Archive for Business Impact Analysis

Another BCP Acronym

Yes, I realize that the last thing we need in Business Continuity Planning practices is another acronym, but, hey, what’s the fun in writing a blog if you can’t cause trouble?  So here goes – another BCP acronym …

I have been stating for a while now, that the BCP Methodology needs to be revisited.  I think that the tried and true practice of conducting BIAs is a bit flawed.  In practice, I think, the methodology attacks middle management and department level areas in the organization without first establishing corporate-wide and senior level objectives for business during a crisis.  When we ask people to establish RTOs and RPOs (more of those lovely acronyms – see the chart below) what are they basing their answers on?  When we ask for impacts of being down, to set those recovery objectives, what business objectives are they being designed to meet?

I think that the BCP Methodology needs to add a step in the beginning of our analyses in which we establish – are you ready for it, here it comes, the new acronym, in three, two, one – our ABOs, Adjusted Business Objectives.  I think part of the fallacy in our current process is that RTOs (or MADs if you prefer that acronym) are set with the assumption that the company is still aiming to hit its established business objectives for the year.  And, I think that is wrong.  During times of crisis, I think management’s expectations of what the company should achieve are adjusted.  During times of crisis, we may not have the same Income Targets, Profit Targets, Sales Targets, Margin Targets, Production Targets, etc.

Every company establishes business objectives for the year – assuming we operate in a normal business environment.  Once that “normal” environment is compromised due to a disaster, I think those business objectives get adjusted.  And, I think it is important to relay that information to the management team that is responding to our BIA questions.  We should be asking what the critical timeframes are for conducting business functions given we need to meet these Adjusted Business Objectives or ABOs.

Department objectives are, I hope, based on meeting the overall corporate objectives.  Once we know our ABOs we can translate that down to the department level and establish more meaningful RTOs, RPOs, MADs and what have yous.

The real challenge here is, however, getting senior management involved enough in the process to establish these ABOs.  One reason I think we don’t do that today is because it is much easier beginning the process with middle management.  The savvy manager, however, I think, is the one that asks, “During a time of crisis, what are my department’s objectives?  What is senior management expecting us to get done throughout the crisis period?”

So, there it is, a new BCP acronym – ABOs – just what we needed … NOT!

ACRONYMS USED IN THIS ARTICLE – FOR THE UNINITIATED

BCP – Business Continuity Planning

BIA – Business Impact Analysis

RTO – Recovery Time Objectives

RPO – Recovery Point Objectives

MAD – Maximum Acceptable Downtime

 

Business Objectives vs Business Continuity Objectives – The Missing Step

This blog article talks about a step in the Business Continuity Planning (BCP) Methodology that I think is missing – and, I happen to think it is a pretty important step.

One of the greatest challenges in the BCP methodology is in establishing the program’s recovery objectives.  Whether you label them as Maximum Acceptable Downtime (MAD); Recovery Time and Recovery Point Objectives (RTO & RPO); or some other creative anagram unique to your process, these program benchmarks are usually arrived at through a Business Impact Analysis (BIA) process or, at least, through some survey/interview with business managers and subject matter experts to establish what the critical business processes are; what timeframes they must be recovered; and what resources must be available in certain timeframes to enable our continuity or recovery of those processes.  Does this sound familiar?  I’m I right, so far?

But – you knew there was going to be a but – to achieve what end?  I mean, we do a great job defining business continuity objectives, but do we do so against established business objectives?

I always thought that the savvy business manager, when asked to complete a BIA questionnaire would ask the question, “What is Senior Management expecting me to achieve during the business interruption period?”  Sometimes, I think, we get close.  Many times I hear business continuity planning professionals say that the objective is to “survive” the disaster or “keep the company solvent”.  But do we ever define what that means – in business objective terms?

So, forget about operating in disaster situations for a second.  Just think about business as usual objectives.  Most every company and most every department within each company has established business or performance objectives.  There are defined revenue targets, income objectives, margin targets, production objectives, etc.  There are expected number of widgets to produce per week; sales targets; number of calls handled per hour; items sold; and so on and so on.

