From: The Small Batches Principle – ACM Queue

The concept of activating the failover procedure on a system that was working perfectly may seem odd, but it is better to discover bugs and other problems in a controlled situation than during an emergency.

This is a shift in cloud native thinking: accepting that there are errors in production and forcing those errors to happen so you can fix them. It’s like avoiding that psychological trap we all get into: if we don’t acknowledge a problem it must not exist and fixes the problem. Computers don’t act that way – you can’t bury a problem – and humans don’t either, really. So, just force the issue, but in small, controlled batches to limit the blast range. Better you control it than something else making the negative effect larger and worse, most likely.

Source: The Small Batches Principle – ACM Queue

From: The British exit and tech: After the shock, uncertainty is the only certainty

In order to exploit being outside the EU, the UK may choose to lower corporation tax – currently at 20%, compared with 33% in France, and 12.5% in Ireland.

This, along with the potential for less regulations and more favorable anti-trust/monopoly treatment seems like one the biggest possible changes in tech with respect to the “Brexit.” However, cutting off easy access to staff (across all of the EU) might confound it all. Who knows, really?

Source: The British exit and tech: After the shock, uncertainty is the only certainty

From: DockerCon 2016: A Summary of Announcements and Key Takeaways

During a media lunch Golub stated that approximately 25% of attendees at the conference had role titles associated with an operations/sysadmin function

What’s interesting here is that it suggests that the Docker community starts with developers, and builds to sysadmins. Which, pretty much, checks out with anecdotes.

Source: DockerCon 2016: A Summary of Announcements and Key Takeaways

Who run IT-town? Ops or Dev?

At container-oriented conferences, whenever a vendor or an open source contributor demonstrates the ease with which developers deploy containers to production, usually there are cheers. But in large enterprises, especially those that maintain strict compliance guidelines, it’s IT that makes the decisions about what gets moved from development to production, and how it is done.

This is what you might call the anti-RedMonk stance. In reality, nothing is as cut and dry as developers XOR operators being king. I’ve been in many strategy discussions over the past 5 years where the people involved would love for just one of them to be rulers of the roost. It’s make setting strategy so much easier than catering to both.

In my experience, it’s more like this: developers have a tremendous amount of influence and devilish-steering over long-term IT department purchases, while IT people control the gates and money.

  • Developers can also just subvert IT and totally ignore them. You get speed and flexiblity, but the trade-off is inefficiencies in the long-term: everyone is doing something slightly different so there’s no economies of scale with respect to knowledge, culture, or costs. (There’s a loop-hole where you all decide, for example, to run on AWS and “bottoms-up” decide to start collaborating and “work together” and all that – I’m not sure that pans out in donkey-land without a lot of centralized change management, though see below on DevOps.)
  • Operators can set orginization wide standards but have to “force” developers to follow their dictates. So, if you want orginization-wide standardization and “someone else” to pay the bill and help run it, you have to go through IT. Here, you have ultimate control and “governance”, but you sacrifice flexiblity and speed. (There’s a loop-hole here where IT establishes a centralized “cloud platform” [to use my work’s parlance] and lets the developers do whatever they want in the confines/contract on that box/platform.)

Of course, many of us have been trying to reuinite this “house divided” for several years, cf. DevOps. Hopefully that’ll pan out because what we really need are both those functions working together to not build boxes or subvert corporate best practices, but to focus on building good products and IT services. Good luck!

A presentation is just a document that has been printed in landscape mode

I’m always wanting to do a talk or write a series of items on the white-collar toolchain, or surviving in big companies. Here’s one principal about presentations in corporate settings.

Slides must stand on their own

Much presentation wisdom of late has revolved around the actual event of a speaker talking, giving the presentation. In a corporate setting, the actual delivery of the presentation is not the primary purpose of a presentation. Instead, a presentation is used to facility coming to a decision; usually you’re laying out a case for a decision you want the company to support. Once that decision is made, the presentation is often used as the document of record, perhaps being updated to reflect the decision in question better.

As a side-note, if your presentation doesn’t argue for a specific, “actionable” decision, you’re probably doing it wrong. For example, don’t just “put it all on the table” without suggesting what to do about it.

Think of presentations as documents which have been accidentally printed in landscape and create them as such. You will likely not be given the chance to go through your presentation from front to end like you would at a conference, You’ll be interrupted, go back and forth, and most importantly, end up emailing the presentation around to people who will look at it without you presenting.

You should therefore make all slides consumable without you being there. This leads to the use of McKinsey titles (titles that are one-liners explaining the point you’re making) and slides that are much denser than conference slides. The presentation should have a story-line, an opening summary of the points you want to make, and a concluding summary of what the decision should be (next steps, launching a new project, the amount needed for your budget, new markets to enter, “and therefore we should buy company X,” etc.).

