October 2013 IT Business Consulting Newsletter

Dealing with Disasters via Prevention!

By Tom K

When most people think “Disaster”, huge natural disasters immediately come to mind, and these certainly can affect your business. But during my days consulting on Wall St. we considered ANY issue that impeded business success to be a Business Disaster. And, when properly defined and analyzed, we found that we could take steps to prevent the occurrence of 80% to 90% of the Business Disasters we had defined.

In this month’s newsletter I present a methodology to help you define your potential Business Disasters, categorize those that can be prevented, prioritize them, and begin the process to eliminate them.

Next month, in “Dealing with Disasters via Preparation”, I’ll discuss how to deal with those Business Disasters that are out of your control and can’t be prevented, showing you how to mitigate their effect through structured preparation and planning.

Define Your Potential Business Disasters

This involves old-fashioned brainstorming with your senior team. Order lunch, set up in the conference room, and bring up a blank spreadsheet on the big screen. Ask everyone to consider any issues that can negatively impact your business and list them all in column C. No need for order or organization or quality judgments at this point, we just want to get everyone’s ideas into the spreadsheet.

Think operations, revenue, profits, guest loyalty, homeowner relations, staffing, equipment, local and state legislation, etc. Consider elements within your walls and outside your walls. Get granular and list as separate items… a 2 hour power outage will affect the business differently than a 3 day power outage or a 7 day power outage. The same is true with Internet access or phone systems or phone lines.

When I’ve run assessment sessions, we generally come up with about 200 items. Some random examples:

  • A fire in the main office, large and small
  • The only employee who knows how to do payroll gets hit by a bus
  • Your web site (or on-line booking process) goes down
  • The only access road to the island is gone
  • You provide sheets/linens to 400 houses and the laundry you use imploded
  • A key server goes down
  • Your business bank account is hacked and the homeowner escrow account is emptied
  • A heavily booked high profit property is rendered inhabitable
  • Your PM system is down or inaccessible
  • A hurricane is rolling through the gulf

No potential issue is too large or too small. Just get them all into the spreadsheet where they can be reviewed. If you miss something, don’t worry. This is a dynamic process and a dynamic document. Items can and should be added and removed as conditions change.

Categorize Your Business Disasters

Now that you have all your known potential Business Disasters listed, work through the list considering whether each entry is a preventable disaster or an issue that is out of your control that you can’t prevent but should prepare/plan for. If it can be prevented, enter a “P” in Column A, if not preventable, enter a “Z”.

You’ll find that some items are “mostly” preventable, but not completely. When this is the case, duplicate the entry and make one a “P” and one a “Z”.

An example is Internet Access. You can prevent Internet outages most of the time by setting up your gateway to work with two primary Internet access channels, ie Cable and DSL. As the two channels operate independently, if one goes down, the other will usually be up and you still have Internet. Furthermore, you can add Cell capability (3G or 4G) to the gateway to cover your business if both primary channels go down. So you have pretty much prevented Internet outages. But it is possible that all three systems go down at the same time, so you still need to prepare for an Internet outage.

Once all items are classified, sort the spreadsheet by Column A. The top section contains disasters you can prevent; the lower section contains disasters you’ll need to prepare for.

Rank Your Business Disasters

Now we work through each section to rank each item as to how severe its effect would be on your business. Consider all aspects of effect independently… a reputation disaster could be more severe to the long-term profitability of the business than a hurricane.

Work with your managers to quickly ballpark each item, from most severe (10) to least severe (1), and place the ranking in Column B. When the Prevent section is complete, sort the section by Ranking (Column B), refine the rankings, and re-sort.

Do the same for the Prepare section.

When both sections are complete, take the three most worrisome 10’s from each section and make them 11’s (remember “This is Spinal Tap”?).

Cost Assess Your Business Disasters

Look at the ranked and sorted Prevent section. The disasters your management team considers to be preventable are listed from most impact to least impact. The next qualifier to review is the remediation cost of each item relative to the severity of its effect on your business.

We do a rough benefit/cost analysis on each item and color-code them accordingly:

  • Green for high benefit/cost
  • Yellow for moderate benefit/cost
  • Red for minimal benefit/cost

Losing the Internet for 7 days will probably be ranked a 10, and preventing this is inexpensive, so we’d code this Green. Losing power for 7 days will also probably be ranked a 10, but preventing this (an automated generator system) is quite costly, so we might code this Yellow.

Eliminate Your Business Disasters

So, we have listed all the Business Disasters that can be prevented, we’ve ranked them from the most severe effect on your business to the least severe, and we’ve performed an informal benefit/cost analysis.

Using this data, select the disasters you want your team to immediately attack, and determine how best to attack them.

Most companies will start with the most severe disasters, tempered by cost/benefit.

While a long term power outage is considered very severe (a definite 10) you may not have the necessary funds to prevent this today, so the action item may be to research the best vendor and generator, determine the cost, and add this to the budget.

Some clients have started by adding a “Cherry Picking” column to the spreadsheet, where the simplest and most “bang for the buck” items are highlighted for immediate action. This could include the dual Internet circuit gateway as well as cross-training your staff for critical functions.

However you go about selecting the immediate disasters to prevent, select them NOW. Assign each to a member of your senior staff and enter their name into column D. This manager now owns the elimination of this probable disaster. Assign deadlines to either completely eliminate the issue or, if this specific elimination is a multi-stage process, milestone the completion of the required phases (column E).

If you must assign an item’s elimination to multiple staff (cross departmental remediation), establish a committee but ensure that the committee chair takes complete ownership.

Follow Up

You are now well on your way to eliminating most of the Business Disasters that can negatively affect any facet of your business. But keep on it! Set a monthly follow-up meeting to ensure that deadlines are being met and milestones are on track. Use these regular meetings to work through items that were skipped the previous month.

Ensure that those responsible for a given disaster maintain ownership throughout their tenure with the company. While the goal is to “eliminate” all of your preventable disasters, once eliminated, conditions can change to resurrect an issue that had been effectively removed. If an item owner leaves the company, reassign that item. The ownership column in the spreadsheet makes this very simple to track.

Revisit your benefit/cost analyses regularly. Technology improvements and product cost reductions will often shift a solution that was considered too expensive for the desired benefit to one that is now practical and essential.

If you have any questions concerning defining, classifying, ranking, and eliminating your Business Disasters, or the steps within the process, I’d be happy to discuss them with you at your convenience. Feel free to contact me at TomK@TomKConsulting.com, or via my cell 443.310.5110.

Next month in “Dealing with Disasters via Preparation!” I’ll discuss the steps involved in preparing for those Business Disasters that can’t be prevented. We’ve already created the Disaster Preparation list, so this article will highlight structured planning through the three phases of disaster preparation: pre, during, and post.