What I would want to know, if I were the business manager being asked what my critical processes are and how long can we go without performing those processes, is:  What adjustments are being made to my performance objectives during this incident you are asking me to plan for?  Am I expected to still achieve my revenue target, sales target, income target, margin targets?  Am I still being measured against growth?  How many widgets per day am I expected to still crank out?  If you can tell me what my management is expecting me to produce during this contingency period, I can then tell you what I need to do, when I need to do it and what I need to get it done.

Seems to me, we miss that step.  We make middle management guess at what our business targets are.  And, furthermore, we never ensure that their guesses are consistent with one another.  Each individual manager who completes the BIA makes their own assumptions about what the overall business objectives are during a business interruption event.  Seems a bit risky to me.

I understand why and how this happens.  It is primarily because middle management is more accessible in our planning process.  It is much easier to include middle management in the planning process, feed them the BIA questions and get them to assign MADs, RTOs and RPOs than it is to include Senior Management in the process.  But – there’s that damn word again – how can we really define viable business continuity objectives if we don’t first know our business objectives during time of an event?

I wonder what would happen if we tried?  I wonder … what if you posed that question to upper management?  What if we added that step in our BCP Methodology:  Define adjusted business objectives that must be achieved during a serious business interruption event.  IN BUSINESS TERMS – not in BCP terms.  Interesting.

Anyway, just a thought.  What do you think?

The BIA Insult

So, I came across this quote the other day that someone was using in a presentation about the importance of conducting a Business Impact Analysis (BIA):

“A business continuity plan that is not predicated on or guided by the results of a business impact analysis (BIA) is, at best, guesswork, is incomplete, and may not function as it should during an actual recovery.”

Really?

I understand what they mean and I appreciate this message given to business continuity planners, but, I would hesitate saying this in a board room.  It may not be wise suggesting to the CEO and other senior executives that they do not know their business well enough to tell you what is important to them and what business processes are necessary to keep their organization solvent.

I have long since been of the opinion that business continuity planners have become victims of our own methodology.  I think many of us have lost sight of the why’s and wherefores of what we do and have become too caught up in the whats and how we do things.  And, I think, the BIA is a prime example of this.

Ultimately, why do we conduct a BIA?

I suggest that we perform a BIA to establish the objectives for our Business Continuity program.  We gather and analyze the impacts of a business interruption in terms of financial impacts, reputational impacts, operational impacts, legal and regulatory impacts and other impacts unique to our company or industry.  Armed with this measurable and intangible information, we can make an educated and informed decision about what business processes we need to continue – and, in what timeframe – to minimize our losses and keep the organization solvent following some sort of devastating business interruption event.

I like to break down the standard Business Continuity Methodology into the Strategic Planning Phases and the Tactical Planning Phases.  The Strategic Planning Phases consists of the Risk Analysis, Business Impact Analysis, Recovery Requirements Analysis and Cost Benefits Analysis of viable solutions.  The Strategic Planning part of the methodology helps us define “what” our business continuity plan should achieve.  The Tactical Planning Phases of the methodology define “how” we achieve our objectives.  This includes, implementing the chosen solutions and documenting the policies, plans and procedures.

But, I don’t believe the Business Continuity Planner is always needed to define the Strategy.  I think, in some instances, the “strategy” can be given to us by the CEO, board or other executive management team members.

What if the CEO told you what business processes they want to continue, in what time frames?  Are you going to tell him/her that that would be creating a BCP based, at best, on guesswork?

I know that the methodologies say we MUST CONDUCT a BIA.  But, I think that that requirement is a little bit tangled up.  I think it is absolutely correct to say, before you can  successfully implement a viable and effective business continuity plan you must establish your recovery time and recovery point objectives; you must identify and categorize your business processes in terms of criticality and importance to the sustainability of the organization and the ability to satisfy the corporate mission; you must know the dependencies and requirements that support those critical processes to ensure a complete and holistic recovery solution – but, I am not sure a BIA is always what is needed to get these “strategic” parameters.

