Wednesday, June 23, 2004

Consulting firm bias toward software vendors

There's an aspect to the DoJ antitrust lawsuit against Oracle that's not getting any attention--that is, the explicit relationships between major consulting firms and major software vendors.

Generally, when a company hires a consulting firm to advise them on a software acquisition, they assume that the consulting firm is on their side, serving their best interests. But check out this e-mail from Craig Conway, CEO of PeopleSoft, which was introduced as evidence in the DoJ's antitrust suit against Oracle (underlining mine).
From: Craig Conway, 11/02/2003 09:23 PM
To: [various executives at IBM]
Subject: Accenture and SAP

Friday I spoke with Steve James, President/COO of Accenture, and learned some disturbing news.

You may recall a few weeks ago that Accenture announced a relationship with SAP directed at the financial service industries. At the time, Steve indicated that the agreement related only to vertical applications. Specifically, Accenture had a number of "transactional applications" directed at banks and insurance companies, and SAP also has some newly developed applications. The announcement was that both companies would fund further development of these applications and promote a joint solution to the market. Steve assured me that agreement did not extend to ERP.

However, Friday Steve called to let me know that the agreement was in fact much broader. Accenture will recommend SAP to the financial service industries for both vertical applications and ERP applications. In return, SAP will recommend Accenture to FSI [the financial services industry] for ALL enterprise software implementations. It is quite a wholesale endorsement.

We should discuss what this agreement means to IBM and PeopleSoft. Clearly it does not bode well for our relationship with Accenture and should not bode well for your relationship with SAP. On the other hand, both PeopleSoft and IBM are stronger in the financial service industry so there should be an opportunity for both of us.
This is a clear example, in writing, of what insiders have known for years: major consulting firms partner directly with software vendors to promote their products in return for those vendors endorsing the services of the consulting firm. We're not talking about subtle biases here. This is a direct conflict between the interest of the client and the interest of the consulting firm toward its software vendor partners.

No comments: