Business continuity in the lean times

Business

Continuity in

Lean TimesSTEVEN AIELLO

~Salvador Dali

Who Am I?

Steven Aiello

CISSP, CISA

VCP 5, CCNA, etc…

Bachelors in TM from EMU

Masters in TM : IA from EMU (Winter 2013)

What’s My Background? Focus One

HIPAA

PHI (Protected Health Information)

ADP SAS 70

SOX

Technical interface with KPMG & D&T

Online Tech Head engineer & manager

Head of design & management of our BC / DR plan

Advisory member for customers for BC / DR planning(primarily banking sector)

Why Am I in This Space?

I like long term thinking (personal disposition)

Advocate responsible business not just short

term gains

Businesses have a responsibility to their stake

holders to think about their long term viability

Why Are We Here?

Why Are We Here?

Why Are We Here?

Why Are We Here?

77% net profit loss (Toyota: Auto)

38% net profit loss (Honda: Auto)

60% net profit loss (Western Digital)

80% production decline

180% increase in consumer cost

Why Are We Here?

How does a risk- based mindset affect the

type of business you conduct?

Enron

Arthur Anderson

Why Are We Here?

Sarbanes-Oxley: Publicly Traded Companies and Accounting

HIPAA: Health Care Data

Basel II & III: Banking Regulations

Gramm-Leach-Bliley: Banking, Securities, and Insurance

PCI: Credit Card Transactions

SAS 70: Generally replaced by SOC (Service Organization Controls)

Why Are We Here

Or you could just want to…

Protect your company

Protect you profits

Protect your customers

Protect your job

Macro Efficiency

strategy + business (autumn 2012)

Managing in a Multipolar WorldWhy companies need to rethinking their operating models

by: Paolo Pigorini Ashok Divakaranand Ariel Fleichman

What Is DR / BC

What is DR?

What is BC?

How are they different?

What are they designed to protect?

Disaster Recovery Feeds

Business Continuity

You can’t have Business Continuity without

Disaster Recovery

Disaster Recovery without Business

Continuity isn’t very effective

BC Language: Words for

Changing Mental Models

IT Based RTO: Recovery Time Objective

How fast do we have to be online?

RPO: Recovery Point ObjectiveHow much data can we afford to loose?

Operations Based

Backlog or Backlog Trap

What is critical?

What is time sensitive?

BC Language: Words for

Changing Mental Models

Operations: Let’s Focus On Choices We

Can Make

Backlog or Backlog Trap We’re going to talk more about this

What is time sensitive?

What is critical?

BC Language: Words for

Changing Mental Models

Backlog

1. A reserve supply or source.

2. An accumulation, especially of unfinished work

or unfilled orders.http://www.thefreedictionary.com/backlog

BC Language: Words for

Changing Mental Models

Backlog Example

Operating efficiency = 80%

Slack per day = 1.4 hours

Downtime = 4 days

8 Hr. pd x 4 days = 32hrs / 1.6 Hr. pd = 20 days

Downtime / (Max Production Capacity – Expected Production Capacity)

Economics 101: Why do we lose site of the basics?

Macro Efficiency vs. Micro Sufficiency

Economy of Scale / Diseconomy of Scale

Utility Cost or Marginal Utility

Economy of Scale, Diseconomy

of Scale

What are we managing?

People & Relationships

Over Dispersed Geographic Locations

Production Capacity & its ComplexitiesManufacturing

Shipping

Etc…

Operational Guidelines or Processes

Macro EfficiencyG

lob

al

ITG

lobal

CSR

Glo

ba

l

HR

Glo

ba

l

Etc.

This is great!

Everything is the same!

Macro EfficiencyG

lob

al

ITG

lobal

CSR

Glo

ba

l

HR

Glo

ba

l

Etc.

This is great until…

Dissatisfied customers or workers

Disruptions in your supply base

Differences in Customs

Difference in a Disaster?

77% net profit loss (Toyota)

38% net profit loss (Honda)

The Motor Vehicle Supply Chain: Effects of the Japanese Earthquake and Tsunami By: Congressional Research Service(May 23 2011)

The Cost of Downtime

1.5 million an hour to 6 million an hour

36 million to 144 million per day in lost

profit

What is the cost of down time to your

business brand?

