Lofe, for one, is a proponent of the slice-and-dice concept. “We set upfront expectations for deliverables in a certain timetable, and require the provider to give specific reasons why a deliverable isn’t met by the established date,” he says. The practice further permits the company to delay, change course, or cancel subsequent phases if the earlier phases fail to show the promised results. “Otherwise,” he adds, “we run the risk of the consultancy being here forever.”
As Lofe suggests, a major part of keeping control over a consulting engagement is figuring out how to end it well. That works two ways: making sure the consultants don’t hang on too long, but also that they don’t leave too soon. “I’ve been in situations where we’ve had to repeatedly ask a consultant to return because there was no knowledge transfer. Never again,” says Jeff Burchill, senior vice president and CFO of global property insurer FM Global. Now, the company assigns an internal project manager to each consulting project in order to fully digest the project and then end it. The project manager’s job is to “import the skill sets of the provider and then transfer this knowledge to others through training,” he says.
Cardinal Health has similar practices in place to keep a tight rein on its engagements. “If we engage Deloitte or McKinsey, we designate a very senior executive as its sponsor, to understand and monitor any and all projects being done by that firm,” says Henderson, who himself is an executive sponsor for “a number” of large consultancies.
That approach ensures that Cardinal Health doesn’t unknowingly retain the same consulting firm for the same project in different business units. The company thus achieves greater consistency in project design and fee structure. Using one consultancy to provide coordinated service wherever feasible may also offer the chance to negotiate a volume discount, notes Tan.
However, perhaps the best lesson CFOs can offer about handling consultants is to not get too comfortable with them. Henderson says his biggest goal is to avoid relying exclusively on the services provided by a single consultancy — no matter how good the price or the result. “Even if the firm provides top-notch service,” he says, “you need to shake things up with other perspectives now and then — recommendations and observations you never thought of. We’re learning all the time.”
Russ Banham is a contributing editor of CFO.