Ethical IT Vendor Management

Situation
An IT manager who has purchasing power has a large project that will require a purchase of 8 high throughput compute units, network components, and services contracts. The project is considered the highest priority, most visible, project for the IT department. Recently, a long time friend of the IT manager has left a position with a large VAR to start his own business. The IT manager has previously told the now new business owner of the huge purchase his IT department must make.

The IT manager puts the purchase out for RFP in September with a desired purchase date in November (Request For Proposal). Three VAR’s respond to the RFP. In October two of the VAR’s have long term relationships with company and have each quoted the purchase price at 1.8 million dollars. By mid November the third VAR, who is the IT manager’s friend, quotes the purchase at 2 million dollars. This is the friend’s first quote to the company and he has never visited the company’s location to build relationships with other stakeholders.

If the friend gets this purchase it will boost his new business and allow him to become fully established. However, if the IT manager awards the purchase to his friend, the level of support will not be equal to the two larger, more established VAR’s. This IT manager has put himself into an ethical dilemma. This IT manager must consider both the friendship and the ethical perception of the purchase decision.

VAR’s and Ethics
The potential for conflict is enhanced by three factors: Pressure for sales organizations within the IT industry to perform (Schwepker & Good, 2011); Lack of education in the area of ethics in IT concentration curriculums (Pliagas, 2000); Pressures for IT to be responsive to business stakeholder requirements (Mcmanus & Webley, 2013). Ethical conflicts arise as IT organizations develop closer relationships with VARS and stop performing due diligence processes to assure what is best for the business stakeholders. “Good Ole’ Boy” networks are formed and assuring a friend hits sales goals for the quarter becomes more paramount than business’ bottom line.

Jin, Drozdenko, and Bassett’s (2007) study indicates that IT manager’s perception of ethical decisions is often based on deontological evaluations. These evaluations are based on what the manager believes is the right thing to do, based on their moral compass, and does not take into consideration the consequences (Jin, Drozdenko, & Bassett, 2007). Due to the lack of ethics specific education these evaluations are based on the individuals gut feel only. Taking care of a friend instead of the stockholders of a large, profitable corporation is therefor rationalized as an ethical decision.

Technology trends change at a constant rate. A technology sales organization must change as the technology trends change in order to stay relevant. The drive to stay relevant and keep up with customer needs drives the IT sales person to develop close relationships with the IT managers they serve (Schwepker & Good, 2011). Sales persons are most successful when they develop a customer relationship that can be described as a partnership. Sales persons in a partnership will exhibit behaviors that favor others rather than themselves (Schwepker & Good, 2011). VAR employees can easily over extend their company’s capabilities in an attempt to meet customer desires, without a purchase decision. It is the IT manager’s ethical responsibility to be transparent about the purchase decision process and funding possibilities.

Business stakeholders have revenue-producing objectives to support. IT management must build a service provider relationship with business stakeholders to create a value proposition for the business. The pressure to respond to business stakeholder requirements can force IT managers to overlook necessary procurement processes, which exist to protect against unethical behaviors in vendor relationships.

Solutions for IT Management
Education
Many IT managers are technical leaders who have thrived in an organization long enough to garner opportunities to manage projects and teams. When these technical leaders move into management they often lack the soft skills required to be an effective manager. The following solutions will improve the understanding of ethical behavior among IT managers:

• Corporations need education gates for potential managers.
• Technology education curriculum should include ethics and specifically ethics in procurement relationships.
• Corporations should provide ethics education to all IT managers.

Culture of Ethics
Business stakeholder trust is key to the success of the IT Organization. IT leadership must have an organization that is founded on an ethical culture. Jin, Drozdenko, and Basset’s (2007) study indicates that managers who demonstrate ethical values will have subordinates who also demonstrate ethical values in the workplace. The key to producing an ethical culture starts with leadership (Jin, Drozdenko & Basset, 2007).

Better Systems
Purchase decisions need to be made quickly to allow business drivers to realize revenues. However, the drive for revenue can cause processes to break down and unethical procurement decisions to be made. For IT managers, better ERP (Enterprise Resource Planning) systems can make a difference by expediting the process of approvals, while also providing a level of anomaly detection (Baker, 2010).

Mismanagement of IT vendor relationships can affect the relationship with both the VAR and highly valued business stakeholders. IT managers can strengthen these relationships by building an ethical culture in the workplace, seeking further business ethics education, and through the use of systems and process designed to prevent unethical decisions.

References: Pliagas, L. (2000). Learning IT right from wrong. Infoworld, 22(40), 39.

Schwepker, C., & Good, D. (2011). Moral Judgment and its Impact on Business-to-Business Sales Performance and Customer Relationships. Journal Of Business Ethics, 98(4), 609-625. doi:10.1007/s10551-010-0641-8

Mcmanus, J., & Webley, S. (2013). An ethical perspective of stakeholder salience. Management Services, 57(2), 33-36.

Cramwinckel, F., Cremer, D., & Dijke, M. (2013). Dirty Hands Make Dirty Leaders?! The Effects of Touching Dirty Objects on Rewarding Unethical Subordinates as a Function of a Leader's Self-Interest. Journal Of Business Ethics, 115(1), 93-100. doi:10.1007/s10551-012-1385-4

Jin, K. K., Drozdenko, R., & Bassett, R. (2007). Information Technology Professionals’ Perceived Organizational Values and Managerial Ethics: An Empirical Study. Journal Of Business Ethics, 71(2), 149-159. doi:10.1007/s10551-006-9131-4

Baker, C. (2010). We Have Been Here Before Benefits of ERP and the Post-recession Business. Siliconindia, 13(9), 32-33.

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