This also gives rise to “back-up” slides which are not part of the core story-line buy provide additional, appendix-like information for reference both during the presentation meeting and when others look at the presentation on their own. You should also put extensive citations in footnotes with links so that people consuming the presentation can fact check you; bald claims and figures will be defeated easily, nullifying your whole argument to come to your desired decision.

Also remember that people will take your slides and use them in other presentations, this is fine. And, of course, if successful, your presentation will likely be used as the document of record for what was decided and what the new “plan” was. It will be emailed to people who ask what the “plan” is and it must be able to communicate that accordingly.

Remember: in most corporate settings, a presentation is just a document that has been printed in landscape mode.

Setting goals is important for DevOps success

For my monthly column over at FierceDevOps I wrote about the importance of setting goals. I was motivated to write this by this point being repeated in Leading the Transformation many times, e.g.:

Management needs to establish strategic objectives that make sense and that can be used to drive plans and track progress at the enterprise level. These should include key deliverables for the business and process changes for improving the effectiveness of the organization.

It made me think that most of the corporate failures I’ve seen over the years were due to management being vague about what they wanted and what the team should be doing. Someone has to set the goals and, at the very least, it’s management’s job to make sure its done (they don’t have to do it, though I tend to think they do: they just need to make sure it happens).

Anyhow, check out the piece!

DevOps ROI

Recently, for my column over at FierceDevOps, I opined about doing ROI for DevOps. This topic comes up a lot as I note in my Pivotal post on the topic.

Here’s a summary/excerpt of the three ways of thinking through it:

1.) Bottoms-up ROI: We know everything and have put it in this spreadsheet

…if you have a good handle on the costs during some period of time where you were doing DevOps, and the gain that resulted from that period of time, you could come up with a bottoms-up ROI analysis. I think it’ll be somewhat dicey since it’s so hard to attribute costs and gains directly to DevOps but hey, it’s better than either telling people they’re asking the wrong question or its mute cousin: nothing.

2.) Were the efforts to change worth it? That is, DevOps is all cost

…if you want to run the numbers on something like “they tell me it will take three months and $50,000 in training and consultants to ‘do the DevOps'” this might satisfy your ROI craving. Again, you’ll need to have a pre-existing ROI at hand to simply plug your DevOps costs into.

3.) Pain avoidance and remediation

In the “DevOps is all cost” ROI scenario, we avoided ascribing gain to changing to DevOps. Again, while this is overly simplified, the deliverables of DevOps are to provide a continuous delivery process for your product and ensure that your product has excellent uptime. How could you account for the gain of those two desirables? You could create a way of assigning value to the knowledge you gain from weekly iterations about how to improve your product. You could also calculate the savings from avoided downtime.

Check it out, and tell me how you’ve been answering that question.

What does IT need to start doing to become a software defined business?

I was asked to talk to do an internal, “brown-bag” style talk at a company this week. I chose to do a slightly more technical-oriented version of the talk I tend to give, commentary and pointers on moving your orginization over to relying on more and more custom written software to run your business. Here, I give a brief business context and then throw out three areas to start focusing on if you’re interested in cloud, DevOps, and all this nonsense. The recommendations are to look into contious delivery and DevOps, figure out cloud-native applications (and microservices), and then plan out your cloud platform strategy.

As ever, I’m trying to make actionable a few things that are often fuzzy. I don’t acomplish that too well – a seperate hour long talk on each topic would be better – but I at least hope to explaing the thing, say why it’s useful, and give some pointers for further study.

I put the slides up previously, but because people often ask me for the talk track, I thought I’d record a rehersal run and post it here. So, check out the video if you’re into this kind of thing.

Sizing the PaaS Market

Fun with market sizing

I’ve spent a lot of time over the years working with cloud market-sizings, and occasioanlly on them. They’re always a bit whackadoodle and can be difficult to pull apart. But, so long as they’re consistent year of year, they do give a good intedication of momentum and a comparision to other markets. This is what you should be using emerging technology marketsizing for: just indications of which way the wind is blowing and how strong that wind is relative to other breezes.

All too often, strategy and M&A people (and other “MBA” types who’re doing valuations and finances, plus all the hangers on in the chattering classes) get obsssed with market-sizing as if they’re “real” and start to do things like include them as fundamental parts of their business plan, e.g., “we’re going to capture 1% of the cloud market this year!” The implication there is that if they don’t, they’ve failed…but when you realize how corny the market-sizing are, you realize that basing your yearly plan on an Excel macro is a poor use of time.

With that disclaiming context established, I love finding market sizing numbers. They’re fun once you get enough of them and can start figuring out the relative size of markets. Which is to say: how much money is being spent each year across the world on various types of technology.


