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Sweet Deals or Bitter Meals?

Sweet Deals or Bitter Meals?

Should you agree to be a poster reference in return for preferential treatment? Two CIOs take opposing sides in this ongoing debate.

Ethics (or the lack of it) in the corporate world has become a daily drumbeat in the news. Financial giants such as Citigroup and Merrill Lynch are being investigated for helping Enron (and now Parmalat) assemble their pyramid schemes. Mutual fund companies are being investigated for market timing practices. Business journalists are increasingly alert to the relationships analysts have with the companies they rate. But the quid pro quo of customer references, wherein technology vendors provide discounts and ­preferential treatment to CIOs in return for good reviews, remains a flourishing practice.

Is this wise? Are there ways to get special consideration without crossing ethical boundaries?

Robert Urwiler, CIO of software company Macromedia, maintains that customer reference arrangements can be beneficial to all parties as long as certain rules are followed. Jerry Gregoire, former CIO of Dell and PepsiCo, disagrees, arguing that there's never a good reason to be a poster child in exchange for preferential treatment.

Which argument do you buy?

A Win-Win for Customer and Vendor

Viewpoint: Robert Urwiler, CIO, Macromedia

Many vendors I've encountered have suggested that in return for better pricing or special consideration, I or others in my company be willing to provide references, participate in press releases, case studies or even talk to investors on their behalf. As CIO of Macromedia, a $US340 million software company, I believe that it is possible to entertain such propositions without crossing ethical boundaries as long as the rules of engagement are clearly defined.

First and foremost, I will not agree to be a guaranteed reference for anyone under any circumstances. Whether the vendor is a Fortune 500 supplier or a venture-funded "new idea", I always make it clear that being a reference is solely at my discretion. If I do agree to provide a reference because a product or service met or exceeded expectations, I also make it clear to the vendor that claims of success must not be embellished. In order to make sure that doesn't happen, I insist on the right to review and approve any use of our company name or brand in any collateral material, Web site, news release or case study. Depending on the vendor and the situation, my company formalizes such agreements contractually.

On occasions when we enter into special arrangements with vendors related to early adoption of a new product or a significant unproven upgrade, we insist on some unique rules. For example, I was recently introduced to the management team of a new company in the business intelligence space through my involvement in a CIO consortium. After the team came in to pitch the company's value proposition and capabilities, we were interested in testing its new approach to analytics. After some negotiation, they offered a tightly scoped pilot project, several perpetual licences and perpetual support on those licences at an unbelievably low cost. Because the company is a start-up and has very few real customers at this point, we've received an incredible amount of attention from it at all levels. As of this writing, we are two months into the pilot and quite impressed with the software. We have agreed to act as a reference on the condition that we are satisfied with the pilot.

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