Yes, I have been in many a situation where the leadership team was not comfortable in establishing these objectives without the support of information gathered and analyzed through an in-depth BIA.  I have also seen many a business continuity planning team chastised for spending months on gathering and analyzing information simply to conclude in telling management teams what they already knew.  And, I have seen business continuity programs fail at time of an event because they were predicated on the findings from a BIA that were never verified and matched against management’s expectations, which were significantly different from what the information gathered suggested.

Now, I am not against BIAs.  I have made a nice living by conducting many a BIA over the past 20 years, and I do believe they are valuable and necessary tools – just not in every case.    I caution business continuity planners not to become so married to the methodology that you lose sight of what the objectives are for each methodology component.  If the objective of a BIA is to establish the continuity and recovery objectives of your business continuity program and the executive team in your company knows and are willing to sign off on recovery and continuity objectives that are given to you – do you really need to conduct the BIA?

In any case, I don’ think I would ever suggest that a business continuity plan not based on the findings from a BIA is guesswork, especially if the guesses are coming from the Executive Management Team.  I just know that if you came into my company and told me that a team of business continuity planning specialists are needed to identify what our critical processes are, I would be showing you to the front door.

The Adjusted Recovery Confidence Factor – Repeat Blog

Over the past few weeks I have actually had a few people ask me to send them the link to an earlier blog I posted about an Adjusted Recovery Confidence Factor.  Since there actually seems to be some interest in this idea – and, since I am really busy working on client deliverables – I have decided to take a blog short cut today and simply redirect you to an article we posted a few months back.

The Adjusted Recovery Confidence Factor

We had much less blog site traffic when this was originally posted so maybe its not a bad idea to put it out there again.  Any thoughts?  We would love to receive more comments on our postings.

Thanks.  And now, back to work.

Establishing RTOs

I think there is a common mistake that we, as business continuity planners, make when working with our business partners to determine RTOs for processes and applications that support them.

I think we do a good job in using the findings from our Business Impact Analyses (BIA) to help identify the Most Critical, Critical and Essential business processes (or whatever labels you happen to use) to ensure that these processes are what we recover first, but, I think when we work with these areas to define Recovery Time Objectives (RTO) we do not properly establish the post-disaster performance objectives.  I think that most of us allow our business partners to establish their RTOs based on the assumption that they will be operating at or close to business as usual.

Sure, we instruct them to try to establish the minimum requirements and consider work arounds and the such … but, to achieve what end?  How many of us first ask senior management if there will be any changes to our management objectives following a serious business interruption event?  Will revenue or income targets be adjusted?  How much additional costs and expenses can we incur?  Will response or service targets be adjusted?  Margin targets adjusted?  ROI?  ROE?  Or, any other management metrics adjusted because we are in crisis mode of operations?

Although this goes against my overall philosophy of trying to simplify things, I think it would be beneficial to establish three modes of operation when establishing RTOs with our business partners.

  1. Survival Mode
  2. Sustain Mode
  3. Business as Usual Mode

The goal of Survival Mode operations is simply to keep the company solvent.  Forget trying to be profitable; forget growth targets; forget avoiding all penalties, fines and service interruptions – what, minimally, does the company need to do to not jeopardize the solvency of the firm?

The goal of Sustain Mode operations is to satisfy the commitments we have today with our current customer base.  What do we need to do to keep our current customer base satisfied and meet the regulatory and contractual obligations we already have in place.

And the goal of Business as Usual is … well, just what the words say.

I think if we could get senior management to define the management objectives for each mode of operation and how long the company can operate in each mode, the RTOs we establish will be much more realistic.

I work in many environments testing their RTO capabilities where, when short time-frames are missed, they report this as a failed exercise but, the business areas ultimately say, we could have lived with the delays.  I think our RTOs, in general, are much tighter than they need be if we think about Survival first, then Sustain and then BAU.

I know, I know, I know … for those of you cursing me out; yes, there are some real crucial business processes that legitimately have very short RTOs (or require immediate failover with no downtime), but I think that pool of requirements is much smaller than many of our programs suggest.