Platform-as-a-Service is one of the more tricky markets to size and has spun all sorts of directions over the years. It’s always the smallest of the three aaS’s, but the highest growth. Even worse, most PaaS market-sizing you see is for only public PaaS. I’ve heard that Gartner has consternated much about this over the years: if you insert a simple “r” into it, they have an on-premises category called CrEAP that sizes what, I think, is “private PaaS,” and I believe they’re fixing it up further.

However, the problem with sizing the PaaS market is asking what you’re sizing. There’s “PaaS from SaaS” offerings like and then so called “first generation” PaaSes like Heroku (also at Salesforce) and EngineYeard. Then there’s hosted development tools (all the CI services otu there) that, for some reason, show up in PaaS market-sizing. But now there’s all the private PaaS offerings that happen to also run as public PaaS (it turns out the enterprise market really likes private cloud as well as public). And then there’s trouble-makers like us at Pivotal who bristle at the notion of being called (just) a PaaS. Layer Docker, Mesos, kubernetes and all those folks in there…and you’re head should be spinning.

The composition of this market has changed dramatically over the years. My theory is that it’s not well “shaken out” (defined) yet and it’ll change more. So, when I get asked for PaaS market-sizing, I sigh a bit inside.

Getting to a helpful PaaS market-sizing

I think the best process is to thinking through a what PaaS is used for and then try to figure out how much money is spent on solving that problem, not the exact technologies used to solve it. To me, that gets to some indication (whether it’s a ceiling, floor, or mid-point, I don’t know) of how much money there is up to grabs if you’re selling PaaS.

To that end, I always like this chart from a recent Goldman PDF:

As you can infer from my over contextualizing above, I think most PaaS market-sizing is bunk, but this chart a good way of thinking through getting to answer. It compares traditional packaged software and on-premises hardware spend to IaaS and PaaS to show how it starts to erode into “non-cloud” IT. I’m not sure if IaaS and PaaS and public cloud only (it probaly is, which is problematic).

When using this chart, the voice over is something like “tracking this market is difficult at this moment, as any analyst will tell you. I like to use something like this chart as a guide for thinking about it. With PaaS, what you’re interested in is how much traditional IT teams writing cloud-native applications are taking over, and this is one swag at it. Notice that the growth rates are drastically different too: there’s little to no growth in traditional.

The other thing (since most analysts don’t track private PaaS) this suggests is that all the traditional middleware money switches over to all PaaS (public and private) at some point…at least all the “new” money, the growth. Or, at least, that it’s a rough heuristic. It could be less (prices go down with cloud, right? ;>) or it could be more (software eating the world X IT – SaaS = what? == more customer software development at companies leading to more spend on the application development category).

So, if you add up the traditional markets of Appdev and middleare, you get something like a $35-40bn market in 2018 or so, depending how exuberant or dower you want to be, for pubic and private PaaS. Again, that wet-finger-in-the-winding is “bunk,” but it tells you type of money you should think about. Assume that over the next 10 years most “appdev and middleware” spend converts to “PaaS” and then you’ve got something that looks less shitty than the PaaS market-sizing analysts do now-a-days…and more real, I think.

If you’re really interested in PaaS, come to the Cloud Foundry Summit next month, May 11th and 12th, and see how this market is evolving. You’ll hear how companies are using Cloud Foundry to create software defined businesses and get the latest technical details on Cloud Foundry. Register with the code COTE to get 25% off!

Betting on the Software Defined Business for growth

I had lunch with Israel Gat yesterday. Lobster bisque in a sourdough bread bowl, to answer your first question. We were talking about the concept of a “software defined business” (and I was complaining about how HEB needs more of that, if only to get digital Buddy Bucks).

The question came up, so will companies really do this “software defined business” stuff (that’s the phrase I like for “third platform,” “digital enterprise,” horseman style jabber-jargon)?

Well, over the next 3 years, I think much of the marketing efforts in tech will converge on exactly that. This is what tech companies will try to sell and the “thought lordship” they’ll try to deploy into the market. I think it’ll actually be to the tremendous benefit of customers, not just a hustle. Soon the egg will become a chicken, and the chicken will start making demands on the egg. Which one is egg and chicken? Indeed! One can never tell the causation directionality in these things.)

Why will tech companies focus on software defined businesses as a growth driver? Well, it’s kind of the only area for growth, at least interesting growth. Keep in mind that if you’re a big, publicly traded company, you have to grow, you need to find new money sources. Last year’s revenue can’t just sit there, staying stable. Otherwise you’re toast because investors will want to allocate their money in companies that are growing, not shrinking (they’ll dump your stock, and but another). This is true for any business, but very true for technology companies.

