Menage à trois - the truth about users, vendors and consultants

Martin Butler's latest press seminar found him scathing about the state of the IT industry. And it's not just IT directors bearing the brunt of his comments. He characterises the 1990s as a "fashion parade of shoddy solutions" from the large IT systems vendors who never delivered real value for money for the organisations they supply.

Specifically it is the large systems solutions companies selling ERP (enterprise resource planning), CRM (customer relationship management) and ebusiness packages that he feels have failed to deliver. And he names names, citing Oracle, SAP and Siebel as particular culprits.

However, he reckons vendors wouldn't be able to get away with it without the collaboration of IT management in big enterprises. He identifies an unholy trinity of IT vendors, large consultancies and IT directors. Those in control of enterprise IT look forward to gaining - shall we say - eminently marketable skills by taking on board packages such as SAP R/3 and gaining entrance to an exclusive 'members club' of users.

He added: "Procuring has essentially been governed by self-interest." With enterprises concerned with keeping this cosy relationship, ensuring return on investment (ROI) falls by the wayside.

Most dangerously of all, Butler says, enterprises are losing the chance to gain competitive advantage through a 'me too' culture which means all companies end up with the same systems. Rather than trying to add value, IT management is too worried about fashions and the danger of missing out.

However, with a recession on the way he feels this self-fulfilling cycle will be broken, with a renewed focus on value.

Pretty strong stuff indeed, but does it hold any water?

Certainly it isn't hard to find examples of poorly implemented ERP systems that have failed to deliver. Complex systems have a tendency to miss the mark two years down the line - when they've finally been rolled out, a business has moved on.

One IT director who goes some way to agreeing with Butler's analysis is Brendan Major, IT director for the children's charity NSPCC. He says he has never rolled out ERP because the cost argument was never won.

"When every penny you spend takes away from money that could be spent on children, it really focuses your mind in terms of demanding value for money. I made the judgement that none of the big systems are worth the money they cost," he said.

The implication is that many IT directors - especially during the booming last decade - haven't been under the same cost pressures.

Needless to say the vendors reject this entirely. Oracle, SAP and Siebel responded pretty much with one voice: this interpretation is offensive to our customers by suggesting they don't scrutinise us to ensure we deliver value.

Peter Robertshaw, marketing director for SAP UK and Ireland, said: "It's just naive to think IT management goes to the board without a justifiable financial case."

An Oracle spokesman described the argument as "disingenuous".

Don Galles, senior manager, European analyst relations for Siebel, said his customer satisfaction figures speak for themselves - average ROI is 10 months and average revenue goes up 16 per cent. He added: "When we sell into companies, value and ROI are the only things we're asked about."

But what about the accusation that companies rolling out the same products destroy any prospect of competitive advantage? Butler cited the ubiquitous Oracle advert stating "nine out of 10 of the world's leading ebusinesses run Oracle" as the exact reason why you shouldn't want to implement it. If everyone has it, how do you gain?

One vendor said: "We sort out your IT for you so you can concentrate on the other important things that really give you competitive advantage."

SAP reckons its software can be so radically reconfigured that it is easy to build IT advantage.

This time, other analysts are in agreement with the vendors. Nigel Montgomery, analyst at AMR Research, said Butler's analysis misses the point. "There are lots of people who implemented ERP systems for very good reasons, and have seen the benefits. I hesitate to say the word sensationalist, but at the very least this analysis is grossly simplistic," he said.

He says large systems can be reconfigured. "Of course they're not perfect, but you have to think of the situation the industry was in before ERP - it needed help. It's easy to say they weren't perfect with hindsight, but I'd like to know what choice these people have."

The biggest criticism to be found of Butler's latest analysis was that of simplification. Many companies struggle with large systems IT, but many have also prospered. To say that the whole idea is flawed ignores some basic realities. Most IT is - or should be - commoditised. It is only really at the cutting edge where competitive advantage needs to be found.

Whether IT management's decisions are really impaired by a cosy relationship with vendors and consultants will undoubtedly be hotly debated. However, if Butler's analysis again serves to highlight the need for rigorous ROI analysis before any major scheme gets the green light, then he will have done the industry a favour.

Above all, what this snapshot shows is that IT directors can never afford to be complacent and should never fall into the trap of buying software because they think everyone else is. With a rugged focus on value and realistic metrics to measure performance, large systems IT will always be a big part of the enterprise mix.