So, yes, I think we do a good job focusing on Most Critical job processes, but I don’t think we establish the right mindset in gathering the requirements to support them after a disaster.

I welcome all comments to the contrary or, heavens forbid, in support of this concept.

Business Continuity Planning – Beyond the Doomsday Scenario

At the Continuity Insights Management Conference 2012 that I recently attended in Scottsdale, AZ, there was a lot of conversation around PS-Prep which bled into the discussion of “Why get certified” or, the more generic question of, “Why perform business continuity planning?”  An oft repeated answer to this question, echoed by business continuity planners around the world is, “Because without a plan you will not survive as a company.”

I think this is a disingenuous answer without any history to support it.  Where exactly is the evidence of this fact?  What historical data can you share with me, or the CEO you are trying to convince, that this is the case?  I am confident that you can dig up cases of small companies that did not survive a disaster, but where is that story about the big guy who did not survive the disaster?

The one and only case study I can think of off the top of my head is Enron, but that was a disaster of a different kind.

Look at BP and the horrific Gulf Coast disaster – they survived.  Did they have a plan in place for this?  Maybe … if so, most professionals would argue against its effectiveness.  Were they certified?  No.

Look at Cantor Fitzgerald, the one company most widely spoke about concerning the extent of their losses during the events of 9/11.  Survived.  With much loss and many significant challenges, but they are still in business.

We found this article that lists 8 Infamous Business Disasters – those companies all survived – albeit some under a new name and different business model, but they did survive.  Now, not all of these cases are the kinds of disasters we plan for, but I can’t find that one poster child event that proves the statement, “Without a business continuity plan, you will not stay in business.”

Now look, I am a business continuity planner.  I make a living out of helping companies put these programs in place.  I want … no, I NEED … CEO’s and Boards of Directors to embrace the need for these plans and to invest in professionals like me to help put them in place.  But, I think we need a better sales pitch than the shallow threat of; this is needed to survive a disaster.

I don’t think we need C-level executives to buy into this all or nothing proposition with business continuity planning.  No, I think that the message should be:  Business continuity plans will allow us to mitigate our losses should a disaster occur. The goal is to ensure the investment we make in our plans and solutions is justified by the potential losses that could occur considering the probability that an event happens.

The losses that could occur is measured by performing a Business Impact Analysis and the probability that an event happens is measured by a Risk Analysis.

We plan because it is a reasonable business practice to protect our assets and our stakeholders against losses that could impact the market value of our company not just if, but when, a business interruption event occurs.  If you want the answer to, “Why get certified”, check out this earlier blog we posted.

We need to sell business continuity planning using business terms that executives can understand and stop with the doomsday scenario selling technique.  At least, that’s the way I see it.

In the meantime, if you can share those stories with me that support the position companies will not survive without plans, I would love to read them.  Thanks.

Critical Data: Don’t Overlook the Hardcopy

I know we like to think we now work in a paperless society, but the fact is, we do not.  There are still plenty of industries and processes that rely on hardcopy documentation for historical records and in support of daily operations.  Business Continuity and Disaster Recovery programs often overlook these vital records as they focus on technology and electronic medium – I caution you not to fall into this same trap.

In know this to be true, especially in airlines, medical and educational organizations as well as in some financial services and other industries. 

For example:

Airlines are required to maintain and have access to all mechanical and maintenance records for each and every aircraft that they fly.  In many instances maintenance initiatives issued by various agencies are printed and given to the mechanics and engineers who then make handwritten notations and sign off on the printed form.  These printed forms, with their notations, become the official record of the maintenance activity in compliance with the initiative.  Should this physical, hardcopy record be destroyed or lost, the plane (or an entire fleet of planes) will have to be grounded until the maintenance check is performed once again and a new record created.  Some airlines maintain these records in a single location and do not scan or digitally record the information (keeping costs down, you know).  Should the facility housing these documents go up in smoke, it could take months or longer to recreate the audit trail for those planes – which, by law, must be grounded until proof that all the maintenance initiatives have been completed.

