business continuity in the lean times
TRANSCRIPT
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