Posts Tagged ‘Business continuity planning’

After you go through all the effort of assessing the reliability of a SaaS (software as a service) provider, do you need to implement your own data backups too? This is a question that I’ve pondered about more than once. Isn’t one of the principle value propositions of SaaS the fact that all the worries about administrative task like backups have been outsourced?

The brutal reality is that IT organizations are still on the hook to provide mission critical data to the business, whether the SaaS provider has failed to deliver, or whatever the reason. The challenge is identifying what is mission critical data, and then, what level of risk it is exposed to, and finally, how quickly will the business need access to it when there’s an issue.

What is mission critical data? Practically speaking, some critical attributes are: system of record and operationally critical. Data can have either attribute or in some cases, both. Examples:

1. System of Record: Last month’s sales receipts.
2. Operationally Critical: Urgent customer support tickets.

Although last month’s sales receipts are very important data, critical for financial reporting and needs to be preserved for years, if the system that stores this information goes offline, chances are that business can survive for a 48 hour period without access to this information. In contrast, an urgent support ticket is information that is needed immediately. There may be Service Level Agreement at stake. What do you do if your SaaS provider tells you that access to this information won’t be possible for a couple of days. What do you tell the business?

We have made the decision to back up both types of our data nightly to our own corporate databases. Great SaaS vendors make it easy to access this data… it’s OUR data. But if the worst happens, we will be able to create ad hoc reports to satisfy immediate needs.

If you have engaged a quality SaaS provider it’s unlikely they would be off the air for more than 12-24 hours. And failures like that shouldn’t occur often. Make sure you ask about Recovery Time Objectives for disaster recovery when you are shopping for SaaS services. Your prospective SaaS provider should be prepared with an answer!

Each day since the disaster in Japan, I wake up to more bad news. It is heart wrenching to continually read and watch videos of this tragedy. One wonders how this society can take much more, but they are resilient.  Our Japanese employees are working every day. They set out each day to visit customers or the office and sometimes come back home due to train failure or power outages. They schedule calls that have to be cancelled due to poor phone service after another aftershock. It seems incomprehensible their determination and fortitude. They are really amazing.

Much has been written in the last few weeks about the impact on the global economy from this disaster. Clearly, it will be a very long time before we know the full impact but there are many realities that companies are dealing with today. “Japan accounts for 14 percent of the global production of computers, consumer electronics and communications gear last year, according to HIS iSuppli.” From an article titled Japanese electronics sector faces extended supply woes. The article also discusses countless factories that are not in production either due to the earthquake or following the tsunami. Many of the companies I deal with are facing this exact problem. In fact, I will be meeting with a customer today who will delay an implementation project due to limited work in their office outside of Tokyo and a destroyed factory in Northern Japan. With tragedies like this and a long recovery ahead, how can these companies effectively plan for the future?

The semiconductor industry has also been extremely hard hit by this disaster. “Japanese suppliers accounted for more than one fifth of global semiconductor production in 2010, when companies headquartered in Japan generated more than a fifth of all chip revenue, $63.3 billion, according to market research firm IHS iSuppli.” From an EETimes article titled ‘Japan quake: Tracking the status of fabs in wake of disaster.’ The article states Japan provides 60 percent of the world’s silicon used to make semiconductors.  So, we are really dealing with all levels of the supply chain in Japan disaster. This impacts electronics companies all around the world and of course the end consumer with possible product shortages or price increases.

My colleague, John Westerveld recently blogged on the topic “Coping with catastrophe. Can your supply chain recover?” In his eerily timed blogged (just two weeks before this disaster), he outlined a few things companies can do to prepare themselves for this type of catastrophe. The customers I am talking to this week who are most effectively dealing with this catastrophe have developed tools that allow them to respond to these types of unplanned events. They have many “what-if” scenarios they are running to determine how to deal with their issues to make the best business decisions.  It may not be perfect, but we all know dealing with supply chain is not perfection.

So, as the weeks continue it will become clear the impact of this disaster on the economy, the human tragedy, and companies’ ability to deal with the unknown. How is your company dealing with this tragedy? Did you have a catastrophe plan?

I spotted this article from the Wall Street Journal a few weeks ago and a couple of points caught my eye.  First, 2010 was a record breaking year for natural and man-made disasters. We had a virtual smorgasbord of catastrophes from flooding, to fire, to snowstorms. We had Volcanoes grounding air travel and earthquakes devastating an entire country. And of course, a major oil spill, the impact of which we will be feeling for years to come. According to the article, the economic losses from the disasters reached $222 billion US (three times that of 2009), which is only outdone by the human cost; 260,000 lives.

The other interesting point is that today’s interconnected world makes us far more aware and susceptible to the impact of these natural disasters. Instantaneous news through Twitter, Facebook, YouTube and blogs puts a human face on these events that simply couldn’t be done in a 15 minute segment on the evening news. The economic impact of a catastrophe on today’s global business is also far greater. Almost every large company has a distributed manufacturing base. Further, the suppliers which feed that manufacturing system also are spread around the world. This means that a disaster in some faraway place could have a devastating impact to a company’s ability to ship their product.

The article outlines a few suggestions on how to protect yourself from disasters at home and around the world;

1)      Create a business continuity plan – A business continuity identifies the activities/people that are critical to running the business, and ensures that these are protected.  As Wikipedia puts it; a business continuity plan works out how to stay in business in the face of a disaster.

2)      Supply Chain Risk Management – Specific to the supply chain (and typically part of the Business Continuity Plan) you need to assess your supply chain to determine which suppliers are critical and for those suppliers, identify workarounds should this supplier not be available. Of course, this applies to both external and internal suppliers. A plan, while critical, is not enough. My position has always been that responding to unplanned events is a key component of supply chain risk management. You can assess all aspects of your supply chain, create mitigation strategies for any possible events and still be surprised by some unexpected and unplanned situation. Your ability to respond will mean the difference between a financial catastrophe and a minor blip (for more reading on this, download my whitepaper here.)

3)      Insurance / Catastrophe Bonds – The Wall Street Journal article identified that companies can take out disaster insurance or catastrophe bonds. Of course, Insurance should never be your only disaster recovery plan. This white paper aptly describes disaster insurance as “the disaster recovery plan of last resort.” Like home insurance, you would take many steps to ensure that a disaster doesn’t impact your home (removal of dangerous trees, installing smoke / fire detectors, buying fire extinguishers), but if something DOES happen, you are glad to have the insurance to fall back on.

While I hope 2011 will be less “exciting” from a disaster perspective, I wouldn’t count on it.  Already we’ve had a few winter storms across the US that people have classed as “snowmaggeden” events that basically stopped all movement across the central and eastern US for several days. Further, the trend towards globalization will continue and as such our sensitivity to regional disasters will continue to increase. So with that in mind, do you have a disaster recovery plan? Does it include supply chain risk?  Comment back and keep the discussion going!