I'm sure you've seen this type of clipart before...
I’m sure you’ve seen this type of clipart before…

Here’s my rough sense of revenue streams tech companies will have:

1. Consumer churn.

You know, you get a new mobile phone ever 2-3 years. Instead of subscribing to a cable package, you subscribe to HBO Go. (You sort of end up paying the same amount, but who’s paying that close of attention when there’s so new Game of Thrones episodes to watch?) You buy subscription services. Games.

Basically, the “not enterprise” market. This is what most tech press covers and talks about; it’s (sadly?) what we think of as “tech” now.

There’s growth in here, but it’s a totally different space than traditional, let alone “enterprise” tech. Microsoft finally seems to have figured this out, but meanwhile Apple, Google, and Facebook are gobbling up all the revenue and growth…not to mention all the new companies that have come along.

From The Economist, April 2015.
From The Economist, April 2015.

2. How much more ERP can there be?

Businesses still need a lot of software, but I’d argue that “systems of record” are probably well saturated at this point and low growth. This used to be the fuel of the tech sector, but if everyone has a system of record in place…how much more more spend can there be there each year? (I’m sure we could look up some IDC or Gartner numbers about single digit growth in these markets.) Not much. One area of interest is shifting over to SaaS, or:

3. Rip-n-replace cloud.

VM migration from Thomas Bittman at Gartner, March 2015.
VM migration from Thomas Bittman at Gartner, March 2015.

“Well, I guess I need to replace all this ‘legacy’ stuff with cloud.” You know in storage, compute, and maybe networking. There’s lots of hardware and infrastructure software churn here. In the software category, I’d put migrating your on-premises ERP/systems of record stuff to SaaS here as well: moving to Salesforce, Successfactors, etc. In a squishy analogy, things like Adobe transforming from licensed sales to subscription sales.

This is a long term play with lots of cash; for businesses though: do they end up with anything net-new? Have you actually tried to use Salesforce? It removes the hassle of having the manage your own CRM instance, but you still have to manage how your company uses the application…otherwise it’s baffling what’s going on in there. My point is: the company ends up kind of back where it was before the great rip-n-replace, just more optimized IT, with hopefully HTML5 and native mobile apps instead of Flex.

4. Software Defined Businesses.

Here, companies are looking to create new custom written software that helps run their businesses in new ways or creates entirely new business models. It’s the thing we at Pivotal target, what you see coming out of the IBM/Apple partnership (mostly – some of it just the next step in the great rewrite the UI every decade journey of green-screen->HTML 1.0->Flex->HTML5->Swift), and it’s what will benefit us people most: companies get new businesses and, thus, growth themselves, us individuals get companies using software more to hopefully make working with them suck less. You know: Uber and all that.

There’s lots of “drag” (secondary spending) that gets to #3 above: you know, you’re gonna need a platform for all that stuff, and the hardware and services around it…but instead of just ending up with the same IT-driven capabilities, you’ll have new capabilities in your business.

Portfolio Management

So, if you’re a tech company, and you’re looking at the 4 sources of cash and growth above, the fourth option looks pretty good. #1 means competing with Apple, Google, and Facebook and then a dog’s breakfast of lower margin goods below the UI layer. #2 and #3 are good, known quantaties, but probably with single-digit growth, if not tricky waters to traverse in the lower cloud infrastructure layers.

Then you look at the other option: a wide open field of possibilities where you “go up the elevator” and avoid the Morlocks. Large tech companies have to do all of these, of course, but I suspect you’ll see most of the razzle-dazzle spread on the fourth.

Those cigar makers have nothing to do with this, but cool picture, huh?

Eventually, to do a developer strategy your execs have to take a leap of faith

I’ve talking with an old collegue about pitching a developer-based strategy recently. They’re tryin to convince their management chain to pay attention to developers to move their infrastructure sales. There’s a huge amount of “proof” an arguments you can make to do this, but my experience in these kinds of projects had taught me that, eventually, the executive in charge just has to take a leap of faith. There’s no perfect slide that proves developers matter. As with all great strategies, there’s a stack of work, but the final call has to be pure judgement, a leap of faith.

“Why are they using Amazon instead of our multi-billion dollar suite?”

You know the story. Many of the folks in the IT vendor world have had a great, multi-decade run in selling infrastructure (hardware and software). All the sudden (well, starting about ten years ago), this cloud stuff comes along, and then things look weird. Why aren’t they just using our products? To cap it off, you have Apple in mobile just screwing the crap out of the analagous incumbants there.

But, in cloud, if you’re not the leaders, you’re obsssed with appealing to developers and operators. You know you can have a “go up the elevator” sale (sell to executives who mandate the use of technology), but you also see “down the elevator” people helping or hendering here. People complain about that SOAP interface, for some reason they like Docker before it’s even GA’ed, and they keep using these free tools instead of buying yours.

