Bias in Enterprise Software Evaluation
There is a great deal of biased information offered by market experts in a variety of fields and this is certainly true of enterprise software evaluation. We often write about this bias and how it leads to poor decisions being made. This bias in information sources is why an economist would consider the enterprise software market as inefficient. This is because efficient markets require good information and bias, often driven by financial incentives results in poor quality information. This is particularly true for any product or services which is bought by one set of individuals (for instance executives in this case) but used by others (for instance planners).
The Higher Burden of Evidence we Bear
The reasons why we must provide more evidence than most is related to the following:
- We take positions that are sometimes counter to conventional wisdom and we write many things that other sources of information on the internet will not. One reason is we actually test most of the software that we write about, while most analysts don’t. So we run into real world limitations of software.
- We are sometimes critical of the largest companies in the enterprise software space and call out their products. These are same companies that many other sources of information uncritically republish semi-press releases from large software vendors. We analyze all applications the same regardless of the vendor’s size, which is against the grain. “Journalism” in the enterprise software space means showering praise on the largest vendors.
- We offer a lot of better ways of doing things. Our proposal is that most supply chain systems operate at a low state of functionality. However, the question may be why other people are not doing this. We don’t have a great answer for that question.
- We have not been around for as long, and are not as large or established as outlets like CIO or InfoWeek.
Because we are small as well as taking the path less traveled, we have to be more clear about our internal incentives. Information outlets that publish inaccurate information bear almost no burden in this regard. This is particularly true if the information outlet is large and established. Large media outlets are considered trustworthy by default. However large media outlets are actually at a disadvantage versus smaller outlets in this regard because they have so many incentives to provide biased information.
The Rules We Follow of Enterprise Software Evaluation
One of the reasons we started this site was because of the commercial nature of so much information on the supply chain enterprise software market. Some of it is simply what a vendor would like its customers to believe.
Bias can be controlled by simply following a few rules, call them journalistic integrity if you like. These are rules that very few information outlets follow, because it is so expensive to follow them. Here are rules that SCM Focus follows that prevent the dissemination of false and or biased information on this site:
- Maintain Freedom From Commercial Influence: One of the major problems with market experts is that they are often paid to write things or that they sell their research. This problem is very prevalent in the financial industry. To prevent commercial influences from taking over the site, it’s important that any relationship with software vendors, or other influencing parties be declared. It is also important that the financial benefits from working in a writing capacity for third parties be declared. Think tanks that do work in public policy and economics tend to hide their funding sources and/or present their analysis as if their funding has no relationship to their results. Many think tanks operate in this manner, but their bias is clear when one compares the positions they hold to their funding. These institutions are essentially writing for cash, and are not serious research organizations. Many supposed research institutions work this way, their contribution to knowledge is actually negative. The way around this is to openly declare all financial relationships. We do this on this page (see below).
- Maintain No Conflicts of Interest: All companies which are responsible for providing ratings, that are paid directly or indirectly, by the companies they are offering opinions on, have problems with conflicts of interest. This has shown to be true beyond a shadow of a doubt among financial rating firms such as Standard & Poor’s, Moody’s and Fitch, as well as the major accounting firms. It is also a problem for any media outlet, which accepts advertising. This is why Consumer Reports, an outlet with a very good reputation for objectivity and quite trustworthy, does not take advertising. We have been offered advertising and have turned them down because first of all, advertising cheapens any medium and secondly, we don’t want products or services we dislike appearing on the site. We also are never paid to write about or promote any product on this site.
- Have No Subscribers: However, bias not only comes from financial ties from the supply side. It also can come from the demands of readers. A good example of this is financial newsletters, which have a poor reputation for accuracy and seem to cater to and attract readers with a certain bias. If writers are overly concerned with keeping their audience and if there are strong financial incentives to do so, the author with have a strong incentive to write information that their readers “want to hear.” We like to have a healthy reader base, but if some turn away from the site for whatever reason, it does not affect us financially. We do not charge for access to the site. It’s important to be in a position to print what is true.
Declaration Enterprise Software Vendor Financial Relationships
The listing below is the complete listing of all entities from which SCM Focus received any payment of any kind. All income has been from consulting work which usually takes the form of occasionally writing an article for their blog or providing competitive landscape information. The total income received from any vendor has never exceeded $2000.
- We have performed some writing and advisement for PlanetTogether, a best of breed production planning and scheduling vendor.
- We received some analytical work from JDA on the competitive landscape.
What About Unmentioned Vendors?
On one comment on a post, the question was asked why other vendors were not mentioned on this list, implying that since we wrote good things about them, that by not including them we were hiding a financial linkage. That is not the correct way to read the list. Only those vendors that we have received income from are on the list. Therefore if a particular vendor is not listed above, then no income was received from them.
Anyone with experience in this area should know that writing positive things about smaller vendors is a profit minimizing approach. The way to do well financially is to praise large vendors, because they are the only ones with the resources to really fund information outlets. That is why it is so ironic when we are accused of being biased towards smaller vendors. There is absolutely very little money in this strategy. Strangely no one seems to point out the enormous bias on the side of most other information outlets which highly skew their analysis in the favor of large vendors and which take substantial contributions from them, and how wrong analysts typically are on their projections of the outcomes for the products of the large vendors (which we historically analyze in this article).
No Reseller Arrangements or Referral Income
We have no reseller arrangements with any vendor and have no arrangement where we receive referral fees or commission. (We had one with WinShuttle, but terminated it because we re-evaluated what we wanted to do. We never made income from the WinShuttle relationship.). We have ample opportunities to be referral partners with vendors and never accept them. We make no income if a company purchases a particular application which we recommended.