A lot of "independent" consultants who help companies pick ERP and warehouse software get paid by the vendors they recommend. Sometimes it's 10 percent of the deal, sometimes 30. The client almost never sees it.

I know because I spent more than a decade on the vendor and channel side of ERP sales. This isn't a rumor. It's a business model I watched run every day.

How the money moves

It's rarely an envelope of cash, which is why it stays invisible. It runs through arrangements that sound respectable on paper:

  • Referral agreements. The consultant registers your deal with the vendor and collects a percentage when you sign.
  • Partner margin. The consultant is also a reseller and earns margin on the licenses they "recommend."
  • Add-on commissions. Each product bolted onto your deal pays something back to whoever specified it.
  • Implementation favors. The consultant steers the implementation to a partner firm, and the favor comes back somehow.

Stack a couple of those and a consultant can make more from your vendor choice than from your consulting fee. At that point the advice is the loss leader and the recommendation is the product.

Most of them aren't villains

That's the uncomfortable part. Most of these consultants believe in the platforms they recommend. They've seen them work and they know them well.

Belief and incentive are hard to pull apart, though, even for honest people. When one option pays you and the other doesn't, your judgment leans toward the paycheck in ways you don't notice. Research on conflicts of interest in medicine and finance keeps finding that disclosure doesn't fix it and good intentions don't either. So the shortlist you get tends to match the consultant's compensation, without anyone having lied.

What it costs you

Usually not a bad system. The vendors that pay referral fees make real products. The cost is quieter.

The options that don't pay disappear. A platform with no referral program rarely makes the final round, and neither does "keep your system and fix the process," which pays a consultant nothing.

You lose bargaining power. Someone earning a percentage of your deal has no reason to shrink it. Every module trimmed and every discount fought for comes out of their pocket.

Scope runs generous, because bigger implementations pay bigger commissions, on a project where the license is already the smallest number on the page.

I set up InventoryATC with one rule because of all this: no compensation from any vendor, reseller or implementation partner, in any form. Clients pay me and nobody else does. That's what lets me tell someone their current system is fine, or fight for a smaller deal, without it costing me anything.

The question to ask

You don't need to hire me to protect yourself. Ask this, in writing or across the table:

"Do you receive any compensation, directly or indirectly, from any vendor, reseller or implementation partner you might recommend?"

Listen to the answer, and to its shape. "No, and here's how we're paid instead" takes five seconds. An answer that starts with "well, it's standard in the industry," or turns into an explanation of why their recommendations are objective anyway, is a yes in a trench coat.

If you want to be sure, follow up: "Would you put that in our engagement agreement?" Someone who's independent will say yes before you finish the sentence. Someone who isn't will pause, and the pause tells you as much as the answer.