It’s not always the case that appealing to the “coal-facers” (developers and operators) is helpful, but chances are high that if you’re in the infrastructure part of the IT vendor world, you should think about it.

So, you have The Big Meeting. You lay out some charts, probably reference RedMonk here and there. And then the executive(s) still isn’t convinced. “Eh,” as one systems management vendor exec said to me most recently, “everyone knows developers don’t pay for anything.” And then, that’s the end.

There is no smoking gun

If you can’t use Microsoft, IBM, Apple, and open source itself (developers like it not just because it’s free, but because they actually like the tools!) as historic proof, you’re sort of lost. Perhaps someone has worked our a good, management consultant strategy-toned “lessons learned” from those companies, but I’ve never seen it. And belive me, I’ve spent months looking when I was at Dell working on strategy. Stephen O’Grady’s The New Kingmakers is great and has all the material, but it’s not in that much needed management consulting tone/style – maybe his upcoming book on Oracle will add to it.

Of course, if Microsoft and Apple don’t work out, don’t even think of deploying all the whacky consumer-space folks out like Twitter and Facebook, or something as detailed as Hudson/Jenkins or Oracle DB/MySQL/MariaDB.

I think SolarWinds might be an interesting example, and if Dell can figure out applying that model to their Software Group, it’d make a good case study. Both of these are not “developer” stories, but “operator” ones; same structural strategy.

Eventually, they just have to “get it”

All of this has lead me to believe that, eventually, the executives have to just take a leap of faith and “get it.” There’s only so much work you can do – slides and meetings – before you’re wasting your time if that epiphany doesn’t happen.

What are normal people doing with continuous delivery?


My latest Pivotal blog post is up, it re-caps a presentation I did recently covering what “the market” is doing with continuous delivery.

There’s a lot of opportunity, the glass is half full. See the slides over in my previous post on this talk.

Also, check out the recording of the full talk (it has some bonus material on containers recent role in CD) from HeavyBit, embedded above.

The new industry analysts, again

Never mind journalism, it’s industry analysts who are being disrupted.

I keep coming across a new crop of IT industry analysts who end up getting compared incorrectly to journalists. It’s little wonder as most people have little idea what an industry analyst does; it’s not like analysts, hidden behind their austere paywalls, help much there.

People like Horace Dediu, Ben Thompson, and others are experimenting with ways to disrupt industry analysts. They’re using new business models and tools that often seem bonkers to the more traditional analysts wrapped up all warm and tight in their blue blazers.

Their models focus on narrow topics with broad appeal (Apple, vendor sports among high profile tech companies [you can call this “strategy”], and “social”) and they tend to make much, if not all, of their content free. What they lack is the breadth of the overall industry analyst world (they have no opinion on what type of identity and access management or CRM system you might want to use), but that can could be fixed as more “independent” analysts like themselves pop up. There’s also not a lot of “short-listing” (ranking of vendors and products intended to be used by IT decision makers and buyers) that these folks do; this an area where incumbents can easily defend themselves.

One way of looking at it is the “consumerization of industry analysis:” focusing on selling and serving individuals rather than enterprises. Indeed,current industry analyst shops sell mostly to companies and are near impossible for individuals to work with.

Imagine Ben Thompson times 50

While Horace is patient zero here, the best example of this trend in action is Ben Thompson, or “stratechery.” For whatever reason – and his self-proclaimed Midwestern modestly would make him blush at this notion – he talks about his business more and, thus, provides a better view into the business side of this trend.

In the first episode of his podcast, Ben lays out the model he’s trying to execute (and how, you know, the Internet and blogging makes all this possible); he later elaborated on it with his rain forrest layer cake metaphor; and in an even more recent episode goes over how his business has evolved.

How well do these models work? Well, we have some data points from Ben since he’s discussed his momentum by subscriber numbers a few times. Let’s compare it to what I’ve made as analyst over the years to get a sense of what’s “normal”:

Industry analyst

(Sources: my often shoddy memory [adding up salary and bonus approximations], and Ben Thompson talking about reaching 1,000 subscribers on November 13th, 2014, and then 2,000 on February 2nd, 2015).

This excludes a lot of thing: health insurance is the biggest and other non-cash compensation.

The point is to show that at the individual level, Ben is doing well. His business is performing well compared to what’s “normal” for analysts. The recent growth rate looks even more promising. I actually ended up at the high end of the analyst wage chart (I think). The average is a lot closer to $100,000 the more junior you get.

If this model can be replicated by other individuals , we’ll see the biggest disruption to the industry analyst business since the Web. What the established firms have is marketing reach, brand awareness, and lots of money and time. The first two are hard for individuals to achieve, but not impossible. The last two are harder.

