Consultants have seized upon their Next Big Idea: You. Having seen clients pull back on discretionary spending, consulting firms now regard the finance department as a still-warm, if not hot, target for their services, thanks to the slimming down most departments have endured. IBM, for example, plans to approach CFOs "with some pretty bold claims" about how much and how fast its new business-analytics unit can cut costs in areas like financial reporting, says Fred Balboni, head of the unit. Tata Consultancy Services is offering finance chiefs a two- to three-week "diagnosis period" to help assess where the quick fixes lie, and says many projects can pay for themselves within two quarters. Still others are benefiting from clients' fear, offering reassurance to CFOs who must supervise activities outside their expertise, such as international expansion.

Services specific to CFOs are "the bright spots" for firms like Accenture, Ernst & Young, and many smaller ones, says Derek Smith, director of research for Kennedy Consulting and Advisory, a market-research provider. That's relative, to be sure: Kennedy projects just 2% growth in finance-management consulting in 2009, down from 16% in 2008. Still, in some areas, the growth can be called dramatic. For example, some 42% of executives who began an outsourcing relationship this year report using an adviser to help structure it, according to a recent Black Book of Outsourcing report, up from just 16% last year.

Even in high-demand areas, however, consulting is still a buyer's market. In IT consulting, for example, bill rates are down anywhere from 5% to 15%, says James Friedman, an analyst with Susquehanna International Group who follows Accenture and other IT consulting firms. CFOs also have "a fair amount of leverage" in negotiating with firms that work on a contingency-fee basis, notes Steve Crane, CFO of ModusLink Global Solutions. In general, clients are pressing for "the ROI to be a lot more visible and a lot shorter," says Mark Goodburn, vice chair for KPMG's advisory services.

Finance chiefs thus have an opportunity to get more bang than usual for the consulting buck, but only if they structure projects to make consultants' time as efficient as possible. If an engagement drags on without a clear sense of direction or tangible achievements, lower hourly rates can still add up — and perhaps culminate in a potentially far greater cost: outright failure. CFOs, in short, need to select the best consultant for the job, crisply define the tasks to be accomplished, break them into independent phases so that spending can be turned off at any point, and lean on internal staff to both monitor and streamline the process.

To Buy or Not to Buy
Buying smart begins with deciding whether you truly need to hire a consultant. CFO Holly Koeppel, for one, has progressively challenged her staff at American Electric Power (AEP) to take on roles she once used consultants for, such as leading strategic-planning exercises and managing budget overhauls. That has saved untold millions of dollars, she says, and such processes "have actually gone more smoothly, because people are more engaged" with an internal expert at the helm rather than an outside consultant.

But when a project is too risky, or too important to be handled by nonexperts, many finance chiefs say they won't hesitate to buy what they need. Jack Judd, CFO of data storage provider Compellent, says he never considered using internal staff to organize tax records and plot tax strategy as the New York Stock Exchange–traded company approaches profitability. That approach would have been "very impractical" given that his small staff lacks a tax expert, and could have resulted in lost tax savings if the job wasn't done right, he says.

Likewise, Sentinel Group CFO Ryan Ziemann hired IBM (and its software) to help amplify the company's ability to detect fraud in medical claims, its main business line. "We theoretically could have developed this in-house, but it would have taken years of commitment and resources. The value lies in getting deep knowledge and expertise, plus avoiding pitfalls" that can be costly in themselves, says Ziemann.

Finding the right consultant is decision number two, and arguably the most difficult one. Many CFOs say they rely primarily on references from their colleagues to identify, and then interview, three or four firms. Then they contact more-formal references as they narrow down the process. Doing this well takes no little effort, however. ModusLink Global Solutions CFO Steve Crane says he always does reference checks to make sure that a consultant has some experience, but he also always worries about getting overly optimistic reports from company-provided sources. To help cut to the chase and uncover any glitches that may have occurred, Crane likes to ask: "What did you learn from the project that you'd want to do differently next time?"

A Piece at a Time
Happily, the consequences of hiring the wrong consultant are smaller than ever, as most projects these days are structured into discrete phases so that each part is, in a sense, a trial run. "Put off that long-term commitment as long as possible, and at least until you've seen the results of the upfront work," advises Ziemann. He says it is particularly important to push back when firms ask for upfront fees or the promise of more work if initial milestones are met, since you may decide along the way that "even if they met their milestones, it was more pain than it was worth."

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