West Virginia Calls Out Cisco on “Wanton Indifference”

The legislative auditor of West Virginia says that Cisco Systems, Inc. has sold millions of dollars worth of unnecessary routers to the state. The money was from the federal government grant called the Broadband Technology Opportunity Program. Brad Reese blogged about how the company had sold $24M worth of model 3945 branch routers to West Virginia when more affordable models would have been adequate to address the state’s networking needs.

“It is the opinion of the Legislative Auditor that the Cisco representatives showed a wanton indifference to the interests of the public in recommending using $24 million of public funds to purchase 1,164 Cisco model 3945 branch routers,” the audit report said.

Cisco denies any wrongdoing. The company says that the model 3945 branch router, priced at $15,000 each, is the only one that would have been sufficient for West Virginia’s stipulations, which include redundant power supplies.

However, the West Virginia auditors cite that, according to Cisco’s product literature, a more affordable $650 model 870 router would have been appropriate for the needs of the buildings, including the Marmet Public Library, as stated in the contract.

Channelnomics’ Larry Walsh comments on how the state has described Cisco’s actions in the report. “While Cisco technically did nothing wrong in the deal, the auditor says it had a “moral responsibility” to keep the state from overspending on equipment,” Walsh writes. He then discusses how the concept of moral responsibility runs contrary to a company’s main undertaking of selling more of its product to customers.

Walsh also sees it as especially “problematic” when applied to the channel. The channel’s co-selling model involves engineers, salespeople, and a partner meeting with a customer in behalf of the vendor. The vendor says to the customer that the rationale of sending salespeople and engineers with a partner is to properly position the technology and its value. What actually happens is that this setup enables the vendor to make sure that more of its product is being sold. Solution providers, on the other hand, work differently. According to Walsh, an element of trust gets into the equation as nine out of ten customers “either buy or strongly consider a product” that is recommended to them by their solution provider. Both vendors and solution providers can recommend, even more than what their customers need, in order to suit their financial interest. This is when moral responsibility becomes an issue. “By overselling, solution providers run the risk of corrupting the trust advisor relationship. They can make a sale today, but lose many sales down the road,” Walsh says. (KOM) Link. Link. Link.