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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


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 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?

Think about what could go wrong. There are some basics.

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."

Have a chat with your suppliers. After 9/11, Dotta says,

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.

Figure out what you can spend. There is a back-up for

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.

Forget about boilerplate. Business continuity planning

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.

Realize that this is not "emergency planning."

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.

Be aware of all of the things that could come between your company

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."

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