Who is actually advising you, and what happens commercially if you take their advice?

It has been another uncomfortable few weeks for Australia’s consulting industry.

The latest KPMG parliamentary hearings have put client confidentiality, governance, professional conduct and accountability back in the headlines. KPMG itself has acknowledged “major failings”, while some of Australia’s largest organisations have publicly questioned the conduct involved.

And this isn’t happening in isolation. In July, the Federal Government released options for tighter regulation of large accounting, audit and consulting firms, including how conflicts of interest are managed within multidisciplinary firms. The Government has been fairly direct about why, saying recent behaviour has undermined trust in the sector.

Most of that debate has understandably centred on audit, tax and government consulting. But watching it unfold, I think there’s a question here for anyone about to spend millions of dollars on a major technology transformation as well.

There are people in our industry who take a much harder line on this than I do. Eric Kimberling, one of the more outspoken voices in enterprise technology, has argued for some time that conflicts are built into the traditional consulting model. He’s talked openly about vendor bias, oversized consulting teams and incentives that reward more work rather than better outcomes. More provocatively, he has questioned whether the big consulting model is “fundamentally broken”.

I wouldn’t go quite that far, but I do think he’s asking a question our industry can sometimes be uncomfortable answering.

I’ve worked around enterprise technology for more than 25 years and conflicts themselves aren’t new. What has changed is the complexity of the ecosystem around them. A major transformation can now involve a strategy adviser, software vendor, implementation partner, cloud provider, specialist consultants, assurance partners and sometimes several divisions of the same large professional services firm.

There can be a lot of very capable people around the table. But capable and independent are not the same thing.

If the firm helping you decide what to do can also sell or recommend the technology, implement it, provide additional resources and potentially pick up years of downstream work, that doesn’t make its advice wrong. Nor does it mean there is anything improper going on. It does mean the client should understand the commercial interests around that advice, and I don’t think that question is asked often enough.

Organisations have become much more sophisticated in the way they run procurement processes, score vendors, negotiate contracts and put governance around major programs. Yet large technology transformations still run into trouble.

When they do, the analysis often starts at implementation.

The questions are familiar. Was the software unsuitable? Were the requirements poor? Did the implementation partner underperform? Was testing adequate? Was the organisation actually ready for the change?

They’re all reasonable questions and, in my experience, there is rarely one neat answer. But the examination often needs to go further back: who helped define the problem in the first place, who shaped the options, who recommended the solution, and whether any of those parties had a commercial interest in what happened next.

That’s not an accusation of misconduct. To me, it’s just good governance.

And commercial arrangements aren’t the only thing worth thinking about.

Kimberling tells a story from earlier in his career that I suspect makes a lot of people in the industry uncomfortable. He says his firm was paid more than $1 million to conduct an “objective” software evaluation, but that the recommendation was effectively decided before the work began because the firm had a large SAP practice to feed.

It’s a provocative example, and obviously one person’s account of one engagement, but the broader point is worth considering.

If an organisation has thousands of people trained in a particular technology, longstanding vendor alliances and a large implementation practice built around a particular way of working, of course that experience is going to influence how it sees a problem. That’s human, and in many cases that depth of expertise is exactly why you engage them.

It’s also why there is value in having someone at the table who doesn’t have a preferred answer.

Sometimes the right advice is to proceed with the system or partner you’re considering. Sometimes it’s to look at another option. And sometimes it’s simply: don’t buy anything yet.

The technology might not be the real problem. The process might need fixing first, the data may not be ready, governance might need strengthening, or you may be better off renegotiating what you already have before committing to another major investment.

An independent adviser needs to be able to give you any of those answers without considering what that recommendation means for their next piece of work. For me, that’s the important distinction.

Independence isn’t about distrusting vendors, implementation partners or large consulting firms. At SMC, we work with them all the time, and good ones are critical to successful transformations. They also bring specialist expertise that an independent adviser shouldn’t pretend to have.

It’s about being clear on everybody’s role and making sure someone in the room has a mandate to look at the whole decision from the client’s side.

There’s another part of this debate that I think is important, because it’s easy for the discussion about conflicts to become too one-sided.

Organisations can’t outsource ownership of transformation.

When a major project fails, sometimes criticism of the software vendor, implementer or consultant is entirely justified. But the executive team still owns the business case and the decisions. It owns whether the organisation is ready and the governance that should be asking difficult questions when something doesn’t look right.

One of the things that has always struck me about large transformation failures is how many sophisticated parties can be involved and yet how difficult it can become to work out who was responsible for the overall outcome.

The vendor delivered what was contracted. The implementer worked to the agreed scope. The adviser provided its recommendations. The governance process was followed. Everyone can point to the part they owned, and the client can still end up with an outcome nobody intended.

So I don’t think independence replaces accountability. Good independent advice should help executives exercise it.

When we started SMC 20 years ago, we made a deliberate choice to stay independent and sit on the client side of the table. We don’t sell software or receive vendor commissions. We work alongside vendors and implementation partners, but our role is to represent the client.

At the time, I don’t remember thinking of that as a particularly controversial position. It was simply how we thought advisory should work.

Twenty years later, with governments, regulators and some of Australia’s largest organisations asking much harder questions about conflicts, accountability and trust in professional advice, it feels increasingly relevant. Not because independence somehow guarantees good advice. It doesn’t. But it does remove one variable from the equation.

And when an organisation is about to make a technology decision that could affect its people, operations and finances for the next decade, I think it’s entirely reasonable to know who is at the table, what role they are playing, how they are being paid and what they stand to gain from the decision.

Then make sure somebody there has the freedom to tell you the answer you might not want to hear.