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,"
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.
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
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:
— the people who the generate ideas, the computers from which
they work, and the building that shelters them while they work. Then
move out. Consider where the power to keep the computers running and
the people warm comes from. Think about suppliers, contractors, and
customers, and the web that connects them with each other, and with
the company. What does it take to get your product or service from
conception to customer?
Nearly every company of any size considers fire and theft. Even the
smallest operation thinks about the forces that could destroy computer
data. Many companies consider the damage an unhappy worker could do.
But, as the West Coast dock strike illustrates, it is not always the
run-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 you
something you overlooked."
the Bank of New York, business continuity plan in hand, was prepared
to be up and running in no time. It had back-up offices, back-up computer
equipment, and a plan for getting employees back to work right away.
The problem, he says, was that all of the bank’s suppliers were equally
prepared. The result was that the bank could carry on most of its
functions, but not all.
In planning for business continuity, identify all vital suppliers,
and make sure that they, too, have a plan for keeping their operations
running if disaster strikes.
nearly every emergency, but most back-ups carry a price tag. You must
figure out, for example, whether the risk of transit strike is high
enough, and the potential effects disruptive enough, to justify the
expense of obtaining blocks of pre-paid hotel rooms for key employees,
hiring buses for lower level employees, and/or setting up home offices
for your some or all of your knowledge workers.
is different for every single company, says Dotta. It is no good trying
to copy someone else’s plan. Each industry is different, and each
company within each industry has different processes, priorities,
risk tolerance, and resources.
Dotta says many companies confuse business continuity planning with
emergency planning. The latter, he says, has to do with response,
with getting employees out of harm’s way, putting out the fires, and
being ready to talk to the press. Business continuity planning is
far more comprehensive, and, ideally, takes place long before an earthquake
strikes or a shipload of customers come down with the Norwalk flu.
and its ability to deliver its goods or services, and you will have
a measure of peace of mind. But, as in life itself, there are no guarantees.
"You can think of everything," says Dotta, "and still
get bitten by something else."
Corrections or additions?
This page is published by PrincetonInfo.com
— the web site for U.S. 1 Newspaper in Princeton, New Jersey.