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Cheaper Advice

It's a buyer's market for consulting services, but if you don't manage an engagement carefully, you could pay more than you bargained for.

Alix Stuart is a senior writer at CFO.

The Big and Small of It

When Compellent CFO Jack Judd was looking for tax help for his small, publicly traded technology company last spring, he auditioned several accounting firms, including one of the Big Four, but ultimately chose a (relatively) smaller firm. “The Big Four are easy choices when you need lots of infrastructure and someone to come in quickly,” he says, but since they were the most expensive and the project wasn’t particularly time-sensitive, Judd went with the smaller firm. It wasn’t just cost that drove his decision; the fact that the people who met him from that smaller firm were also the ones who would actually do the work mattered as well. “An awful lot of my choice was about who I trusted [the most],” says Judd.

Indeed, many CFOs at small firms worry that they will get lost in the shuffle if they go with a big brand name for consulting services. That hasn’t stopped Sentinel Group CFO Ryan Ziemann from hiring global information-technology vendors to help his 30-person health-care-fraud-prevention firm, though. To help ensure good service, he says that he avoids upfront and flat fees and pushes for full contingency pricing whenever possible, so vendors are “strongly incented to perform well.”

So far, it has worked out well, says Ziemann. Not only has one vendor’s software tool helped identify more than $50 million worth of health-care fraud in the past five years, but the vendor’s support team is always available by phone to Ziemann’s staff, and recently helped them develop a special report based on the software’s capabilities at no additional cost.

In general, choosing between a large and a small firm may depend on the project. Big firms are typically good at enterprisewide, global projects and carry much less risk, notes Dan Morris, co-founder of Verasage, a think tank focused on trends in professional services, “but if you want true innovation, you’re much better off with a boutique or even a solo practitioner.” — A.S.

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