Customer References Compromise Integrity

Advice is a dangerous gift. Give some and the best you can hope for is the other guy’s natural tendency to ignore it. The next best thing you can hope for is that he never finds out you were motivated by anything but good intentions. That’s a lotta’ hopin’.

So, with that, here’s a little advice.

You should never agree to endorse or demonstrate a vendor’s product in exchange for anything?anything. Furthermore, you should never accept the endorsement of another CIO who has.

The reasons are simple: You don’t have to, and you shouldn’t want to.

Before I explain, it’s worth observing that, in spite of the presenters’ best efforts, all of the sales presentations you’ll ever have to sit through are pretty much the same. There’s the “Here’s why you should buy” portion followed by the “Here’s why you should buy now” part. At the heart of the “buy now” argument is the depressingly accurate notion that mutual interest is a more important catalyst to agreement than logic. What these pitches, of which there are basically three, share is that they are all reasonable, logical and completely bogus. I gave each of these offers a name some years back. See if you recognize any of them.

First, and certainly the silliest, is the one called Send a Boy to Camp, where the vendor offers substantial discounts, services or whatever if you agree to sign a contract before some magical and imminent date, usually at its quarter or fiscal year-end. On a stack of Bibles, I swear we’ve had salespeople who confided that if they closed the sale quickly, they would win a trip to Las Vegas or Branson or somewhere else equally exotic. Breathtaking.

The second, called There Goes the Neighborhood, is where the vendor in question reveals to you that all of your competitors have either purchased or are about to purchase its product. Now, to most really good IT departments this would seem like a compelling reason not to buy and a golden opportunity to create some differentiation, but by definition half of the IT departments out there are below average (present readership excluded, of course).

And the third pitch, called Tin Men, is the most transparent, potentially most dangerous offer and, worse, the one that requires you give up something in addition to your money. The Tin Men pitch got its name from the Barry Levinson movie of the same title. In it, there’s a scene where a couple of salesmen are taking photographs of a house. The woman of the house comes out to ask what they’re doing. “Taking before and after pictures for Life magazine,” they tell her. She’s very excited until she learns her house is to be the before photo and a neighbor’s house is to be the after. Of course, if she’s willing to have her house aluminum-sided (for only the cost of labor and materials), then her home could be used for the after picture. Get it?

The high-tech version of this scam is, of course, taking software, hardware or services at a “discount” in return for offering yourself as a reference and your company as the neighborhood showplace. Which, finally, brings us back to why this is a bad idea.

What’s Good for Them Ain’t Necessarily Good for You

Let’s start with the “You don’t have to.”

You should take it as a matter of faith that whatever discounts you got for agreeing to live under glass you would have gotten anyway with a little extra effort during the negotiation process. Think of it this way: Large, successful vendors don’t give away products and services for any reason, which is why they’re large and successful. Startups willing to give away products and services in exchange for a reference simply won’t be around very long, and that represents a whole different set of problems for the long-term success of your project. Furthermore, no vendor?large or small?is going to walk away from a deal it can make some money on, particularly if a competitor is waiting close by. It just isn’t going to happen.

Now for the “You shouldn’t want to.” Quick, take out a piece of paper and make a list of all the reasons, besides raw ego or some misguided notion that a vendor might be nicer to you after the sale, that it’s a good idea to shill for one of your vendors. Pretty short list, huh?

As a practical matter, being a showplace for somebody else’s software, for example, implies that the software is either new or new for your industry. It’s an irrefutable fact that new software, or old software being adapted for new applications, simply doesn’t work well early on. Hell, you can write your own applications that don’t work for half the price. That’s not to say that it isn’t a good idea to team up with a vendor to create some competitive advantage for your company. It’s just that after all the pain and suffering to make the applications work, do you really want to help the vendor sell your work to your competitors? If the work you and the vendor have done is good, it will probably happen anyway, but why facilitate it?

Your Reputation: A Pearl Beyond Price

The second practical consideration is that reputation for integrity you’ve spent so many years securing for yourself. We’ve got a policy here on the ranch that we never sell a used piece of equipment or a used car to someone we know or are liable to run into again. Not because there’s something wrong with the equipment (besides the fact that it’s old), but because we will have no control over how it’s being used or cared for. You’ve got the same problem every time you speak to your colleagues on behalf of a vendor. You have no control over how that vendor might treat the next customer, but be assured you will shoulder a certain amount of the blame if things don’t go well, particularly if it’s known that you’ve been compensated in some way.

To complicate matters further, not all the compensation CIOs receive comes in the form of discounts or services. It’s pretty common for CIOs of large corporations to sit on the advisory boards of software and hardware vendors and not at all uncommon for CIOs to be members of boards of directors of other high-tech concerns. Now, I believe that CIOs serving on boards is a wonderful thing. It’s done a great deal to enhance the overall standing of our profession, and it’s helped vendors improve their products and services. But compensation?something as small as a weekend of golf at a resort hotel all the way up to a regular board salary and stock options?is still compensation and automatically disqualifies you as a disinterested party in whatever sales pitch you might be dragged into.

I’ve been pretty critical in the past of the astonishing shenanigans the vendors in our industry have been able to get away with. We CIOs have ourselves to blame, in part because we’ve not been more direct with each other about the problems. So on those occasions when a vendor delivers a great product when promised, or does an otherwise superior job of fixing problems and providing service, it would be nice to know that the messenger wasn’t getting his axle greased.