Is Your IT Department Protecting You From the Right CTRM Solution?
I was talking to a vendor salesperson a few days ago (who shall remain nameless). He told me that quite often, they demonstrate their solution to the IT department (acting as the initial vetting stop for new software systems…effectively the first gate in the selection process prior to getting the users involved) and then never hear back. This particular salesperson feels that they have a winning solution – solid functionality and good features at a very competitive price – plus, their system requires very little internal IT department support compared to his competition. In our conversation, he wondered aloud if his oftentimes inability to clear that first gate was connected to this lower dependence on the internal IT group? Was the IT department blocking its users from the system they really needed in order to protect their “turf”?
In the past, we have written a number of blog articles looking at the potential for ‘bias’ from consulting and systems integration firms. As we have stated, bias is often just a natural feature of the skillsets, expertise, and experience that the consulting firm has onboard as opposed to anything nefarious. However, one thing we probably have never written about is internal IT bias.
IT departments within larger commodity trading firms will almost always be tasked with first line support for the C/ETRM systems, either custom (internally) developed and vendor-supplied systems. In either case, the IT department will employ a number of resources that are dedicated to the trading group…addressing user issues and concerns, relaying code issues to the developers/vendor, helping spec out needed functionality, etc.
If the system has been internally developed, the IT department will also be maintaining and enhancing the code using either internal or external developers. In these cases, the same issues that apply to the consulting firms will also apply to that internal IT group…that staff will have been hired for their experience in (or have been trained in) the specific technologies used to develop and support their solution. For large-scale trading companies that use internally developed software, the number of people involved (direct hires or 3rd party resources) in maintaining, developing and supporting the system can number several dozen or more.
In a formal RFP-driven sales process, vendors often deal directly with the IT department personnel who will act as the facilitator and conduit to the business and its requirements. They will also have a say in the final selection decision. While one would expect IT staff to always place the business’ commercial goals and objectives ahead of their own, what if a solution that is being reviewed doesn’t need much IT involvement, but is an equal or better fit to the business requirements when compared to one that requires more internal support or an internally developed one? What if that IT department has a staff of a dozen or more looking after the current solution, but one or two of the products under consideration requires far less support and their selection would result in drastic cuts in the need for IT? What if, at the end of the selection process, there are two equally qualified solutions – one that requires extensive IT involvement and one that does not? Isn’t it possible that the IT group’s leadership might express a preference for the one that keeps their group busy?
In my 20-odd years in and around ETRM and CTRM, I can’t say I have ever seen an IT department influence things to suit its purposes rather than the business’ purposes. But you know, we live in a world where natural bias exists and must be reckoned with. That being said, there are very legitimate reasons that a company would pursue a bespoke build, or continue to use a legacy in-house developed system even after reviewing what might be available commercially…the company may have very specific requirements that aren’t commonly available in vendor-supplied systems; or their unique combination of assets and business focus has permitted the development of a unique solution that provides some level of competitive advantage. In these cases, having the IT group vote “no” to a vendor-supplied system certainly doesn’t imply they are trying to protect their kingdom.
Even in cases where a company is seeking a vendor-supplied system to replace another vendor’s system, levels of internal support required is just one of many considerations. Though we all might suspect that a particular individual or individuals that we’ve dealt with were more motivated by his or her own interests (such as protecting or growing their group at the expense of the goals of the business they support), I do doubt that has been the case very often. At the end of the day, companies expect and demand that all their staff from top to bottom are pulling in the same direction and in the best interest of the business. Besides, I suspect no head of a commercial group whose P&L is being burdened with allocated IT costs is going to have a lot of tolerance for that type of behavior…
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