I think there’s a lot of room for Gartner (the mega firm) and the RedMonks (boutique firms) of the world, but in the middle things will get harder. Forrester is always rearing to be a #2, but revenue-wise, they have a long way to go; IDC will probably keep winching the cost-cranks and double down on being Master of the PivotTable. My former friends at 451 Research have a lot of potential, but like all the other folks in the middle, they need to keep honing their strategies and go-to-market. I keep hearing that HfS is awesome, which could provide an interesting case.

With that bucket of points made for the tl;dr crowd, the rest is an extended treatment.

The Enterprise Gruber

I ran into Nick Muldoon a few years ago at a DevOpsDays (in 2012, right in the middle of my time at Dell) and he paid me a high compliment, loosely quoted from memory: “I always thought you could be the Gruber of enterprise IT.” Indeed, that’s what all my type dream about when we drive past those lottery billboards on the way to the airport at 4:30am: sitting at home, reading news, blogging, and being so awesome that it pays well.

To some extent, I did that at RedMonk; not at Dell, for sure: there’s no talking in public, really, when you work on strategy and M&A. And I did that on the pay side of the paywall at 451 Research. I loved it: writing up what I think about the IT industry targeted at helping my “audience” (we called them “clients”) make better decisions about IT, be it product management, competing, investing, or using IT. (There’s a minority that look towards analysts for entertainment, which is valid, but likely pays poorly.)

In part, that’s what I’ve been asked to do in my new job at Pivotal, except with a Pivotal bent, of course.

The RedMonk Disruption

Just a few years into it, RedMonk decided to do away with their paywall and ended up showing one path to disrupting the industry analyst market: the idea of providing free analyst reports through blogs seemed crazy, but it worked. James captured the, uh, esprit de corps in the analyst world well in a 2005 post:

I was at a recent event when a well known industry analyst, who used to run a firm well known for writing white papers in support of vendor positions, sat down. I was discussing how blogs, RSS splicing and aggregation were going to change industry analyst and other information-based businesses. They sniffed and said that bloggers had no credibility. This from someone that sold their credibility down the river long ago.

Yup, analysts are a friendly lot…

As with VCs, one of the problems an analyst has is generating enough flow to get the raw materials you need for your day-to-day work: getting people to talk to you enough, frequently enough, and deeply enough to gather all the information you need to usefully pontificate. You need raw fodder for your content creation. Ben alludes to this is another way: you have to create a pipe (or an overflowing Evernote notebook) of content ideas, things to write and talk about…to analyze.

For RedMonk, having no paywall meant that their marketing was done for “free.” The consequence was (and still is) that RedMonk can’t charge for content, it’s all free. Most firms in the industry analyst business charge a lot for content. My last analyst shop, 451 Research, charges a bundle, and people seem to like it: 451 writes great stuff and their large customer base shows that people value it. But, it does mean that 451 needs to do marketing separately; they don’t get those “zero marketing budget” dynamics RedMonk does. Neither model is better or worse, just different depending on what and how you’re running the business. Both models still get paid for consulting, webinars, and a multitude of other things.

Let’s look at three firms to peek into the bushes of the business a little bit.

RedMonk’s Differentiation

RedMonk thus differentiated itself from other analyst firms first by making all of its research free (at the time, very novel): it allowed RedMonk to build pull in the market, that is, it made marketing free. It wasn’t easy, and it took awhile, but it worked.

Their research topics matched this structural approach as well, namely:

  1. focusing on bleeding edge technologies and practices, which, leads to the paid work on…
  2. helping those bleeding edge companies talk to the “mainstream” IT world
  3. helping “mainstream” IT vendors (IBM, Microsoft, Sun, Adobe, etc.) understand how to profit from and strategize/product plan with/around bleeding edge stuff.

They still do that and do it well, along with some of the usual analyst business models (like consulting, webinars, events, etc.)…but all of RedMonk’s activities revolve around knowing about the new shit sooner than the next analyst and being able to explain how to fit it into client thinking. Their events business (launched after I left) looks like an an adjacent business to the “knowing what the fuck we’re talking about” strategy: the tried and true come “hang out with the smart folks and drink your face of” business model.

RedMonk is cheap compared to other firms. The entry level is $5,000 for startups, and goes up from there. Companies like IBM, SAP, and Microsoft pay a lot more (and get a lot more!) but still get a really good deal compared to what other firms charge. You can check out their client logo page to estimate their revenue if you do a little estimating for the larger account sizes and Excel swagging: not too shabby, eh?