Many medical offices maintain a slew of forms and doctor reports in handwritten form.  Just notice all the filing cabinets up and down the halls in your doctor’s office.  These records are seldom scanned or stored electronically and are susceptible to numerous risks and threats.  The same is true for school records and other information gathered in handwritten forms.

Financial services firms and brokerages still house plenty of hardcopy documents in the form of payment instructions and customer documentation that could cause plenty of financial exposure and compliance irregularities if lost or destroyed.

For those of you who think that we operate in a paperless society, just take a look around and count the number of filing cabinets still in use.  What do you suppose is kept in all this space?  And, what would be the cost or impact to the organization if they were permanently destroyed?

Now, I am not saying this is true in every environment.  Certainly there are many, many offices and industries that truly have no exposure to hardcopy documentation and information.  I am just suggesting that your risk analyses, impact analyses and recovery requirements analyses do not simply overlook this potentially critical information base and include consideration of this potentially risky business practice.

Backing up or electronically scanning and storing hardcopy documentation, especially historical documentation, may be something your organization needs to look into.  There are plenty of vendors that can help you achieve this end.

Recovery Time Objectives: The Bigger Picture

A few of you didn’t take kindly to a blog I wrote a while back that suggested some of us business continuity planners have fallen victims to our own methodology.  Well, get ready to be offended once again.

This time, I want to take a look at the Business Impact Analysis (BIA) process and how we establish Recovery Time Objectives (RTO) – be they for business functions or software and applications.

In this case, I think we have fallen victims to our questionnaires.  Now, of course, some questionnaires are much more detailed and better than others, but I think they all fail from the problem that we do not put our questions in perspective of the bigger picture.  Ultimately, these questionnaires come down to the question of, “How long can we go without … doing something, or running something?”  Like I said, some questionnaires do a pretty good job of also gathering the justification for the ultimate answer, but…

I think the savvy business manager is the one who everyone else thinks is a pain in the asking.  The savvy business manager will stop short of answering these questions until he or she knows what the corporate position is on business targets during a crisis.  I would resist answering these questions until I knew what the Executive Teams’ expectations were for my department.

In other words, I would want to know; During a crisis…

  • Are our revenue targets adjusted?
  • Are profit targets adjusted?
  • Are margin targets adjusted?
  • Or, whatever business metrics I am measured against – are they adjusted?

I think most BIAs start and end with middle management answering individual BIA questionnaires, when, in fact, they should start with Executive Management establishing a Crisis Management Business Plan establishing the acceptable business targets to be achieved during a crisis.  Armed with that information, middle management has a more realistic shot at providing valid answers to our questionnaire.  Right now, every business manager is making their own assumptions about what Senior Management is expecting and these are likely not consistent across the board.

Furthermore, I think most planners simply accept the BIA answers provided with little push back.  Look, I’ve been a planner for a long time – I know exactly how easy it is to be so excited just to get any answers back that you do not dare challenge the results.  But, how often have you seen situations where business managers say they cannot be down for more than 4 hrs and yet close the entire office for a day or more during a snow storm?  Or, there is a function performed by 3 staff members and at time of crisis they say they need all three to be up and running in 4 hours – you mean none of these people ever take a vacation?  Again, it goes back to the original problem – it all depends what they think they need to achieve during a crisis.

Now before you jump down my throat – I do get that during a crisis you may not be functioning the same as normal.  You may be doing some things manually, requiring more labor.  I am just suggesting that sometimes we need to push back a little and have the managers support their answers and make sure they have thought things through logically.

Now on the opposite side of the spectrum, I was working for Comdisco during the World Trade Center bombing in 1993 and I worked very closely with two financial services firm recovering from that event.  On the Monday following the bombing – the first business day following the event – these companies experienced a call and transaction volume almost 10 X their normal volume!  So they, in fact, had some functions in which they really needed more than 100% of the workforce recovered.  I think, as planners, we may need to also push back on some departments to make sure they have taken into consideration the possible changes in work flow and volumes, given the fact that they had a disaster.  Insurance companies are just one example of organizations in which the disaster itself could be a catalyst for increased work activity.

