Comment Articles

Lies, damned lies, and consultants

Eugene Lacey ZDNet.co.uk

Published: 05 Aug 2002 12:29 BST

"There are three kinds of lies: lies, damned lies, and consultants," Benjamin Disraeli might have said, had he been around to observe the modern business world.

What's wrong with consultants? Well, that's more of a book than a ZDNet UK column, but I'll outline here some of the main problems, starting with the obvious though timely observation that tech consultants cosying up to major hardware and software vendors raises serious question marks over the independence of the advice they offer. To put it bluntly, consultants from an IBM-owned consulting division may be far more likely to recommend Big Blue's servers than Sun's.

This raises similar concerns about the alleged abuse of independent advice that we've seen on Wall Street recently -- where investment analysts were far too close to, and often owned by, investment bankers. It is now widely acknowledged that this system needs to be reformed to establish a clear ethical and legal separation of these activities to prevent the kind of alleged abuses we have seen recently.

In light of IBM's PwC takeover, perhaps the technology sector needs a regulator to guarantee the independence of advice it gives to firms about technology infrastructure investments, make spot checks, and publicise abuses.

Wall Street is used to working under a regulatory regime -- albeit one that has been seen to fail. But at least the existence of rules and regulations under which the financial markets operates is a necessity that is widely accepted in principle. The technology sector looks like the Wild West by comparison.

If the technology sector is to avoid charges of abuse of independent advice now is the time to start establishing the rules of independence.

While the regulator is at it, it could stamp down on some of the pernicious practices that give consultants a bad name.