Keeping Spend Mgmt. on the Straight and Narrrow

Today, I'd like to welcome a guest columnist to Spend Matters. Brian Sommer is a Senior Fellow at Azul Partners, founder of Tech Ventive, and is author of the blog Services Safari.

Jason, like you, I dropped by Software 2006 last week and fell a bit behind on my reading. However, the 4/3/06 issue of Information Week had a cover story on Morgan Stanley (Money, Power and Principle) that caught my attention. It provokes a lot of spend management, procurement and ethical issues.

The back story is interesting in and of itself. Apparently, someone had read some emails at Morgan Stanley that reflect poorly on others there. But, the real dirt involves buyers demanding BIG favors from suppliers. One example noted is:

"CTO Guy Chiarello requesting and apparently receiving hard-to-get sports tickets and other favors from tech vendors doing business with the firm."

The article has a call-out showing an IBM invitation to Wimbledon for several executives. Another example shows the influence/pressure one part of Morgan Stanley was putting on IT for a specific outsourcing decision.

This piece questions how far companies can go to "build relationships" without stepping over the line ethically. The lines are still pretty murky however many of the other firms interviewed for this study seem to have ethics policies in place.

What no one overtly stated in this article is that bad sourcing decisions are made when an individual person stands to benefit at the expense of his/her employer. In my career, I've seen people do the homework, study the alternatives, negotiate a great price, etc. and still have some other executive steer the work to their "friend" or "company we have a relationship with". In some cases, I suspected something was amiss but couldn't prove it. In others, I knew the executive in question had been bought and paid for by a specific vendor. One sales executive I knew had a great track record of treating male buyers to the entertainment opportunities available at Atlanta strip clubs. Sure sex can sell but money, tickets and gifts can work, too. A long, long time ago, I ran into one particularly swarmy fellow who kept a catalog of very high-end goods on his desk. Vendors wishing to do business with his firm would be well-advised to get him something from that catalog. Even after you got the work, he'd then hold up the supplier's payments until another gift came along his way. That worked until I got there. Bribery is not tolerated in this country and this person had clearly crossed the line.

Every holiday season my office would be swamped with gift baskets, new coffee mugs and the occasional freebie t-shirts. Between you and I, I'd never find the receipt of a hot pink t-shirt enough of an inducement to get me to steer work to one particular vendor (actually, it might have the opposite effect). We set a dollar value on such gifts and stuck to it. In the case of perishables, many of these were donated to food banks or the needy.

Some vendors even tempted me with friends and family stock, expense-paid special "briefings" in ski resorts, etc. but these had to be declined. The intent of these was clear: to buy or curry favor.

I hope all of your readers work for ethical firms and are surrounded by ethical executives who are all working to maximize their shareholders' interests instead of their own. While a whole blog could be dedicated to ethics and sourcing, periodic reaffirmation of the importance of these two, linked disciplines is a necessary activity.

Nothing makes any profession seem undesirable or seedy like corruption. Let's keep Spend Management on the straight and narrow.

Brian Sommer authors the blog: Services Safari.

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.