Galleon scandal affects tech industry: How does it affect trust and their relationships to enterprise customers?

As IBM, Intel and even bigger and trusted firms like McKinsey start to show loopholes, my recent talks to many enterprise customers and C-level folks is more business as usual. They simply don’t care about it saying that “No one is free from greed and there are always casualties” as one CIO put it. However many enterprise customers have started to evaluate their options and my recent visit to the east revealed that many enterprise customers treat Gartners, McKinseys etc as ” necessary evil” till the corporate customers can find data themselves and start doing their own work.

Trust is the most important and if there is anything that is missing in these times of need is Trust! As Warren Buffet rightly said that when the tide is gone you’ll soon find out who’s running naked. Many tech firms and whisperers (read: analyst, advisory firms) will soon be exposed to such inside trading and corporate customers will soon have to do the work themselves. Businesses cannot afford to have the feds running around in their offices. A lost image is worse than a bankruptsy, being tainted once and you’re gone.

While here the IBM’s top dog, where IBM has very quickly distanced itself from, has left IBM. I still wonder how deep this scandal will go. Will the customers, especially high-profile ones, of firms such as Intel, IBM, McKinsey, also be affected? What are the consequences of many McKinsey partners who are still doing the “soft calls” and thus not doing the conventional way? What affect does it have on the competitors of these firms?

Surely Galleon and many of these banks got hundreds of millions in lavish fees and many profited and this does mean that many have also been cheated out of this game. One ex-Gartner customer told me that they simply don’t trust and want to talk too much about their affairs with firms such as Gartner, they’d rather go out and fight the bad world themselves.

So this consultant is seeing a movement in the customer community that is soon to keep all external forces at bay and on tap, no more inside news and talk.

IBM’s Moffat’s story:

A senior vice-president and trusted lieutenant of Sam Palmisano, IBM’s chief executive officer, Mr Moffat had himself been mentioned as a possible candidate for the top job.

IBM refused to comment on the circumstances surrounding his departure, confining itself to a brief statement: “Bob Moffat, who had been placed on a leave of absence as a result of a US federal investigation into his personal activities, is no longer an employee of IBM.” A spokesman added that the company did not discuss “personal matters regarding employees or former employees”.

Kerry Lawrence, Mr Moffat’s lawyer, said that the executive had “retired from IBM, he was not terminated or fired”. He had left the company “so he could devote his time and energy to defending himself against the charges,” Mr Lawrence added. He reiterated that the former IBM executive was “still asserting his innocence”.

Mr Moffat’s quick departure, and IBM’s decision to characterise the matter as a purely personal one, contrasts sharply with the approach taken by other companies whose executives have been drawn into the insider trading case.

Source

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