Gartner sued over Magic Q dispute

Anyone who doubts the power wielded by IT industry analysts should take a look at this fascinating post from Beth Pariseau in the Storage Soup blog.  It discusses how Gartner, the ‘Mr Big’ of analyst houses is being sued for $132 million by email archiver ZL Technologies Inc. 

ZL’s ‘main beef’ seems to be that it was wrongly rated on Gartner’s magic quadrant ranking of vendors, which it alleges meant a significant loss of sales.  The company indicates that many purchasers refused to even consider its products because of the ranking.  And it cites an investigation into one large organisation which made a large purchase based ‘solely on the leadership rankings in the relevant Gartner MQ report’.

ZL says its problems are down to the fact that it was placed in the lower left quadrant of  Gartner’s report (ie a ‘Niche player’) because its sales and marketing are not as strong as its larger competitors.  And while I’m unfamiliar with the details of this particular case, I can say from experience that there is general confusion in the way people read MQs. 

The sought after ranking, and the ‘holy grail’ of analyst relations planners (as every good tech marketer knows) is getting a position on the top right quadrant – a ‘Leader’ positioning.  Many IT purchasers (and even some vendors) mistake a top right position as ‘short hand’ for the ‘you should definitely go out and buy this product or service’ position.  When in fact if you read Gartner’s own advice about how to use the MQ, it doesn’t mean this at all.

Here’s what Gartner says on its web site:

To evaluate vendors in the Leaders quadrant only and ignore those in other quadrants is risky and thus discouraged. For example, a vendor in the Niche Players quadrant could offer functions that are ideally suited to your needs. Similarly, a leader may not offer functions that meet your requirements — for example, its offerings may cost more than competitors’, or it may not support your region or industry. Use a Magic Quadrant to narrow your list of choices, but don’t base your decision only on the model.  

So you can sympathise with companies who lose sales if they aren’t positioned as a Leader.  But maybe the real problem is lazy IT purchasers not going through a proper evaluation when making buying decisions.

Uday

One Response to “Gartner sued over Magic Q dispute”

  1. Rob Elliott says:

    Hello,

    On December 4, 2009, ZL Technologies filed an amended complaint against Gartner, Inc. in the United States District Court for the Northern District of California. The Court granted ZL the opportunity to clarify and augment our earlier allegations of defamation and trade libel.

    In the first round of ZL’s legal dispute with Gartner, Gartner argued to the Court that its rankings and other statements in the proprietary “Magic Quadrant Reports” are merely opinions that are not based upon fact, and that they are understood as such by the readers of those reports. However, Gartner’s past statements in marketing materials, white papers, blogs and even the Magic Quadrant Reports themselves, assert that their research and analysts’ opinions are based on a body of facts compiled through what is asserted to be a rigorous process.

    The amended complaint clarifies ZL’s contentions about the inaccuracy of Gartner’s reports, the inherent conflict of interest arising out of Gartner’s voluminous business with the vendors it reviews, and its subsequent bias towards large and established vendors. The amended complaint also adds new detail about Gartner’s repeated claims that its research is based on objective fact—a position exactly opposite to the stance forwarded by Gartner in court.

    While this case is focused on ZL’s dispute with Gartner over the erroneous statements in Gartner’s publications, the issues here also implicate Gartner’s larger business model. Gartner plainly admits that it attempts to leverage value from its largest clients, many of whom are also vendors covered in the company’s research. ZL’s legal filings describe how that business model causes Gartner to favor those large companies at the expense of identifying the best technologies, thus misleading not just the vendors who are inaccurately reviewed by Gartner, but the consumers who base their IT purchasing decisions on Gartner’s biased research.

    ZL is seeking injunctive relief as well as compensatory and punitive damages from Gartner.

    The amended complaint can be found here: http://www.zlti.com/courtdocs/docs/First_Amended_Complaint.pdf

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