ISM Acquires ADR North America: Training, Consulting, China, and Beyond (Part 1)
As a somewhat Germanic aside (credentials, credentials, credentials), if you're curious, the two ISM executives -- both of whom make for great company and conversation, on topics ranging from the future and role of indexes like the PMI to the ideal role of associations and training in the procurement profession – share five (!) certifications between them: CPSM (both) and C.P.M., A.P.P., MCIPS (Paul Novak). Talk about a qualified duo. But more important for our purposes today, the announcement initially confused a number of ISM and Spend Matters readers, many who read about it without the context of understanding the practice area and size of ADR -- not to mention to future goals of the new organization.
Before exploring these elements in more detail and clearing the air around any confusion surrounding the acquisition and new company formation, it might be helpful to share a bit of history. ISM and ADR North America (the US licensee of ADR International) have collaborated for some time. For instance, the ISM-ADR School for Supply Management was established in January of 2009 through a cooperative agreement between ISM and ADR North America.
Incidentally, this training organization, which was previously staffed with ISM and ADR resources, will now be taken in house within ISM. It will not be managed by the new business. The new business, formed from the assets of the acquisition, ISM Services, Inc., was incorporated in December of 2011. To provide even more detail, ISM Services Inc. (i.e., the new "for profit" company) purchased ADR North America and its subsidiary ADR-ISM Supply Management Consulting (Shanghai) Co., Ltd.
Paul and Bill shared that the "ISM Services, Inc. subsidiary ADR North America will still be a licensee of ADR International intellectual properties, including web-based sourcing and supply chain skills analysis tool." In other words ADR North America will license the intellectual property of ADR International, in the same manner in which it has previously.
Previously, ADR had 20 consultants "around the globe" and 50 contract consultants with specialized skills and expertise in North America. The new venture will leverage this network in a contract manner, accessing skills and expertise as required. However, ADR International (including the UK, Eastern Europe, Australian and South African operations) will operate independently, however there will still be sharing and collaboration of resources and intellectual property.
Paul and Bill told us that the transaction and creation of a for-profit company will bring a range of benefits to ISM, including the ability to better manage costs in a tax efficient manner. But most important, the venture will bring much back into ISM not from a financial perspective, but rather it will make the organization more valuable to its members from a research and IP perspective.
Paul noted that "the consulting part [of the venture] brings to us an opportunity to gain insight and knowledge into what is going on in the field" on a pragmatic basis. The vision is that the venture will impact ISM's research (including CAPS Research) and programming in a positive manner to put the organization in closer touch with the fast-moving procurement environment impacting members every day.
Stay tuned as our reporting and analysis of the acquisition and creation of ISM Services, Inc. continues, including what the transaction and company formation means for ISM members, other consultancies and global ISM initiatives (e.g., China).
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Does that strike anyone as an ethical no-no? I mean, to simply own an external company that is a contractor 100% focused on ISM certifications smells stinky. Its way more stinky when ISM changes certifications that then enrich the CEO and SVP who have the opportunity to train the new certs. But, to then cause ISM to acquire their consulting company is rancid. It sounds like this is what occurred? If it did, Jason your normal clearly written material seems to knowingly dance around the topic because today's article is twisted in complexity. Did I read the facts wrong?
If so, the CEO and SVP are at odds with at least 3-4 of the ISM Ethical standards.
So nothing I can see to worry about from an ethical point of view.
1. I wouldn't see a person having those four certifications being super-qualified any more than if they just had one of them. Here's why. The A.P.P. (which is no longer being awarded, not sure why you'd want to use it as a credential) required passing two of the four modules of the C.P.M. (which is also no longer being awarded). So, if you have the C.P.M., you obviously have the qualifications to be an A.P.P. If you had previously earned the C.P.M., you can earn the CPSM simply by having a bachelors degree and passing a "bridge exam" that covers that little bit of material beyond what the C.P.M. covered. So, if you have the CPSM, you obviously have the qualifications to be a C.P.M (and, in turn, the A.P.P, which is essential a half-C.P.M.). And ISM has a reciprocity agreement with CIPS such that, if you have the CPSM, you can pay a fee and get the MCIPS without taking any additional tests. So, therefore CPSM + C.P.M. + A.P.P. + MCIPS = CPSM. The fact that ISM and it's CEO make this type of alphabet soup to make people look more qualified than they are is in bad taste, IMHO. The fact that an expert that I respect like Jason didn't even see through it and considered these extraneous credentials to make someone seem more qualified than they are reflects on how this approach confuses the marketplace.
2. A line from the post that just doesn't make sense to me is this: "creation of a for-profit company will bring a range of benefits to ISM, including the ability to better manage costs in a tax efficient manner." Huh? When an entity goes from not-for-profit to for-profit, it typically means that they will be paying MORE in taxes. So, are they going to funnel the expenses of the not-for-profit arm into the for-profit arm (formerly ADR NA) in order to avoid paying their fair share of taxes (the taxes previously paid by ADR)? Is that what this means? Any IRS auditors out there paying attention? :)