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The agency should be completely embarrassed by its $2 billion lack of accountability, writes a reader. More letters to the editor: claims of Linux infringement; better metrics for setting compensation; offshoring and gender discrimination; more.
CFO Staff, CFO Magazine
August 1, 2004
CFO welcomes your letters. Send them to: The Editor, CFO, 253 Summer St., Boston, MA 02210.
E-mail us at JuliaHomer@cfo.com. You can also contact a specific author by clicking on his or her byline at the beginning of any article.
Please include your full name, title, company name, address, and telephone number. Letters are subject to editing for clarity and length.
Gwen Brown has been CFO of the National Aeronautics and Space Administration for only six months, but as a taxpayer, I was greatly disappointed to read about her recent congressional testimony in your item in Grapevine (July).
The third paragraph reads, "In her testimony, Brown assured subcommittee members that the missing $2 billion was not the result of 'fraud, waste, or abuse.' But when pressed on what did cause the money to go missing, she admitted that the agency wasn't sure."
Am I the only person who finds these statements to be totally inconsistent with each other? In my humble opinion, I think that both Ms. Brown and NASA should be completely embarrassed by the lack of accountability ($2 billion) and their unwillingness to be straightforward and explain how NASA can be so sure it wasn't waste, fraud, or abuse, when they really don't know.
On the other hand, NASA's rocket scientists once again deserve a mighty round of applause for their recent success involving the pictures of the rings of Saturn. Those NASA employees certainly deserve appropriate praise for a great job.
The Legal Linux
In your recent article on Linux insurance ("Penguin Suits," TechWatch, June), you reported on the ongoing efforts of vendor SCO Group to get Linux users to pay the company a licensing fee. You also noted that SCO's assertion that Linux is derived from Unix is "unproven as yet."
I'm glad you mentioned that SCO's claims are unproven. Spend some time reviewing the court documents, and you find that SCO's assertions are more than just unproven. Despite violating two court orders compelling SCO to provide specific evidence of copyright violation in Linux, SCO has been unable to demonstrate a single line of copied code to the court. In fact, the suit against IBM wasn't even about copyright violation. SCO's original claim was that Big Blue violated the company's trade secrets.
Now, SCO is claiming that IBM was contractually obligated to keep IBM's own additions to AIX confidential. Note that SCO's case is based on a very loose (and unsupported) definition of derivative works. Even if IBM violated the SCO contract, there is no way this contract case could enjoin, damage, or claim copyrights on Linux source code.
If SCO has proof that Linux is taken in part from Unix, then the firm is legally required (as per copyright law) to perform mitigation of damages by contacting Linux creator Linus Torvalds with specific proof of copyright violation. The company is also required to request corrective actions. In my opinion, if SCO ever does litigate for copyright violation, the company's current actions will demonstrate bad faith to a judge and jury.
Measure for Measure
The practices and prescriptions for setting executive incentive compensation mentioned in "New Carrots, Old Yardsticks?" (June) rested largely on traditional, enterprisewide accounting metrics: ROI, growth rates of revenues, cash flow, free cash flow, and so on. A better way to gauge a manager's performance is to create and organize business units into profit centers and measure performance in terms of contribution profits.
A further drawback to relying on accounting measures of performance is that one of the central principles of accounting, the matching principle, is not always followed, especially when it comes to R&D, product launch, and other costs where the anticipated revenues won't materialize until future accounting periods. These factors, along with others such as channel stuffing, open wide the door to gaming merit-pay systems where bonuses are based on conventional accounting measures of performance, rather than EVA (economic value added) measures.
The CFO's budget, planning, audit, and control functions need to expand to include performance evaluation based on an assessment of the degree to which managers follow shareholder-value maximizing principles in their decision making. There are many EVA measures that can serve as guidelines. Unfortunately, none were laid out in the article.
Norman P. Monson
Opinions on Offshoring
Your cover package "Off Shore" (June) was right on the mark. Americans don't care whether their jobs are "offshored" to India or "outsourced" to Indiana. Regardless of the term or place, it is a disease that destroys employee morale and hampers the organization's ability to grow. It may cut costs in the short term, but at the expense of the people who have the potential to create value for the organization in the long term. What's needed is bold, decisive, and visionary leadership in business and government capable of releasing this potential.
What would happen if businesses viewed employees not as costs, but as investments? What would happen if the government changed outmoded accounting standards, cut foreign aid, and invested in America first, or ended world dependence on Middle Eastern oil? The point is, we have the potential to create new industries and new jobs without resorting to offshoring or outsourcing.
Christopher M. England
Outsourcing the American Dream
As a female accountant, it has been many years since I have been exposed to blatant discrimination based on my gender. However, almost every time I deal with offshore customer-service staff, discrimination kicks me in the face.
I have called help desks on many occasions regarding computer problems, only to be belittled by male staffers in India or the Philippines. My suggestions as to what I think the problems could be are ignored and dismissed. I often feel like I'm dealing with an automobile service station — all that's missing are the calendars with naked women on the walls.
The women are not much better, because they are used to being subjugated and do not accept that another woman might be as capable as their male bosses — if not more so.
Offshore staffing ignores the benefits we have of working in our society and forces us to deal with behaviors that our nation has long since outlawed. As a professional female, I should not have to deal with discrimination. If the discrimination came from an American, I would have recourse. What recourse do I have against an arrogant individual half a world away? Women have worked too long and too hard to be respected in our professions. Those efforts should not be tossed aside just to enhance corporate profits and executive bonuses.
ImageWork Technologies Inc.
Your coverage of offshore outsourcing was informative and fairly comprehensive. As a provider of an onshore alternative to offshore manufacturing, we thought it only fair to point out some nuances that were overlooked.
The concept that large global companies can effectively reduce their costs by outsourcing to smaller, cheaper, more nimble companies makes for a sound foundation for all cost containment. But to look only overseas for those alternatives misses great opportunities for American companies that can provide the same options. Smaller U.S. companies with highly specialized processes and expertise can provide cost-effective solutions with the same equipment and less labor.
Your article "The Backlash" (June) was great. I work in corporate PR for the largest call-center outsourcer in the world. Routinely, the company passes up the opportunity to speak to the press — Business Week, Fortune, Forbes, you name it — on any issue. The company simply will not talk to them. Then, when the company has something to say, it tries to go back to the beat reporters and editors, who no longer want to talk. It's a toxic cycle!
Name withheld by request
In "Office Politics" (July), a table of political donations was incorrectly described as "What the largest companies and their CFOs have given this election cycle." The donations were made by the individual CFOs; companies, as the story notes, are prohibited by law from making donations to federal candidates.