Expert network
Encyclopedia
The expert network phrase was originally coined by Mark O'Connor of the Yankee Group
in presentations introducing his August 1997 Management Strategies report, Knowledge Management: People and the Process, using the Teltech Resource Network (now part of Infogroup's ORC International
) as a commercial example of related services.
The first known published appearance of the phrase in this context is in the April 1999 Yankee Group white paper A Knowledge Perspective: The Knowledge Management Product and Service Domain. In the December 1999 publication, "Knowledge Evolution: Tools of the Trade," clients were advised to utilize Expert Networks to "Understand who the experts are throughout the organization (including the extended organization), and more appropriately employ that expertise within a broader range of business contexts for better decision making."
Today the phrase is used most often to refer to the firms offering commercial expert network services, or networks of professionals employed either to conduct research, or as subjects of that research. Information providers and researchers within commercial expert networks can be anyone from doctors and academics, to professional experts. Clients range from investors and law firms, to product manufacturers and service providers.
After the implementation of Regulation Fair Disclosure
in 2000, which made it harder for institutional investors to get market moving information
directly from publicly traded companies, commercial expert networks became more widely used by financial services firms. Hedge funds were early adopters, but the use of expert networks is now widespread among all types of institutional investors, including mutual fund advisers, pension funds, banks and private equity
firms.
The Fall 2009 indictment of individuals associated with hedge fund FrontPoint illustrated the compliance challenges of speaking with sources directly. The individuals had initiated access with a Dr. Yves Benhamou, board member of an on-going clinical trial. Though these began as formal engagements through a network, their exchanges with Dr. Benhamou would became less formal and more specific. They stopped going through the network, opting to contact one another directly, and they allegedly culminated in the portfolio managers coaxing inside information
from Dr. Benhamou and Dr. Benhamou obliging. The circumstances illustrate one of the core challenges of primary research in general and a central plank of the expert network platform.
allegations. Networks have taken different approaches to the compliance puzzle. Some spend millions reaching out to publicly traded companies and others don't allow employees of publicly traded companies to consult at all.
Yankee Group
Yankee Group, a Massachusetts company, sells advice and market-research information relating to information technology.-History:Founded in 1970, the Yankee Group emerged as the first independent technology research and consulting firm...
in presentations introducing his August 1997 Management Strategies report, Knowledge Management: People and the Process, using the Teltech Resource Network (now part of Infogroup's ORC International
ORC International
ORC International is a leading market research agency and the global research operating unit of Opinion Research Corporation. The company's UK headquarters are located at 186 City Road, Londonadjacent to Silicon Roundabout, with another office in Manchester....
) as a commercial example of related services.
The first known published appearance of the phrase in this context is in the April 1999 Yankee Group white paper A Knowledge Perspective: The Knowledge Management Product and Service Domain. In the December 1999 publication, "Knowledge Evolution: Tools of the Trade," clients were advised to utilize Expert Networks to "Understand who the experts are throughout the organization (including the extended organization), and more appropriately employ that expertise within a broader range of business contexts for better decision making."
Today the phrase is used most often to refer to the firms offering commercial expert network services, or networks of professionals employed either to conduct research, or as subjects of that research. Information providers and researchers within commercial expert networks can be anyone from doctors and academics, to professional experts. Clients range from investors and law firms, to product manufacturers and service providers.
After the implementation of Regulation Fair Disclosure
Regulation Fair Disclosure
Regulation Fair Disclosure, also commonly referred to as Regulation FD or Reg FD, is a regulation that was promulgated by the U.S. Securities and Exchange Commission in August 2000...
in 2000, which made it harder for institutional investors to get market moving information
Market moving information
A term used in stock market investing. Defined as information that would cause any reasonable investor to make a buy or sell decision.When a public company insider fails to publicly disclose material, market moving information, that is called selective disclosure, an act that is prohibited by the...
directly from publicly traded companies, commercial expert networks became more widely used by financial services firms. Hedge funds were early adopters, but the use of expert networks is now widespread among all types of institutional investors, including mutual fund advisers, pension funds, banks and private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
firms.
The Fall 2009 indictment of individuals associated with hedge fund FrontPoint illustrated the compliance challenges of speaking with sources directly. The individuals had initiated access with a Dr. Yves Benhamou, board member of an on-going clinical trial. Though these began as formal engagements through a network, their exchanges with Dr. Benhamou would became less formal and more specific. They stopped going through the network, opting to contact one another directly, and they allegedly culminated in the portfolio managers coaxing inside information
Inside Information
Inside Information is the sixth studio album by American rock band Foreigner, released in 1987. The album hit #15 on the Billboard 200 Albums Chart and was certified Platinum in the U.S. for sales exceeding one million copies....
from Dr. Benhamou and Dr. Benhamou obliging. The circumstances illustrate one of the core challenges of primary research in general and a central plank of the expert network platform.
Expert Networks As Businesses
In the last 10 years, a rather large industry has sprung up around facilitating "out of network" connections, or connections with professionals with whom the individual or organization doing research has no prior connection. The investment community is the largest consumer of expert network services; an estimated 38 expert network companies generated $364 million in revenues in 2009, according to a report by Integrity Research on the industry.Expert Network Business Models
There are many nuances between the types of services and experts provided by each, but there are two dominant business models within the industry. There is also a third business model which focuses on custom recruitment.Subscription Expert Networks
The vast majority of expert networks service providers operate on a subscription based business model. These networks charge researchers flat fees for access to a stable of information providers, and the network then pays the information providers hourly rates as they are used by the subscriber base. The network keeps the difference between the subscription fees collected and the hourly rates paid out.Transactional Expert Networks
A growing minority of expert network service providers have embraced the transactional model commonly used by the face-to-face coaching/tutoring industry or the technology service outsourcing community. These networks pay information providers hourly rates and bill them out to researchers at a higher rate, keeping the difference.Custom Recruitment Expert Networks
Expert networks do not charge a subscription fee and instead of recruiting experts for a database, use custom recruitment for each research project undertaken. Clients submit confidential research requests, the expert network seeks out experts/professionals specifically in those fields and return with a list of vetted individuals within one to five days of the initial request. This ensures that the experts are selected on the most relevant information available, thus providing many more accurate matches between client and specific area of interest.Legal Compliance Issues
One of the biggest challenges faced by expert network operators is legal compliance in regards to the information passed from information provider to researcher. Several expert networks have made headlines in relation to improper information disclosure and insider tradingInsider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
allegations. Networks have taken different approaches to the compliance puzzle. Some spend millions reaching out to publicly traded companies and others don't allow employees of publicly traded companies to consult at all.