Corrections or additions?
This article by Kathleen McGinn Spring was prepared for the January 15, 2003 edition of U.S. 1 Newspaper. All rights reserved.
When Things Go Bad, Contingencies Help
When employers think about vital business functions,
“everyone says payroll is most critical, but that is not true,”
says Wayne Dotta, an independent consultant, who has studied
business continuity.
Should the payroll system go down, it would not be all that difficult
to issue handwritten checks, Dotta points out. The life of the company
would not be disrupted, and workers, payment in hand, would care little
whether it was issued by a human or by an automated system. “It
would only be true if you’re part of a company in the IT area,”
he adds. “In that case, employees could lose confidence in their
company.” Thinking could veer toward an assessment like this:
Hey, if they can’t even get it together to keep payroll up and running,
just how good are their virtual widgets?
This example just begins to highlight the complexities of planning
for business continuity, for keeping operations running in any and
all circumstances. No plan can foresee every monkey before it tosses
its wrench into the works, but simply thinking through the possibilities
is an important exercise. Dotta speaks on “Business Continuity”
at a meeting of the Institute of Management Accountants on Wednesday,
January 15, at 6 p.m. at Good Time Charlie’s in Kingston. Cost: $25.
Call 609-520-1188.
Dotta, a graduate of Rider University (Class of 1969), is the former
director of business information systems at Sarnoff, and is now working
as an independent consultant, specializing in regulatory compliance
in the pharmaceutical industry, and especially in 21 CFR, Part II,
which deals with electronic signatures, and in HIPPAA accountability,
which deals with security and privacy issues in the electronic transfer
of patient records.
Dotta, who holds a CPA and is a longtime member of the Institute of
Management Accountants, took on the business continuity issue as a
project for the group. During the course of his research, he came
across some surprising facts. “The West Coast dock workers strike
was a classic continuity case,” he says. “Fifty percent of
shippers had no continuity plan.”
Among the results of this lack of foresight was that tens of thousands
of crates of fresh pineapple from Hawaii rotten just offshore. The
ships on which they sat were just too big to get through the Panama
canal. “There was a great deal of loss,” says Dotta. And not
just for pineapple farmers.
“We now have just-in-time manufacturing,” Dotta points out.
No longer do manufacturers keep large stockpiles of parts on the floor
or in nearby warehouses. The parts, tracked by sophisticated software,
are scheduled to arrive from wherever they are produced in just the
numbers needed in real time. That being the case, auto manufacturers,
among others, had to slow production because parts needed to complete
some automobiles were bobbing at anchor in the Pacific alongside the
pineapples.
Had a strike been foreseen, alternate means of getting goods in from
the Pacific could have been arranged, but only in some cases. “You
have to consider cost,” says Dotta. That is a part of continuity
planning. Air freight, for example, would have neatly bypassed the
back-up, but at what price? Keeping more parts on-hand could have
been a solution too. But that would have entailed hiring extra warehouse
space, and staffing that space.
Continuity planning becomes a matter of playing the odds. Companies
with Pacific operations should have asked: What are the chances that
a strike could occur? How would it affect operations? How much are
we willing to spend to mitigate those effects? Answers are not easy,
but posing the questions, says Dotta, is essential. Of course, a strike
is just one of an infinite number of wrenches that can fly into the
works at any moment. How to foresee all of the possibilities, and
to protect against them? Here is Dotta’s advice:
Look at the entire business process. Start from the beginning— the people who the generate ideas, the computers from whichthey work, and the building that shelters them while they work. Thenmove out. Consider where the power to keep the computers running andthe people warm comes from. Think about suppliers, contractors, andcustomers, and the web that connects them with each other, and withthe company. What does it take to get your product or service fromconception to customer?Think about what could go wrong. There are some basics.Nearly every company of any size considers fire and theft. Even thesmallest operation thinks about the forces that could destroy computerdata. Many companies consider the damage an unhappy worker could do.But, as the West Coast dock strike illustrates, it is not always therun-of-the-mill disaster that bites you.Trying to conjure up every scenario can be “overwhelming,”says Dotta, but, he says, “working on awareness will show yousomething you overlooked.”Have a chat with your suppliers. After 9/11, Dotta says,the Bank of New York, business continuity plan in hand, was preparedto be up and running in no time. It had back-up offices, back-up computerequipment, and a plan for getting employees back to work right away.The problem, he says, was that all of the bank’s suppliers were equallyprepared. The result was that the bank could carry on most of itsfunctions, but not all.In planning for business continuity, identify all vital suppliers,and make sure that they, too, have a plan for keeping their operationsrunning if disaster strikes.Figure out what you can spend. There is a back-up fornearly every emergency, but most back-ups carry a price tag. You mustfigure out, for example, whether the risk of transit strike is highenough, and the potential effects disruptive enough, to justify theexpense of obtaining blocks of pre-paid hotel rooms for key employees,hiring buses for lower level employees, and/or setting up home officesfor your some or all of your knowledge workers.Forget about boilerplate. Business continuity planningis different for every single company, says Dotta. It is no good tryingto copy someone else’s plan. Each industry is different, and eachcompany within each industry has different processes, priorities,risk tolerance, and resources.Realize that this is not “emergency planning.”Dotta says many companies confuse business continuity planning withemergency planning. The latter, he says, has to do with response,with getting employees out of harm’s way, putting out the fires, andbeing ready to talk to the press. Business continuity planning isfar more comprehensive, and, ideally, takes place long before an earthquakestrikes or a shipload of customers come down with the Norwalk flu.Be aware of all of the things that could come between your companyand its ability to deliver its goods or services, and you will havea measure of peace of mind. But, as in life itself, there are no guarantees.”You can think of everything,” says Dotta, “and stillget bitten by something else.”Previous StoryNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
