NetScout’s Great Blunder: Suing Gartner
By Richard Stiennon
NetScout, a vendor of network management tools, has filed a suit against Gartner claiming that Gartner has a "pay-to-play" business model. The suit states that Gartner made false and defamatory statements regarding NetScout, causing substantial injury to NetScout.
It says that NetScout suffered the consequences based on its placement in Gartner's latest Magic Quadrant (MQ) report Network Performance Reporting and Diagnostics (NPMD) published in March.
As a former Gartner analyst I have been on the other side of vendor complaints about placement in their relevant MQ. Those complaints never escalated to a lawsuit but they did involve calls to the CEO of Gartner demanding that I be fired.
I have also been on the vendor side and had to struggle with apparent arbitrary placement in the MQ. It is very true that not being included in the upper right quadrant of the MQ in your space can limit sales opportunities because many enterprises attempt to simplify their product evaluation cycles by short-listing just the Leaders. Anyone in marketing will tell you how he or she gets blamed by the sales team for lost sales due to poor placement in the MQ.
In recent years I have been asked repeatedly for advice on handling such situations. I attempted to capture that advice in UP and to the RIGHT: Strategy and Tactics of Analyst Influence. Note that in the book I begin by debunking the “pay to play” accusation that is prominent in NetScout’s suit against Gartner. I even include a chapter on what not to do where I advise against suing Gartner.
On the face of it, NetScout’s drastic reaction to being put in the Challengers Quadrant appears to be overblown. On Ability to Execute (the vertical axis of the MQ) they rank above all but two of the other 14 vendors, while Cisco, Blue Coat, and Emulex are not even included.
The authors of the MQ, Jonah Kowall, Vivek Bhalla, and Colin Fletcher, provided very strong positive statements about NetScout:
NetScout Systems was founded in 1984 and has been a mainstay in the NPMD space ever since, providing network performance solutions across the enterprise, service provider and government markets. Since assuming the dominant position in the market, NetScout has combined internally grown technology with sound acquisitions to augment its existing portfolio and capabilities. Significant acquisitions include Network General in 2007 and a trio of acquisitions in 2011 (Simena, Fox Replay and Psytechnics), covering such areas as security, voice and video analytics, and network packet brokering technologies.
In order to support the claim of “offending public policy” the NetScout suit expends a lot of words on trying to equate Gartner’s position to that of large investment banks that were punished for the lack of separation between their analysts and their stock selling operations.
Gartner is certainly influential in the IT buying arena but, unless NetScout is able to demonstrate that Gartner somehow profits from investing in those vendors that they place higher, I recommend that NetScout should drop this specious argument.
NetScout, like ZL Technologies, the last vendor to sue (and lose), uses their legal complaint to parade their market standing and product capabilities. This is definitely not a good riposte to an undesirable positioning in the MQ. I contend that few CIOs will read it for anything other than whining.
NetScout’s executive team may believe that this is a battle they must fight, but the perception from their competitors, prospects, and customers, especially those that know and respect the analysts involved will be that this is no more than sour grapes. It would in my view be much better to heed the advice of Duncan Chapple, long time industry watcher:
“NetScout needs to put much more effort into its communications with other analysts, and consider ways that its channel partners can be encouraged to develop their relationships with Gartner to keep NetScout on the radar.”
Any vendor which finds itself contemplating going to the mat with Gartner should (as NetScout says it did) raise the issue with Gartner’s ombudsman. If they still feel they are misplaced they should carefully analyze what has been written about them and take measures to address the perceptions of the analysts.
True, that process is easier if you are a paying client. You can bring the analysts in for a day-long strategy session. You can meet with them at Gartner conferences. You can schedule inquiries to get nuanced views on the market. All are options open to paying Gartner clients. Unfortunately, a lawsuit closes the door on that approach.