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Volume 27, Issue 4

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Business Continuity as a Business Strategy

A recent trip to a local grocery store demonstrated organizational understanding of business continuity.
While checking out my grocery purchases the store’s point-of-sale system went down. Sounds of angst reverberated from all of the checkout lines. Many customers were stating that they did not have time to wait and would have to go to another store. The store manager interrupted the stressful situation by simply stating, “Let’s go manual.”
 
The cashiers pulled out receipt booklets and calculators. Though customers were unsure of the process, each cashier was able to check out a customer within 10 minutes after placing items on the counter. The cashiers’ experience with an inefficient method allowed the store to provide customer service while management was recovering the primary automated system. The situation was not a disaster but a business disruption that may have affected customer perceptions if management had not correctly addressed the problem. A fundamental element in a strong business continuity strategy is an understanding and establishment of alternative methods for operations.
 
Many business disruptions are the result of a disaster from another business. In November 2008, a major fire destroyed a historic building in the main section of Champaign, IL. The 1870s-era building was empty as an estate antiques store recently moved and the upper floors were under renovation. The damage was not limited to this building. The collapse of the building structurally compromised a nearby law office, an architectural firm had water damage, and surrounding buildings had smoke and broken window damage. The investigation and cleanup activities forced changes in business operations.
 
The city condemned the law office building requiring the law practice to seek a new facility. The business owners, through business networking, knew of available space and quickly relocated. The law practice did not have a formal business continuity or disaster recovery plan. The senior partner used knowledge of community resources to maintain a viable business practice. Knowledge of available resources is another element to include in a business continuity strategy.

Business Strategies
The 2008 Business Continuity Institute’s Good Practice Guidelines recommends business continuity management being an integral part of an organization’s culture. Growth and viability of an organization is the result of well-developed business strategies. Mintzberg, a doctoral professor of management at McGill University and author, considers business strategy as an organizational perspective of the business environment. An effective business strategy requires everyone throughout the organization sharing the perspective resulting in common behavior, thinking, and intentions. The preceding scenarios highlight different perspectives that affected the organization during and after a business disruption.
 
The owner of the grocery store realized technology provides efficiency, when it works. She developed a business strategy of training cashiers and stock personnel on the computerized system and an alternative manual system. Unexpected power outages and equipment failures were familiar events that crippled technology but not manual procedures. The core strategic element of the business strategy was to provide customer service no matter what the situation. The shared perspective was ingrained in the organizational culture.
 
The primary partner of the law firm had years of developing relationships with clients and other businesses within the city. The organizational culture is based on mutual support of the business community. The firm had an advantage in understanding the legal frustrations surrounding insurance claims, city investigations, and client services. The structure of a partnership allowed multiple layers of decision-making. Shared knowledge, responsibility, and perspective are the foundational elements of a strong business strategy.
 
The common elements between the two businesses are a well-communicated business strategy, pro-active managers, and a lack of an established business continuity plan. An unanswered question is would the businesses have survived without the primary key person directing actions. Inclusion of business continuity into business strategies would ensure any employee could perform appropriate actions to maintain business operations.

Business Continuity 
Working with very small businesses (less than 10 employees) has indicated multiple single points of failure since the owner is usually the accountant, inventory manager, public relations point, and human resource manager. Any disruption, small or large, is a disaster to this sized business. Many of these owners retain corporate knowledge only in their heads; a few have written operation guides. A well-prepared business impact analysis provides the foundation for a streamlined continuity plan emphasizing survival first, recovery last.
 
Small businesses need to view business continuity as a strategy for survival first then eventual recovery. Many small businesses view business continuity planning as a costly endeavor and a low priority. Small businesses lack additional resources for alternate locations, hot-sites, or redundant systems usually considered in larger enterprise continuity plans. These elements are important for long-term recovery but for immediate operations, identifying and establishing basic survival elements would be more beneficial to the small business owner. 
 
The first step is deciding the minimal functions the business needs to survive the first few days until the business can establish recovery operations. The first response by owners will be that everything is needed immediately. The reality is not everything will be available for immediate recovery. The first priority should be the protection and safety of people. Without employees, the business would not function even if facilities and equipment have been fully restored. Employees are the key to successful implementation of business continuity and disaster recovery plans.
 
IT directors would disagree that a business could operate without electronic information systems for a longer time than normally recommended. However, many day-to-day operations can function with manual standbys – paper, pencil, and human interaction. Manual processes can provide businesses with immediate operations while waiting for management to implement more stabilizing recovery actions. The process may not be highly efficient and will be labor intensive but the customers will appreciate efforts to maintain some level of business. The survival phase requires business owners and employees to implement interim processing strategies.
 
Suspension of business operations is a low-cost strategy. The business owner does not try to reopen business until all technology and resources are available. The total cost of suspending operations is more than cash flow; business reputation may suffer as customers seek out alternative sources. The size of the disruption will affect the availability of external resources and recovery time. A short planned suspension of operations may become a permanent closer of the business. Small business owners may forgo suspending operations by considering other options.
 
Many small business owners have grown businesses from simple manual operations to technology-enhanced operations. Implementing alternative operating methods using manual systems is a cost-effective option to remain open. This option is labor intensive and requires management to train employees on the alternative operations. The operations may not be as fast as using technology and may cause customer irritation. Other small businesses have a high technology infrastructure that would not allow for either suspension or alternative methods for continuous operations.
 
The most costly option for businesses is maintaining redundant capability. Businesses depending on computer processing consider off-site backups and redundant services and equipment as the primary means for recovery. The majority of small businesses will not have financial resources to maintain redundant systems as a feasible solution for possible disruptions. Very small businesses may consider having a PC at the business and a laptop with the owner the best redundancy option available for low cost. The best survival solution for any business is a combination of anticipation of possible disruptions, communication between management and workers, and education of all employees concerning their role in maintaining business operations.

Conclusion
The business owner and employees need to be aware that disruptions may have a low probability of occurring; however, the few that do occur often are large enough to destroy unprepared businesses. Open dialog between the business owner and employees about possible interim and long-range recovery processes provide a foundation for immediate survival of one important asset – people. Training employees to handle alternative operating procedures and recovery operations reduces the initial stress of disruptions and allows the business to be a survivor.

Dr. William “Stew” McConnell has a doctorate in management specializing in information systems and technology. He has an extensive background in COOP and has been promoting continuity education for small business owners. Comments about this article may be sent to smcconnell@wsmsystems.com

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