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Accounting, Management & Legal
A Master Over Disaster
Emergency recovery starts with prior planning, analyzing risks
Amid the rubble and the heartache caused by hurricanes Katrina and Rita were the lost dreams of many a business owner. More than likely, those people affected worst along the Gulf Coast were too concerned for and with their families to consider entrepreneurial ventures.
Get my family. Grab a few things. Get in the car. Go.
Those fortunate enough to be able to do just that probably did. Others, among the many who live in abject poverty along the base of Louisiana and Mississippi and Alabama, had to ride out the big one.
The hurt, pain and loss of countless thousands didn’t make losing a business any less difficult.
Developing a commercial venture is like birthing a child, every step is your step and every accomplishment is your accomplishment.
Of course, if you were a smart, savvy, forward-thinking ecommerce business proprietor, you knew that developing a business continuity plan should be a procedural given.
You knew that transactions could have and should have been executed even on your trek away from harms way. You knew these things because you created a disaster plan long before Katrina and Rita were twinkles in the proverbial eyes of Mother Nature.
“The time to plan is when all things are rosy,” said Michael Z. Bell, proprietor of Albion Research Ltd. and riskythinking.com.
Those entrepreneurs who were taught that business plans were for stiffs probably think that a disaster plan needs to be some formalized, task-force driven piece of bureaucratic drivel. Not the case.
Bell said building a disaster plan typically involves considering how to deal with all things physical (building, documents, products, papers, people, etc.) and all things electronic or logical, such as data. Ecommerce business owners get to deal with both.
Bell suggested that business owners have three choices when it comes to attacking disaster and continuity planning:
- Mitigate: Take steps to prevent the risk.
- Accept: Resign yourself to a certain level of risk.
- Insure: Purchase business-interruption insurance.
You might be surprised, but purchasing insurance isn’t recommended for small to medium-sized ecommerce businesses. “Tends to be expensive,” Bell said. “It’s unlikely it’d cover you for your losses.” Truth is, for an ecommerce business owner, disaster is probably not the primary issue facing the organization. “The risk of actually having a disaster is lower than your risk of going out of business for other reasons,” he said.
Like going out of business for purchasing gobs of business interruption insurance? Maybe not.
However, Kirby Wadsworth says business owners must do something to mitigate the risk of failing to plan for disaster. He’s the senior vice president of marketing and business development for Revivio (revivio.com), a company that works to develop the best methods for dealing with data protection.
“You can’t pass the reasonable-person test and not do something,” he said. Bell’s disaster-planning mantra for the ecommerce business owner is simple: “Backup. Backup. Backup.” When asked what the most common continuity casualty is for a business in times of disaster, he said: “You think you backed up but you didn’t.”
That means backing up where you do your work, where your web host does its work and where your vendors and partners do theirs. You want to make it your business to understand what continuity plans are in place for everybody in your supply chain. Doesn’t have to be a formalized document; just requires some communication.
Bell suggested maneuvering through any number of situations:
- Your building’s been destroyed.
- You’ve been denied access to the building.
- Everything has been destroyed. Everything.
- The power has gone out.
- The phone has gone out.
- Your web host has gone bankrupt and closed up shop.
- Your delivery team has gone on strike.
- Fire.
Wadsworth spoke of continuity-planning scenarios in terms of infrastructures that should be managed. What would happen if any of the following were to implode (figuratively):
- Data infrastructure
- People infrastructure
- Manufacturing infrastructure
- Operational infrastructure
- Telecom infrastructure
- Information Technology infrastructure
Having just returned from a speaking engagement at San Diego’s Disaster Recovery World last week, Wadsworth noted that the business of planning for disasters has become quite sophisticated.
“You’d be surprised at the depth and professionalism in this industry right now,” he said.
Wadsworth pointed to the inclusion of process continuity in most discussions of disaster planning.
“People, I don’t think, pay enough attention to that,” he said. Bell concurs. He said the second-most common ecommerce business continuity issue is when you thought you had been backing up your data but really you hadn’t because no processes were in place such that you’d ever know this for sure.
If you’ve really backed up data such as order histories, web site code, and customer lists, then the ecommerce business owner can attend to the first outward task whenever disaster strikes: Remind the world you’re still in business.
“You’ve got to make it clear to your customers,” Bell said. “You have to be proactive.” Speaking of being proactive, both Bell and Wadsworth recommend consulting an expert to help put together a disaster plan. “The blind leading the blind might not be a good idea,” Bell said. “I think it helps to talk to somebody who’s done it before.”
The result of this consultation should be a written plan – doesn’t have to be a 500-page thesis. Wadsworth said it should be a road map for outlining what you’d do should you suddenly go from a 24x7 online operation to one that was completely offline.
How do you sell products? How do you fulfill products? If you wait until an actual emergency hits, such as many ecommerce business owners probably did along the Gulf Coast, it’ll be too late.
First, Bell noted that people are hardly in the position to think rationally during times of crisis-riddled chaos. Second, it’s the worst time to negotiate for things like emergency office space and/or extended lines of credit. Demand is higher; therefore you’re in no position to deal.
So, what’s your risk? If you’re in Oklahoma, it might be twisters. Along the Gulf and Atlantic coasts, it’s hurricanes. In bigger cities, it might be terrorism.
Then again, your biggest business continuity risk, if you’re an online business that directs people to a call center, your greatest risk might be a phone outage.
- Outline those risks. Get creative in identifying all the little a big things that could happen, and then outline what you could do to ensure your online business stays open at the same level of uptime as your customers have grown accustomed to.
- Outline a process to backup everything, and then double-check.
- Outline a disaster itinerary of sorts, detailing procedures for communication with customers, for example. Negotiate alternate office space in a designated get-away area, and work with your bank to establish credit options during times of disaster.
- And, make sure your vendors do the same because if you’re an ecommerce business owner, you’re likely working through distribution centers or vendors or shipping agents. If customers interface with you as the primary source of the relationship, but your business suffers continuity loss because of disaster striking your shipping provider or distribution center, the customer won’t make that deep a designation.
They’ll blame you – and would you blame them?
Planning for business continuity in the event of a disaster doesn’t require expensive insurance. It doesn’t require months full of meetings. It requires some creativity, some time to document what to do when and communication with partners and vendors to make sure everyone is on the same page.
Even if this level of planning isn’t done for your customer, do it for the peace of mind in knowing that should a really devastating disaster hit as did this past month to millions of people in the southern United States, you’ll be able to lead and support the most important people in the world…
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Published on Tuesday, November 01, 2005
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