Are CRM Consultants Objective?
Of all the questions a company needs to ask when determining which CRM software to implement, perhaps the most important is the most overlooked: How independent is your CRM consultant?
What? You didn't ask that one? Well, before you blow your CRM budget on an ill-advised implementation, here's why you should ask: A good number of large CRM consulting companies--and even a number of the smaller ones--have direct, financial ties to the CRM vendors they're recommending, and in some cases that bias can be bad for your company.
These alliances abound. Take Accenture, for example: In its February 4, 2000, SEC SC 13G form, it was disclosed that Accenture owns 3.14 percent of Siebel. Accenture's alliance with Siebel has led it to have the highest market share of Siebel implementations, with more than 700 joint projects and more than 2,200 trained Siebel consultants. (Accenture has since sold it's Siebel holdings, a spokesperson says.)
Another firm that's big on alliances is BearingPoint Consulting, which has key alliances with Siebel, SAP, Oracle, and PeopleSoft. As a Siebel Systems Strategic Consulting Partner, BearingPoint employs certified Siebel Systems consultants in all its major industry segments. The company also invested in E.piphany's second round of funding in 1999, signaling a significant commitment at the highest levels of each firm to a long-term relationship.
Then there's IBM Global Services (IGS). IBM, including the former PwC Consulting, has key strategic alliances with SAP, PeopleSoft, Oracle, and Siebel. Last year IGS and PwC Consulting together were involved in 12 percent of all PeopleSoft transactions. PeopleSoft acknowledged IGS with the Partner Award of Excellence, which recognizes partners with the highest worldwide performance in the areas of sales and services teaming, revenue growth, customer satisfaction, and dedicated resources. And IGS has invested more than $50 million in Siebel licenses and employs almost 1,000 Siebel consultants, which has driven more than $1 billion in joint sales.
While these alliances may be beneficial in driving sales for the vendors and integrators, they may also be driving integrators to recommend vendors that benefit their bottom line instead of vendors that truly benefit their clients.
It's a growing problem, and one that's endemic among the larger consulting companies, says Dick Lee, practice manager for Caribou Lake Customer-1. "I take a hard line on it," he says. "I think it's unethical for a consultant to have a financial relationship with a software company. And I would extend that to consultant companies that have received extensive training for implementation of a software system, which predisposes them to pick it--unless that's clearly disclosed to the client."
Lee, who considers himself an independent consultant, isn't the only one to take issue with the fact that so many consultants and vendors are in bed together. "This lack of objectivity can have a negative impact on the development of a CRM strategy or implementation initiative," says Barton Goldenberg, president of CRM consultancy ISM Inc. "Subjectivity can unfortunately skew prioritized business functional decisions, technical platform decisions, and user-friendliness criteria. [And] skewed decisions can impact the success of a CRM initiative.
Unfortunately, alliances are rarely revealed up front, as Mike Dymott found out. A senior IT manager for one of the United Kingdom's largest companies, Dymott, during his search for a consulting company to help with a CRM implementation, short-listed six companies. That number quickly changed when he discovered by looking in the registers of major shareholders that one of the candidates, Accenture, owned Siebel stock. "They were not up front about it," he says, adding, "not surprisingly, the recommendation was that we should implement Siebel."
Dymott actually did implement Siebel, but left Accenture out of the deal. "Accenture failed to demonstrate independence in the selection process," he says. "While Siebel might have been the right product, we require an independent assessment to ensure the best products [are] selected for our CRM implementation."
Can such close ties ever benefit the consumer? Lee admits that if the software selection is a foregone conclusion (e.g., there's an office mandate to use the entire Oracle suite), or a client already owns software, then objectivity is not such a big issue.
"These relationships can be very helpful," says Adam Klaber, IBM Business Consulting Services' global CRM leader. "The integrators have an understanding of the product sets and how to implement the software, so the client has realistic expectations moving forward. What's key is the integrator needs to be up front about the relationships they have with the software companies." Furthermore, he adds, "In this market, if you're totally independent you're also probably ignorant of what these products do." (Klaber says IBM has no equity interests in the CRM market.) Where a company can get into trouble, Klaber says, is if the consultant doesn't have a relationship with a vendor that the client is considering. "Then they push company X instead of company Y."
What Lee and Goldenberg take umbrage at is that so few people know these relationships exist. "The bottom line is, if you're advising somebody and you have ownership in a vender or a vendor has ownership in you, its not possible to give unbiased advise," Goldenberg says, "because your paycheck depends on that advice."
So what's the solution? According to Lee, it's vigilance. "If I were a client I'd have a consultant sign a statement verifying that they have no financial interest in the software selection, and identify any vendor training that they have received." And if you've already hired a consultant? Maybe it's time to go back and have that conversation.
Just 1 Question
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