More Collaboration Needed in Vendor Selection Process, Tech CEO Argues

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    Last month, I wrote about Joe Salesky, CEO of CRMNEXT, who argued that his company’s approach to CRM could have prevented the recent scandal at Wells Fargo, in which bank employees were found to have fraudulently opened more than 1.5 million deposit and credit accounts without customer authorization. But another seasoned tech exec I recently spoke with raised a couple of good questions: How do you know that Salesky’s claim is true? And what could Wells Fargo have done to ensure it was selecting the right CRM software in the first place?

    That tech exec is Venkat Devraj, CEO of SelectHub, a technology evaluation platform provider in Denver that he co-founded three years ago. Devraj argues that the issue isn’t that one CRM package is good, and another is bad. At issue is the need for the organization, Wells Fargo in this case, to look at technology purchases more holistically, and in a way that’s much more collaborative. He explained it this way:

    The CEO in that article talks about how Marc Benioff at Salesforce has perpetrated a problem where the CRM is in the cloud, and essentially that allows different departments within a company like Wells Fargo to get a different instance of Salesforce. A different department gets a different instance or a different product, and fundamentally these systems don’t talk to each other. But the issue isn’t that one CRM is better. Of course, with all due respect, his CRM may be the appropriate one in that scenario, but it’s not just for the vendor to make that claim, because every vendor is going to say that their solution is the best. So how do you identify what is the right solution for the company?

    In 2006, Devraj had co-founded Stratavia, a data automation software provider that was sold to HP in 2010, when he became CTO of HP’s cloud automation business unit. He said that as he spoke with CIOs, CTOs, and chief architects about HP’s products, he was confronting that issue, just as he had confronted it at Stratavia:

    The problem is that right around 2008, when the financial crisis happened, companies started coming under a lot of scrutiny on technology purchases. Every CIO was put under the gun by the CFO or by the CEO, depending on who they were reporting to, in terms of having measurable metrics, in terms of how you measure return on investment. Before that, if you look as far back as 1995, in the [Standish Group] CHAOS report, it was documented that seven out of 10 technology purchases tended to underperform, and that was just par for the course. But in 2008, with that increased level of scrutiny, CIOs and IT organizations were trying to figure out, “How do we help the business? How do we work more closely with the business in terms of ensuring that the return on investment was high?” So they started becoming more like control freaks. They said, “Look, all technology needs to happen within the purview of the IT department.”

    At around the same time, Devraj said, the cloud emerged with platform-as-a-service and infrastructure-as-a-service offerings becoming commonplace — a lot of software companies were getting started in spite of the economic crisis:

    So for any popular business application, like CRM in the case you wrote about, suddenly there were hundreds of software vendors, and companies weren’t very clear about which one was the right one. And here the IT department was saying, “Look, we are the central policing figure, we are the central control body, all purchases need to go through us so we can be the custodian of the purchase, we can make sure that the technology integrates with our existing architecture, it integrates with our existing transactional streams, data streams.” But business was having a different problem. They were saying, “We can’t go through IT for all of this. IT is too slow. There’s a lot of red tape, there’s a lot of approval process, there’s a lot of change control process, we don’t have the time, IT people don’t get it, they don’t understand our business, we’ve got to move much faster.” So suddenly the marketing department, the HR department, different groups started saying, “Look, we have a budget for technology or we have discretionary spending, why don’t we go out and get it?” So it’s not a problem that was perpetuated by people like Benioff of Salesforce, or anybody else. It’s just the nature of how it started happening right around 2008 onwards.

    Still, Devraj said, a lot of fingers started pointing at the vendors:

    We had our fair share. Back at Stratavia, we started seeing that in 2008. Lehman Brothers was a large contract for us, and that’s a company that had been around for a long time. Suddenly they disappeared. We started seeing a lot of other financial services companies, oil and gas companies, stop their investment in our technology. I started flying out and meeting with a lot of these customers, and I personally started saying, “Look, let’s sit down. We don’t want to just be a vendor, we want to be a partner.” So I sat down with a lot of the CIOs, a lot of the CTOs, and had a conversation about what Stratavia could do to help them get beyond this issue, how we could show that there was a successful ROI with our deployment. We were able to get rid of the problem, but I saw that a more prescriptive methodology was needed in the industry to help companies help the IT department select and prescribe the right technology to the business. And it had to happen in a way that it was largely self-service. For example, if the marketing team is coming to the IT department and saying, “I need new marketing automation software, I need a new CRM software,” the IT department takes three to six months to figure out which is the right product, the right vendor. They do an RFI and RFP and so on, that’s not going to work. It’s going to create a lot of shadow IT — the marketing department is no longer going to come to the IT department. So the opportunity I saw is, if you could create a prescriptive workflow, a prescriptive platform that the IT department can enable in their organization, it can be done in a matter of days and weeks, instead of weeks and months, and sometimes longer than a year.

    Right around 2012, I started speaking with a lot of my CIO customers, and started asking them how they thought we could solve this problem. The problem was that the IT department was seen as too slow, too lethargic, kind of a policeman rather than a true business partner. So end-user business units were bypassing them and getting their own technology. How could we solve this problem? That’s where, based on those conversations, we ended up creating a solution that is now SelectHub.

    Devraj went on to explain exactly what SelectHub is doing to help solve the shadow IT problem. I’ll cover that in a forthcoming post.

    A contributing writer on IT management and career topics with IT Business Edge since 2009, Don Tennant began his technology journalism career in 1990 in Hong Kong, where he served as editor of the Hong Kong edition of Computerworld. After returning to the U.S. in 2000, he became Editor in Chief of the U.S. edition of Computerworld, and later assumed the editorial directorship of Computerworld and InfoWorld. Don was presented with the 2007 Timothy White Award for Editorial Integrity by American Business Media, and he is a recipient of the Jesse H. Neal National Business Journalism Award for editorial excellence in news coverage. Follow him on Twitter @dontennant.

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