New players Whale Path and Chaordix have emerged in the market research and analysis game, crowdsourcing information and research to go head-to-head with high-paid technology analyst firms like Gartner and Forrester.

Crowdsourcing market research could end the Magic Quadrant quest

Industry analysis and market research is an important part of doing business. Companies rely on independent analysis of market segments and potential vendors to make decisions that impact business and the bottom line. Firms like Gartner and Forrester are heavyweights in the industry, but a new breed of industry analysis has sprung up to challenge the status quo with crowdsourced market research. Should the old guard be worried?

The kingmakers explained

There are a couple problems with the traditional approach to market research. On the one hand, purchasing the insights and analysis of these firms is expensive, and many small and midsize companies simply can't afford to access the information. Second, there's a perception that the system operates on a "pay-to-play" quid pro quo that biases the analysis and makes it a somewhat self-fulfilling prophecy.

Richard Stiennon, an independent analyst who formerly worked for Gartner, wrote a book dedicated to helping organizations understand and succeed in the Magic Quadrant game. In Up and to the Right, Stiennon writes, "There is magic in the Gartner Magic Quadrant. Despite the heaps of scorn expressed by vendors that don't make it into the Leaders Quadrant, there is no denying the positive benefits that derive from reaching the position farthest UP and to the RIGHT."

Gartner's Magic Quadrants are a sort of Holy Grail for companies. The company that tops the Magic Quadrant at the upper right is essentially crowned king of its industry, but just being somewhere on the grid—even at the bottom left—provides significant exposure and is enough to boost the image of a company. In other words, the incentive is to do what it takes to place on Gartner's Magic Quadrant.

According to Stiennon, a favorable position on the Magic Quadrant yields a variety of benefits. Companies that "win" at the Magic Quadrant game get increased deal participation, increased valuation, better relationships with press and media, and more merger and acquisition activity. In other words, life is good if you place well on the Magic Quadrant.

A brave new faster-paced world

Market analysis by firms like Gartner and Forrester takes a long time to research and produce, and most companies simply can't afford to play Gartner's game—whether it's as the subject of the market research or the customer buying it. They're not the only source of information, though. With the advent of the Internet and mobile devices, we all have somewhat ubiquitous access to information almost instantaneously. Bloggers, online tech press, independent analysts, and social networks such as Facebook and LinkedIn provide an endless source of valuable information.

New companies like Chaordix and Whale Path lie somewhere in the middle. They deliver credible, curated insight with greater speed than the big market analyst firms. This new breed offers similar research and analysis as Gartner and Forrester, at a fraction of the cost. They can do this because the data and research are crowdsourced.

"Whale Path was born out of a need for proprietary and reliable market data and analysis research that can be delivered at a significantly lower price and much faster than Gartner's or Forrester's typical time frame," explains Artem Gassan, CEO of Whale Path. "We felt the need for a new way for companies to acquire reliable market data and analyses, and we are creating this way by utilizing the crowdsourcing model."

Whale Path is a venture-backed startup based in San Francisco with a simple mission. It wants to disrupt the traditional research space by utilizing the crowdsourced model, bringing together thousands of analysts who are eager to utilize their knowledge and skills to earn extra income on the side and produce unbiased, reliable market data and analysis.

Gassan claims that there's huge demand out there for this type of industry-specific market research. Whale Path boasts more than 14,000 analysts in its network—most of whom either currently work or have worked at a major management consulting firm or at a private equity or hedge fund. Gassan says these analysts join Whale Path because they know they can present value: they either have access to valuable (and hard to get) data and information, have already produced their own reports and analysis, or know they're capable of generating high-quality research results for Whale Path's customers.

"It is because of the virtue of the crowd our customers are able to get their research within days instead of months as they normally would if they worked with Gartner, Forrester, or any other research firm," Gassan told me. "The price is also a fair market price, because the crowdsourced model operates based on the simple rule of supply and demand. If your price is too low, you will not get enough analysts participating, which will signal you to raise the price. The higher price will encourage more analysts to participate, which means you will get your results much faster."

Has the Quadrant lost its magic?

Information is crucial to making effective business decisions. The faster organizations can obtain accurate market research and analysis, the more valuable it is. If it also costs less at the same time, it's a no-brainer. Does that mean Gartner's days are numbered?

Rob Enderle, principal analyst with Enderle Group and a former Forrester analyst, thinks there's cause for concern. "I don't think the age of high-paid analysts are over (I'm not ready to retire yet), but the Gartner model clearly isn't working," says Enderle.

Enderle suggests that the problem isn't with the model but with the executive execution. He says big firms should be investing in analytics tools to ensure that their research has value and to demonstrate that they believe in the technology they advocate. He also cautioned that the report production process generally results in reports which are months out of date when published.

"If Gartner doesn't step up to the challenge it is likely that an independent group of federated analysts backed by an AWS-like service could displace them with cheaper, better services very rapidly using software-as-a-service type of sales and delivery tools," warns Enderle.

Right. So, something along the lines of what Whale Path and Chaordix are already doing.

Stiennon is more optimistic about the future of the traditional market research firms. His philosophy is more along the lines that there is room in the world for both types of market research and they each serve unique and valuable purposes.

Will the independents eat the old guard's lunch?

"There will always be a demand for industry expertise, especially as the pace of innovation accelerates. Gartner and Forrester serve a thinly penetrated market. Even Gartner admits they only have 11,000 clients," says Stiennon. "At the other end of the spectrum are bloggers, users, etc., that write about their experience with various products/technologies. There is a vast segment in the middle to be filled by independents and new models that either crowdsource or recruit expertise (GLG Group, etc.)"

I think the future lies somewhere between Enderle and Stiennon's views. Gartner, Forrester, and other old-guard market research firms do serve a different clientele than their cheaper, more agile, crowdsourced rivals, such as Whale Path and Chaordix, and there are enough customers out there to sustain both models.

As Enderle points out, though, the big firms need to adapt to the times and accelerate the process. Information provides a competitive advantage, and if organizations can get similar or better market research analysis in less time, at a fraction of the cost, it would be foolish to continue working with a firm like Gartner.

Image source: Ali West/Flickr

Topics: IT Ops