Systems Integrating, or Kickbacks?

Oct. 3, 2007
Smart purchasers need to ask themselves about the impartiality of their integrator's software recommendations before putting cash on the barrel, says Rich Lyons

Many companies rely on outside consulting firms to assist in Package Software Evaluations and Selections. Requirements are gathered, demos are scheduled, and decisions are eventually made. The assumption is that through this selection process, the best package will be selected based on the companys business requirements and priorities. But is this always the case? How independent is your consulting firm?

From a simplistic perspective, technology firms are broken into three categories: software and hardware (products), services, and hosting. Some technology firms focus on only one category, while others may combine all three. It is important to be clear on the offerings of the consulting firm that you hire, because this may indeed impact its independence.

A consulting firm that sells products is biased towards the products it sells. A firm should be biased towards its own products or it should not be selling them. This is neither good nor bad in and of itself, it is just a fact -- the firm is biased and can no longer be considered independent. This includes firms that sell their own products or receive referral fees for selling other companys products.

For a Packaged Software Evaluation and Selection project, independence is critical. How else can a company be sure that the best decision is being made -- specifically the best decision based on business requirements, not based on incentives? The problem with incentives is that they work. You do not want a consulting firm to be incented to select a specific package for you. You need to be clear with your consulting firm on all product offerings and referral agreements upfront. Full disclosure is key to a healthy relationship based on trust.

This does not mean that a consulting firm should not have a relationship with a software vendor. On the contrary, it is critical for a consulting firm that implements package software to have a strong relationship with the vendor. This relationship has many benefits, including access to beta software, insight into the product roadmap, access to technical support and best practices, just to name a few. This strategic relationship can help insure that an implementation goes well, and can be leveraged in case any problems are encountered during implementation. The problem comes in when the relationship is extended to include a reseller agreement or referral fee agreement. Then the independent is compromised.

Similarly, a consulting firm that only implements one product, or happens to have a very big bench in one particular area, may also have its independence compromised during a Package Software and Selection process. With the carrot of an implementation on the horizon, these factors will weigh heavily on a consulting firms mind. Unfortunately, profit is often the name of the game, not necessary the companys business requirements or best interests.

In summary, a consulting firm should make you aware and bring it to your attention upfront if any of these conflicts or situations exist. Good consulting relationships are based on trust. Select a consulting firm that can be a trusted advisor, that puts your interests ahead of their own, that does what is best for you, and that makes decisions "in your shoes." I call this leading from behind, because ultimately, the software selection decision has to be owned by the entire organization, not the consulting firm. The consulting firm does not have to live with a bad decision...or lose its job over one...

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