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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: