We've never mastered the art of the crystal ball here at CMSWire. So don't expect us to tell you who will ultimately prevail in the newly filed lawsuit that pits NetScout Systems against the Gartner Group.
NetScout, a Westford, Mass.-based computer performance management provider, filed the lawsuit last week over allegations of "corporate defamation" arising out of the business research practices of Stamford-based Gartner.
NetScout doesn't like being called a "challenger" rather than "leader" in one of Gartner's Magic Quadrant industry reports — especially because it thinks its ranking is based, in part, by its unwillingness to "pay to play."
Magical thinking? Maybe. But this isn't the first time Gartner has been sued by one of the vendors it ranks, and there's no reason to expect it will be the last.
Don't Worry, It's Magic
Gartner even includes boilerplate language about the risks of "legal proceedings and litigation arising in the ordinary course of business" in its quarterly reports to the US federal Securities and Exchange Commission. But it further notes "the potential liability, if any" is unlikely to have a material effect on its "financial position, cash flows, or results of operations."
So far, that appears to be true. Back in 2009, what was then an email archiving company, ZL Technologies, Inc., unsuccessfully sued because Gartner placed it in the "niche" quadrant rather than in a more prominent spot. Gartner claimed the suit was without merit because the Magic Quadrant is nothing more than opinion based on its research — not an objective presentation of quantifiable facts.
Money Doesn't Buy Happiness Ratings
The NetScout suit goes a step further, contending those opinions are influenced by the amount of money select vendors spend with Gartner. It alleges that Gartner's "substantial success is due to the worst kept secret in the IT industry" — the fact that Gartner rewards its clients who spend substantial sums on its various services by ranking them favorably in its influential Magic Quadrant research reports.
Now, in fairness, just because someone gives you a wad of cash — even in the form of extra business — it's no guarantee you'll write something favorable. Trust me on this: Back when news was still reported in daily papers and reporters were wooed with more insincerity than a contestant on The Bachelor, it was customary for sources to send gifts.
Liquor. Chocolates. Fruit baskets. Tickets to random events.
Eventually, newspaper management — envious of the fact that the gifts generally went to reporters instead of editors and managers — adopted ethics policies prohibiting such gifts. But you know what? It didn't matter.
Reporters would willingly pour from an expensive bottle of Scotch with one hand while writing a scurrilous story about the person who sent it with the other.
Facts, Feelings, Infamous Accusations
But are non-reporters — the less jaded, the less hardened, the ones more likely to have hearts and feelings — as immune from the power of gifts and cash? Can someone with a vested interest in growing a business, not to mention generating value for shareholders, really look as kindly on companies that never spend a cent for its services as it does on the ones that spend big bucks?
Thomas J. Bittman, a vice president and distinguished analyst with Gartner Research, claims "yes."
Back in 2009, the same year ZL Technologies filed that suit over a host of alleged illegalities regarding what writer Paul McNamara has called the "famously controversial Magic Quadrant," Bittman published a self-described rant.
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As an analyst at Gartner, I can’t describe how angry I get when I read bloggers spouting as 'fact' their opinion that I and my teammates have no integrity. That we can be 'bought.' In my 14+ years at Gartner, I have never, ever allowed a vendor to influence my opinion with anything but facts. Period. They have certainly tried to influence me with non-facts. I can say this definitively -- it has never worked," he wrote.
Green with … Envy?
One of what is arguably one of the funniest comments ever made about Gartner and its practices — except, perhaps, to the folks at Gartner — comes from Steve Duplessie, founder and senior analyst at ESG. Duplessie wrote a blog in 2009 shortly after a court dismissed the suit filed by ZL Technologies. First, he noted, ESG, "is a research, analysis and strategy firm. As such, in some ways we theoretically compete with Gartner. In practicality, we don't."
Then he continued:
A more honest disclosure of the above is that ESG doesn't compete with Gartner, as we serve very different purposes. A truly honest disclosure is that I am wildly impressed and completely jealous of Gartner's ability to drive revenue the same way the mafia does — by veiled threat. The difference is that the threat of the mafia (in a protection scheme) is physical while the threat of Gartner is market muscle/economic. I would love to be that powerful — although if I were I'd like to believe I would not abuse the power — which in my opinion is the true crux of this issue."
And the Ex-Analyst Says …
Amrit Williams, a Gartner analyst turned Chief Technology Officer at BigFix, IBM, Quantivo Lancope CloudPassage, claimed in a 2009 blog that the controversy over Gartner's business model is unfounded. The image, above, is from that blog.
There has always been cries that Gartner is a pay-for-play firm, that there are serious conflicts of interest, that the more you spend the more positive the research output is. There are pay-for-play analysts firms, Gartner isn’t one of them. In my experience Gartner worked very hard to insulate the analysts from the business side of the company's financial efforts. Analysts generally have no idea how much a client spent with the firm, they sometimes are not aware if the vendor is even a client and there is no requirement that a vendor must be a client to be included in research such as MQ’s."
But he goes on to mention several significant problems with the Magic Quadrant, including the fact that Gartner does not maintain or employ a testing facility and relies on macro trends rather than company-specific criteria. Oh, and yes, he concedes, it is subjective, "based on opinion — highly tuned and supported opinion, but still opinion."
He continued:
The MQ is only one piece of the evaluation and procurement process and its main purpose is to help guide and validate position, but anyone who uses it as sole source vehicle is most likely going to experience some time in the trough of disillusionment. In terms of influencing the influencers there is no doubt that the more money spent with an analyst firm provides benefits, such as access to their feelings and opinion on market dynamics – obviously aligning with their thinking provides better positioning."
Remember ZL Technologies?
So back to ZL Technologies, the company that unsuccessfully sued Gartner in 2009 for that unfavorable coverage and lost again on appeal in May 2011.
In Dec. 2011, ZL earned a spot in the “Visionaries” segment of Gartner’s annual Magic Quadrant review of key vendors in the enterprise information archiving space. In early 2013, ZL was named as the "top vendor in the forward-thinking Visionary category" of the annual Gartner Magic Quadrant review — and late in 2013, it earned a spot in the Leader's quadrant.
No word on how much, if anything, ZL is now spending on Gartner's consulting services. But it seems to have figured out how to play the game.
Title image by Milan Bruchter/Shutterstock.