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Ethics: When telling the truth to the client hurts everyone

When a firm gets the majority of its business as a third-party consultant with a large vendor, it sometimes finds itself placed in the position of having to do what is best for the vendor, not the vendor's clients.

Knowing the truth and not being able to tell it places any consultant in a difficult position. Recently, Ms. Dilemma, a TechRepublic member, told us of a situation in which her firm, which contracts almost exclusively with a single vendor (we’ll call it Big Vend), was brought in as a third-party consultant to help a Big Vend client.

When Big Vend secretly went against the wishes of its client, Ms. Dilemma was in a quandary. If she informed Big Vend’s client that it was defying instructions, Big Vend would likely lose the contract. If that happened, Ms. Dilemma would also have lost the current contract with the Big Vend customer, and Big Vend would likely have found another consulting firm to use with its clients.

Here’s how Ms. Dilemma handled the situation.

Background
Ms. Dilemma’s firm was founded in the midst of the Internet boom as a software vendor. Even in the Internet heyday, her firm, full of people more adept at coding than sales and marketing, found the environment less than lucrative. Instead, the company began offering consulting and customization work. At about the same time, it began partnering with Little Vend, a small software company that needed assistance installing and customizing its products in other areas of the country. Business began picking up for Ms. Dilemma.

When Little Vend was acquired by Big Vend, Ms. Dilemma’s firm found itself in a good position: Big Vend needed a consulting firm that understood Little Vend’s products and that could perform customization and consulting work when Little Vend’s customers eventually decided to upgrade to Big Vend’s products, which they often did. While Big Vend initially hired Ms. Dilemma’s firm only for engagements in her town, Big Vend eventually began using her firm for contracts all over the country. Business boomed.

The situation
In one engagement, Big Vend hired Ms. Dilemma’s firm to work with a financial company, Top Dollar, which was upgrading from BV VER 2 to BV VER 3. Top Dollar liked BV VER 3, but it made it clear that—because it had concerns about the size of its database and possible problems introduced by a manual upgrade—it didn’t want any customization work done to upgrade its database. “Just use the standard upgrade tools that were being used for all other customers,” was the request.

Instead, Top Dollar would wait until any bugs in the upgrade process were resolved before upgrading to BV VER 3.

Big Vend assured Top Dollar that nothing special would be done. After all, Top Dollar was also Big Vend’s biggest hosting customer and paid hundreds of thousands of dollars each month for the service. Why would Big Vend threaten its relationship with its biggest customer?

But Big Vend knew that its conversion utility couldn’t handle Top Dollar’s 10-GB database. In truth, Big Vend’s VER 3 product was probably not the right fit to accommodate Top Dollar’s growing business. But to keep from jeopardizing its hosting contract and all of the revenue that came with the upgrade, Big Vend—during a period in which no new data was being added to the database—had the database sent to another location where a manual upgrade was done.

Pregnant pauses
This move placed Ms. Dilemma and her firm in an uncomfortable situation. She knew that Big Vend, although forbidden by Top Dollar to do anything custom to upgrade the database, had gone against the client’s request. Although Ms. Dilemma and her other consultants knew what had happened, they were told not to say a thing about it and avoid talk of the issue. She felt that while her loyalty was to Big Vend, she had serious concerns about its action on this engagement.

And, as always happens, the truth began slipping out from other sources. For example, during conference calls between Big Vend, Ms. Dilemma’s firm, and Top Dollar, loaded questions were asked about the database upgrade. It seemed as if Top Dollar knew what was being done.

But, following the wishes of Big Vend, Ms. Dilemma would let long pauses elapse when asked about the database. In essence, she wasn’t lying to Top Dollar, but she wasn’t being forthcoming either.

“I really didn’t know what I should have done,” Ms. Dilemma said. “It puts you in an awkward position, to say the least. We try to do the best for both the vendor and the client, but the vendor makes it difficult sometimes.”

What would you have done?
Ms. Dilemma's firm ended up having to eat dozens of hours worth of work because it couldn’t disclose the fact that it had to deal with problems introduced by Big Vend’s database work. Top Dollar ended up keeping Big Vend for its upgrade to BV VER 4, which addressed its earlier problems dealing with Top Dollar’s large database. (Ms. Dilemma’s firm was brought in to consult for that work as well.)

While smarting from that decision, Ms. Dilemma’s firm is still the first choice for Big Vend’s customization and consulting work. But Ms. Dilemma said that similar situations emerge with other Big Vend customers. She also contends that this kind of situation—a vendor going against the requests of its clients—happens often and that third-party firms are caught in the middle.

How would you have handled such a situation? Do you think Ms. Dilemma did the right thing? Should she have told Top Dollar about Big Vend’s work to the database and risked her firm’s stability, or should she have kept quiet?

Offer your suggestions about this dilemma by posting your comments in the discussion below.
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