Posted by: kenwbudd | June 3, 2010

The Devil’s Triangle of IT Project Management

The Devil’s Triangle describes a basic set of dysfunctional relationships that push many projects toward failure. As you have heard in other contexts; there are three people in this marriage.

Three parties participate in virtually every major software deployment: the customer, system integrator or consultant, and the software vendor. Since each of these groups has its own definition of success, conflicts of interest rather than efficient and coordinated effort are built into and affect many software implementation projects.

The Devil’s Triangle

The Devil’s Triangle explains how economic pressures can drive software vendors and system integrators to act in ways that do not serve customer interests. It also offers insight into the ways some enterprise software customers damage their own projects.

Devil’s Triangle relationships are a short sighted and self-interested way of life for too many participants in the enterprise technology landscape.

Schizophrenic software vendors and split loyalties

Clearly, Software companies want to sell product licenses to end customers. However, the vendor’s loyalties are sometimes unclear, because 3rd party system integrators have a great deal of influence in most software deals.

Beware the Systems Integrator

As a result, although the customer buys the license, the system integrator may have a closer, better, stronger, relationship or partnership with the vendor. The link to the customer is more tenuous.

Although the customer is certainly important because he finances the deal, some integrators offer incentives to enable critical ‘deal flow’ to the vendor, making the integrator a key part of the software company’s sales process.

So who wins when a software vendor’s loyalties to the customer conflict with its relationship to the system integrator?

Wacky system integrators: billable time vs. customer success

When a project goes over-budget, the customer pays much of that extra cost to the system integrator in the form of additional services fees. In the best cases, these fees enable the service provider to perform additional, high value work improving business outcomes for the customer despite the higher cost.

Beware the Dual Incentive

System integrators sometimes have a dual incentive to build long-lasting customer relationships while racking up change order fees if the project runs late.

Sometimes, this situation creates an negative incentive pushing the integrator away from the goal of completing the project on time and allowing the cash to continue flowing, out of the customer’s budget.

For these unscrupulous consultants, unsuccessful projects represent “annuity consulting” revenue coming at the customer’s expense.

This conflict has been described before:

  • In private moments, many third-party consultants dream of long projects, where billable hours and customer purchase orders flow like water.
  • This kind of annuity consulting is never good for the ERP buyer.
  • Almost by definition, when projects exceed their schedule and budget, the extra dollars go into the consultant’s pocket.
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