The 451 Differentiation

451, structurally, is similar to other analyst outfits: there’s a paywall for most everything. As with any analyst outfit, 451 does paid consulting, webinars, events, and other usual marketing driven stuff. 451 also does data center planning (they acquired The Uptime Institute some time ago) and has some interesting data-driven businesses that are being marshaled into proper quantitative analyst products. 451’s key differentiation is mixing its scale with the “the new shit” focus (perhaps a bit less bleeding edge than RedMonk, but not much), all stuck in the speed blender of publishing velocity.

451 seeks out new technologies, not old ones, and writes a lot: each analyst has to write somewhere between 40–60 reports a year, basically one ~1,500 word report a week…not including other deliverables. For the most part, if you brief a 451 analyst they’ll write a report on you, vendors love that and it helps with content flow (and gives analysts inbox heart-burn). I was terrible at that cadence coming from the RedMonk school (which emphasizes consulting, which I did a lot of at 451 instead of writing), but the best performers at 451 rarely take a briefing that resulting in no report being written.

451 is slightly cheaper than larger folks like Gartner and much more expensive than RedMonk. I was delightfully shocked at how much 451 charged coming from RedMonk; which is more a reflection of how cheap RedMonk is (I’m not sure they’ve raised prices, at least at the entry level, since 2006 when I started there – great for clients!). You get a lot more content, of all types, however, from 451 than from RedMonk due to 451’s sheer analyst bulk and core process of weekly report writing.

You’ll recall that my personal revenue was much higher at 451. I think that’s a reflection of the “leverage” a larger group of analysts can have: selling the same thing (reports and knowledge) over and over more.

Gartner Differentiation

Gartner is giant. It has breadth and has captured much marketshare. In analyst sales calls you often hear a variation on this:

Well, we’re signing up with Gartner because we have to, and IDC next because we need their PivotTables…the rest of you get to fight over what’s left (want to write a white paper for me?).

Gartner is really good at being the Microsoft of the analyst space…and I mean that as a compliment.

One of the key activities they do is ranking vendors. That may seem trivial, but it’s huge. Gartner tells you what the safe bet in IT acquisition is. It may not be the growth bet, or even the anti-disruption bet for your industry, but it’s the safe bet. And really, with the way most people use IT, that’s all they want. People don’t want to be Uber, they’re forced to compete with Uber, and they’d rather Uber didn’t exist at all.

If this beguiles you, think about your own buying habits outside the realm of computers. Do you prefer to buy your building materials at Home Depot, or some experimental shop on the side of the road? Like lumber and Shop-Vacs, most people look to computers for a function, not a complex belief system (I could have typed “paradigm”), let alone putting a business strategy in action.

(We at Pivotal like to think we help companies who are wise enough to take the first mover advantage when it comes to using IT to gain competitive advantage. This is shockingly not everyone in the world, which is fine: so far there’s been plenty of wise customers out there.)

Throw in their relative scale, and Gartner is in the hollowed “don’t fuck it up” position.

Industry analyst

Gartner is expensive, from what I’ve heard and encountered when I’ve been on the vendor side. However, depending on what you need their content is good and the ability to influence (that is, educate, not make them parrot your messaging) analysts through working with them is nice. The IIAR seems to like Gartner, that group of analyst relations folks having ranked Gartner as #1 most every year since 2008 (it’s interesting to note that individual analyst winners are much different). Enterprises seem to like Gartner a lot as well from anecdotes I hear.

(See more analyst shop rankings from Kea Company’s 2014 survey if you like that kind of thing.)

The New “Bloggers-cum-analysts”

The new (or “new new,” if you’re RedMonk and crew) crop of analysts follows the “make all the good stuff free” rule of having no paywalls (though Ben Thompson is following a sort of open core model). And in making all that stuff free, they’re doing much of the type of work that industry analysts do now, mostly of the qualitative sort. Horace gets into forecasts and market-sizing a bit, actually, which makes him even more of a threat; the other folks don’t seem to spend time on that. (Of late Horace has been mixing in market numbers from traditional analyst shops as well, but he also doesn’t do surveys.)

Again, the reason this new crop of “bloggers” are threatening to industry analysts is because they’re serving some of the same purposes, with much of the same tools and outputs of traditional analysts. And for those analyst activities they don’t currently do: it’s not too far fetched to think that someone soon will. The core differences are similar to previous disruptors (RedMonk and 451 – see, that’s why I outlined them above, all you tl;dr ding-a-lings!), but with some tweaks, namely:

Narrow focus, but with broad appeal

Most of these analysts have a very narrow focus that appeals to a mainstream market. One individual can only cover so much, but if there’s a large audience for that topic, it will suffice.

