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Avaya offer vetoed, outed by CIO

Ready for some football? A special offer reaches some CIOs, but experts advise watching the game at home.

Will Weider, CIO of Affinity Health System, a Catholic health care system in Wisconsin, recently received "an opportunity to witness history!" by Avaya Inc. The offer came by mail on beautiful letterhead, noted Weider, and was signed by Donald Peterson, the chairman and chief executive of the Basking Ridge, N.J.-based telephony provider. Weider read that on July 9, 2006, Peterson will be hosting "a select group of executives" at the FIFA World Cup in Germany.

"On behalf of Avaya, I am delighted to invite you and a guest to a memorable experience of world class football. You will travel to Germany to see two of the world's best football teams go head to head in a Semi-Final Match on either July 4 or 5, 2006," the letter states.

An official partner of the FIFA and the 2006 FIFA World Cup, Avaya is "proud to provide voice and data communications … to the world's largest sporting event," Peterson wrote. This visit, he promised, will be "a once-in-a-lifetime experience with face-to-face players' meetings and many other surprises."

Indeed, Weider, who writes a blog called the Candid CIO, was so bowled over by the invitation that he attached it to an entry titled "CIO Junkets." He promises to post more "unbelievable" offers as he gets them, to "show folks the lengths a vendor will go to get cozy with a CIO." He notes wryly that he likely will get fewer in the future.

Avaya spokesperson Deb Kline said one of the reasons the company sponsors the World Cup is because it provides a "live technology showcase," a working network model of its offering. "We actually see this not only [as] a customer hosting experience, but much more of a learning experience for CIOs that might be having similar issues. This allows us in essence to build out a system that is no risk for our customers that they can learn from," Kline said. She noted that Avaya would not offer technology executives personal gifts – and that CIOs accept vendor offerings depending on their corporate ethics standards.

The company is not alone in offering freebies, say CIOs interviewed on the topic. Dinners, drinks, a weekend of golf -- are all par for the course. It's perhaps not hard to see why. Even over-the-top offers, such as free trips to Germany, are pocket change compared to the IT budgets in this country. CIOs are expected to spend $824.8 billion on IT projects this year, according to Gartner Inc., the Stamford, Conn.-based consulting and research firm.

"The green is always there," said Bruce Barnes, a consultant and former CIO, whose firm, Bold Vision LLC, offers peer-to-peer advice for CIOs. "Is it worth it to spend $1 million to make $2 million? I suspect that's the equation a lot of companies use."

Vendor freebies offend Barnes on two levels. "It's insulting when a vendor thinks that I can be bought. And it's insulting to me when I know that some of my peers can. It's just wrong. That money could be put to much better use," he said, such as finding out what companies really need instead of pushing a product.

Some CIOs are taking a zero-tolerance approach. No crusader, Weider began his blog by admitting he enjoys the perks of being a CIO. He notes he probably goes to 10 vendor dinners a year and is usually treated to one Packers game with his spouse per season, the most expensive outing he's comfortable receiving. With a capital budget of $8 million this fiscal year and an operating budget of $5.5 million, Weider gets vendors' attention. But the Avaya junket shocked him, he said. "I would say that has been the most gracious offer I have received," said Weider, when reached for comment on his blog.

The Affinity Health system, which includes three hospitals and 17 clinics, is operated by Ministry Health Care and the Wheaton Franciscan System. In his role, Weider said, he accepts the occasional steak dinner with a vendor, but he said the majority of his meetings are conducted at the Copper Rock coffee house next door. "I don't have a problem accepting a free latte, although I try to buy once in a while," he said.

CIOs that tolerate vendor freebies are on shaky ground, said Keith Darcy, executive director of the Ethics Officer Association, a nonprofit member association that bills itself as the largest group of corporate ethics and compliance practitioners in the world.

"I think it is one of the high-risk areas. The new SEC Chairman, Christopher Cox, has declared that one of the top agenda items on his list is executive compensation. The known and unknown forms of executive compensation are clearly under the microscope," said Darcy.

"Once you add other incentives into the decision-making process, i.e. perks and bennies, you are no longer making the efficient decision on behalf of our corporations," Darcy said.

Bruce Weinstein, author of the syndicated column "The Ethics Guy" and a frequent TV commentator on ethics, agrees. "To maintain the integrity of the companies they represent, CIOs must avoid not only bona fide conflicts of interest; they must avoid the perception of a conflict of interest. Thus, if a gift might suggest that the company is unfairly favoring one client over another--even if that is not actually the case--it is in the long-term interests of the CIO and his/her company to decline the gift," he advised by e-mail.

And Weinstein adds, it is irrelevant, "ethically speaking," that many or most businesses disregard that rule. "If a company is committed to having the highest ethical standards, which ultimately is good for business and the best way to develop and maintain the public trust, it should just say no to potentially troublesome perks," Weinstein said.

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