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Book reviews – Essential reading.

Last year saw The CFO as Business Integrator, which took a holistic look at the corporation by examining the whole supply chain. Now Read has produced a volume that concentrates on one of the most talked about and badly executed corporate strategies – outsourcing.

CFO Insights offers a detailed strategic look at determining what sort of functions any particular company should be outsourcing (and which should stay), how to select an outsource service provider, the various combinations of in-house shared service centres and fully outsourced services, as well as pricing, tax and HR issues.

The book also looks at the problems of establishing the contract and managing the relationship as well as looking at the cost, geopolitical, cultural and infrastructure issues of global outsourcing to countries such as India, China or (nearer to home) Ireland.

Cedric Read himself used to head up what was then Price Waterhouse’s Financial Management Practice, where he and his team produced the first two titles in the series before establishing his own consultancy and worked with SAP to produce the third book. For this fourth title, Read has teamed up with Accenture – but don’t think this is nothing other than a 300-page sales pitch. There’s certainly plenty of Accenture in there, but other service providers get a mention and, in any event, the emphasis throughout is very much on the experience of leading corporations.

A highly readable book, laden with case studies ranging from BP (the first company to outsource its finance function) to Dell to logistics group Exel – and extensive interviews with many FDs.

CFO Insights is compulsory reading for any business considering outsourcing any part of the finance and accounting function.

Stewart Clements, Michael Donnellan & Cedric Read
ISBN 0-470-87086-9
Published by Wiley

The best of the rest…

FOOLED BY RANDOMNESS; Nassim Nicholas Taleb; ISBN 1-58799-184-5; Published by Thomson Texere; £12.99
Living up to its title, this book is a cornucopia of random examples of how chance plays a major part in business, social hierarchies and the “chromodynamics of swans”.

Businesspeople need to rid their minds of intellectual certainties; in other words, remain sceptical about how much executives can control markets or company performance by analysing risk. The author claims that opportunities afforded in business are more about luck than certainty.

Fooled by Randomness does offer some words of comfort: “It is unlikely for someone to perform considerably well in a consistent fashion without his doing something right.”

Perhaps the book should be read in the context of its opening chapter that asks the simple question: “If you’re so rich, why aren’t you so smart?” Not something you should discuss with your chairman, though.

DEALING WITH FINANCIAL RISK; David Shirreff; ISBN 1-86197-591-0; Published by Profile Books; £20.00.
Beginning with a quote from The Merchant of Venice and ending with how mobile phone companies are dealing with the fact that their products could cause tumours, this Economist title is a detailed analysis of how businesses’ approach to financial risk has changed over the past 30 years. With real-life examples, such as the tech crash of 2000 and Enron, as well as theory and trends in risk management, this book is accessible and authoritative.

New regulations such as Basel II and its impact on global businesses is covered in-depth, as is the rise of company ‘risk officers’ whose role is to make sense of the legislation.

Most enlightening are the chapters on complex ‘theatre of war’ games that some companies and consultants have introduced to get managers thinking like army generals, political leaders, or even Alan Greenspan.

THE COMPANY; John Micklethwait & Adrian Wooldridge; ISBN 0-297-84726-0; Published by Weidenfeld & Nicolson; £14.99
The Company is a historical romp through 5,000 years of big business. It charts the creation and development of the modern company, from its “protracted and highly irresponsible youth” as embodied in the merchants of Mesopotamia to the latter day rise of the “dark lords of globalisation”.

Companies have always had a bad press, but it is their ability to adapt to different situations that has ensured their survival. So where does that leave the company going forward? First, multinationals will initiate a silent takeover of the world. Second, companies will outsource so much of their operations that they will become nothing more than a good idea and a handful of people. Third, companies will dissolve into a mass of partnerships operated by knowledge workers. So much for gossiping round the coffee machine.

THE VALUE MINDSET; Erik Stern & Mike Hutchinson; ISBN 0-471-65029-3; Published by Wiley; £23.99
New York-based consultancy Stern Stewart more or less invented the concept of EVA (economic value added), which has been adopted by many global businesses as the means for investment appraisal, performance management, and executive and employee remuneration. At its heart lies the notion of efficient use of capital – that shareholder value is created only when returns are generated that are greater than the notional cost of the capital employed. So it is unsurprising to see that Erik Stern and his co-author Mike Hutchinson subtitled their book, ‘Returning to the first principles of capitalist enterprise’. This book looks at the theory and practice of EVA from the perspective of motivation and incentive. Using examples from Coca-Cola to Tony Blair, this thought-provoking book is a worthy addition to the bookshelf.

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