Horace ostensibly is the world’s premier Apple analyst. That’s a bold claim as I don’t read any Apple analysts you have to pay to read, so maybe there’s some better than him locked behind paywalls; at the very least, he’s a big deal for his size. As a side effect of being an Apple analyst, he covers the mobile space in general. There’s two more tricks for him that build off this seemingly narrow focus:

  1. In that smartphones and tablets are taking over how compute is done, he sort of covers “PCs of the future” and, thus, computers broadly.
  2. “Innovation” is actually his main focus area, namely, figuring out what and how great companies actually do great things (as the intro to his podcast says, more or less). Apple is a wise choice for this question, but you can see his engineering-like “break it apart to find out how it works” curiosity at play when he looks at how Hollywood works (with Pixar as his Apple there), Amazon, and the mysteries of Google (cf. “The absence of a purpose rooted in profit makes Google resistant to analysis.”).

The combination of Apple, “PC of the future,” and “innovation” all amounts to a very large “audience.”

(Recently, Horace went to go work for a think-tank; it’s hard to tell if that invalidates some of the “this independent blogger-cum-analyst thing is a thing” thinking here or not.)

While Ben Thompson started out seemingly as another Apple/mobile analyst, I’d argue he’s become more of a “third platform” analyst, discussing how the “consumerization of IT,” is effecting the tech industry.

The efficiency of vendor sports

This narrow focus means that both (and most of these new types of analysts) cover “vendor sports”: they don’t give buyers advice about what products and services to buy, they instead tell you how various tech vendors are doing and explore the strategic possibilities of new types of technology.

There are very few of these new analysts that are prescriptive when it comes to buying. I’m not sure why, but I’d theorize that it has a lot to do with the cost structures of doing such work (in the cycle time of analysts learning, collecting epiphanies, publishing, and then collecting money form clients for sharing the results). This is a large part of why I think Gartner’s scale and established position is and will continue to be hard to beat, head on at least.

There are some challengers here:

Once these new bloggers move beyond vendor sports – if they can – and start recommending what to buy, the dynamics will change a lot. Until then, they’re nibbling at the industry analyst business…but that’s how it all starts.

Back to the “Enterprise Gruber”

On that quest to find an enterprise Gruber, there’s been a rash of sites of late that go for that. There’s still a giant gap in the market for good enterprise tech coverage.

  • TPM started up EnterpriseTech which seems to have taken the ethos of his wonderful IT Jungle (which seems to purposefully hide behind its ancient-feeling aesthetic – it’s some of the best coverage and analysis of IBM that you’ll find out there), and just announced a new site, The Platform.
  • The Diginomica gang is having a run at enterprise applications.
  • My friends at are getting close and will soon give a view of how native advertising works the industry analyst business model blender.

I watch these sites closely to see how they pan out and if they fall into the usual journalistic traps that start to preclude good analysis.

How the small and mid-sized firms can react

What you’d really like to see is some dramatic business model hacking in the mid and small section of the industry analyst market. What would it mean to have a Ben Thompson or a RedMonk approach at a place like 451, or Forrester even? Those shops would have huge cultural issues to deal with (analysts are, ironically, a lot who’re the least interested in doing new things in their own processes: they hate changing), but the established brand/reach and capital (in money and time) those larger firms could bring to the strategies of the micro firms would be interesting.

How the big firms can react

The problem with the big shops taking in the blogger-cum-analysts is that big shops don’t like to create rock star analysts. The rock stars leave to become independent because they can make more money, or, at least have more freedom. They, like me, also get snatched up by vendors who can pay much more including something rarely seen in the analyst world: those mythical stock options which could worth anything between the title for a large house, the cost of a college diploma, or pack of novelty cup-cake papers.

Larger firms are better positioned to cement their position by upping their game by deeply evaluating and short-listing technologies. There are two examples right in front of us: OpenStack and Docker. Both of those vacillate between IaaS utopia (sometimes people come down from their buzz and realize that Docker often aspires to be a PaaS too) and shit-shows cracking in tire-fires all the way down.

Someone like a Gartner has the time, money, and (potential) authority to run labs to test technologies like these out and give solid recommendations on what to use and not use…per business use case, even. To quote the meme, one does not simply build an enterprise cloud…so how could you expect anyone who just creates PDFs about cloud to actually be credible?

So, what’s your problem, Coté?

With all this glee, you may be wondering why I’m now at a vendor. Good question, as they say when they’re buying time to think. The core of it is that my fixed expenses are too high. I have a family, a large house, and even a new dog (I resisted as long as I could – promise!). And, I’m the single earner for all that.

While I would love to bushwhack my way through this emerging analyst jungle, I don’t want to Mosquito Coast my family; and let’s be honest, myself either. The warm, bi-weekly embrace of a vendor is very comforting. So, like the analysts themselves who observe from the sideline, I’ll be eagerly watching how the industry analyst sports-ball brackets play out.

(Also, check out the two part podcast – part one and part two – with myself and some other analysts on this topic.)