat-out boondoggles in the corporate tech world, one of the most useful services any analyst could provide would be to red-flag companies away from wastes of time and money. I asked Aberdeen President Stephen Gold for an example of something critical from an Aberdeen report.

He cited several. One warned that companies in a particular tech area aren't always forthcoming about licensing information.

Another dinged SAP about delays in a software update. A third had a table that listed the per-user costs of a certain kind of software, which showed that a particular Aberdeen customer had the highest price.

The list might seem a small one. Mr. Gold, nonetheless, was eager to defend Aberdeen's credibility; he said he took the presidency of the company in 2006 to help restore it. If the reports weren't credible, he said, tech users wouldn't download them, so there would be no "audience" for Aberdeen to sell to tech sponsors. And business, he said, is good; the company employs 154 people today, compared with 28 in 2002.

I asked Mr. Gold to describe the old Aberdeen. He said it "had become complacent about actual research. We were following a non- scalable and non-value-added model."

True enough, but there is more that could be said, which perhaps is the case with Aberdeen's current research.

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