If you can’t supply your customer and they

buy a competitors product will you get

them back?

Not Common

More Common

More Common

New Mental Models

Regional Cluster Models

“Decision rights should be pushed down into the

organization and the center should involve itself only

in critical enterprise-level decisions such as portfolio

strategy, capital allocation, and global brand

management”.

New Mental Models

Regional Cluster Models: Require?

Transparency at all levels of the organization

Decision making should be made based on performance not

politics

Key performance indicators which are linked to the

companies management process

Does this sounds like “Balanced Score Card?”

Micro Sufficiency

Core Functions

Operations Unit 1

Operations Unit 2

Operations Unit 3

Operations Unit 4

Operations Unit 6

Operational Unit #

Sales

Legal

Communication

Manufacturing

(maybe)

Etc…

Micro Sufficiency

Core Functions

Operations Unit 1

Operations Unit 2

Operations Unit 3

Operations Unit 4

Operations Unit 5

Operations Unit 6

Core Functions

HR

Finance

IT (maybe)

Etc…

Insert Personally Bias Slide Here

Your IT person may be

the very best individual

to help you!

Just because we’re so smart! (not really)

Business Networks ≈ Data Networks

Fast (speed of items transmitted)

High throughput (amount of volume transmitted)

Resilient (bus, star, mesh)

Optimize for quality (remember dial-up / DSL) (Franklin, 2011)

Would you Rather?

((2+4)+(3*6)+((9-3)/(2+1))+(5+7)-(5+5))*

((2+4)+(3*6)+((9-3)/(2+1))+(5+7)-(5+5))*

((2+4)+(3*6)+((9-3)/(2+1))+(5+7)-(5+5))*

((2+4)+(3*6)+((9-3)/(2+1))+(5+7)-(5+5))*

((2+4)+(3*6)+((9-3)/(2+1))+(5+7)-(5+5))*

((2+4)+(3*6)+((9-3)/(2+1))+(5+7)-(5+5))*

((2+4)+(3*6)+((9-3)/(2+1))+(5+7)-(5+5))*

((2+4)+(3*6)+((9-3)/(2+1))+(5+7)-(5+5))

Would you Rather?

+(2+4) = 6

+(3*6) = 18

+(9-3/2+1) = 2

+(5+7) = 12

- (5+5) = 10

=(38-10) = 28

28*6 = 168

People != Math

Your teams can

only be effective

as the talent of the

managers and the

management

systems in place

Think Small!

The OSI Model

Break Big problems

into smaller ones!

Think Big

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Location 1 Location 2

Slack

Production

Think Big

0%10%20%30%40%50%60%70%80%90%

100%

Slack

Production

The JIT Strategy

Cut Costs

Save Space

Free Up Cash

Reduce Waste from Obsolescence

http://www.mindtools.com/pages/article/newSTR_78.htm

The JIT Strategy +

Reasonableness

Cut Costs(without loosing market share)

Save Space(without crippling yourself in the event of an emergency)

Free Up Cash(Invest in betterment programs)

Reduce Waste from Obsolescence(understand your business cycles better)

http://www.mindtools.com/pages/article/newSTR_78.htm

Benefits of BC

Functional Improvements

During analysis stage many times you can

spot operational inefficiencies, safer ways of

conducting business, develop process

improvements

Benefits of BC

Sales and Marketing

In the event of changes in the market those

who are prepared can adjust to changes in

those markets more rapidly

Benefits of BC

Flexibility in Operating Procedures

While preparing for a business emergency

people naturally identify ways for

accomplishing business objectives

Organizational Behavior & Theory

Benefits of BC

Improving the Utilization of Key Resources

BC requires a thorough analysis of the

organizations resources. This is the perfect

time to review resource allocation

Benefits of BC

Improving employee moral & wellness

Healthy work environments generally produce

a more productive and creative outcome

which allows a business to be more adaptable

Economics 101: Why do we lose site of the basics?

Macro Efficiency vs. Micro Sufficiency

Economy of Scale / Diseconomy of Scale

Utility Cost or Marginal Utility

So What is DR / BC

BC is a way of thinking about conducting

business

BC is a mental model to start building a

framework around

BC includes disaster recovery