It just seems to me that sometimes, and I don’t mean everyone does this, but sometimes, the BIA really simply becomes a Business Impact information gathering tool and we forget to do that “A” part – we forget to analyze the answers provided.

So, in summary, I think we can sometimes help the process along if we first get Senior Management to establish adjusted business targets for operations during crisis before asking middle management how long they can be down; and, I think we could do a better job challenging some of the answers we get back to our, sometimes, ambiguous questions. 

Okay, there you go, now let me have it and tell me why I’m wrong.

Business Continuity Planning: Have We Fallen Victims to our own Methodology?

I understand the importance of all the phases of the typical Business Continuity Planning Methodology.  I know the value of and why we conduct Business Impact Analyses (BIA) and Risk Analyses.  I understand the benefits and process for defining Recovery Time Objectives and Recovery Point Objectives.  I appreciate the need for defining Recovery Requirements and know the value of identifying different Recovery Solutions and conducting Cost/Benefit Analysis to evaluate and select the best alternatives.

I get it, really, I do.  I have been following this recipe for years (don’t ask how many) and have made a living at convincing clients they need all of this stuff.  And, I believe that they do … eventually.  I also believe, however, that we sometimes fall victims to our own methodology and sometimes lose sight of what it is our clients need, at this point in time.

I have witnessed myself, senior management teams getting frustrated because teams of consultants had been working for months on “The Analysis Phase” of business continuity planning and all they were wanting to learn was who was going to call them at two in the morning when a disaster occurs.

Sometimes I think we get so caught up in the business continuity planning aspect of things that we forget to first implement a baseline emergency response plan that addresses the crisis management components of the program.  After all, we need crisis management with or without a comprehensive business continuity capability.

Don’t get me wrong – we need to implement the BCP Methodology and all of its bells and whistles.  But I think we sometimes get so caught up in planning the menu, determining the best foods to eat, evaluating the nutrition content, balancing the diet and so on and so forth, while our patient starves to death waiting for some food.

Baby steps.

I think we serve our clients (internal or external) best by first documenting the imperfect programs in place today, even if the strategy is to figure it out at time of disaster.  If we can at least put together a baseline plan that includes a communication process, notification and escalation procedure and crisis management framework that gets the right people together to “figure things out” – we can at least ensure the patient is eating something while we design and implement the perfect meal plan.

Does any of this make sense?  I simply wish to suggest, that we do not blindly follow an academic approach to the planning process without first understanding what the patient needs.  Stop the bleeding before designing the perfect health care program.  To do that, we need to find the bleeding.  Rather than trying to explain the methodology – first ask, “What are you looking for your Business Continuity Program to do for you?”  You might be surprised by the answer.

The Recovery Time Objective Debate Continues

The Recovery Time Objective debate continues over on a LinkedIn discussion board.  Really folks, I don’t know what is so hard to comprehend here!  I think some people are just trying to be difficult as a means to show they are smarter than everyone else.  Me, personally, I prefer the KISS method – Keep It Simply Simple (I know it is usually said another way, but I wanted to avoid labeling people).

Simply put, the RTO measures the time objective for moving from Point A to Point B where; Point A equals the moment when a business process (or technology resource, if used for IT Disaster Recovery purposes) stops functioning and Point B equals the point when the business process (or, you know) must start functioning again to avoid jeopardizing the solvency of the organization.

It is an OBJECTIVE – that word is part of the acronym – why is it so hard to comprehend?

Yes, yes, yes, the event that interrupts the process or service will definitely influence when the recovery process starts, or what recovery tactic you decide to take – but the OBJECTIVE remains the same.  Fine, fine, fine, so you have an emergency response team that is responsible for assessing the damages and determining whether or not to declare a disaster, but the OBJECTIVE remains the same and the clock is ticking.

Hopefully, your proven recovery capability is less than your recovery objective.  In that case, the Recovery Time Objective minus the Proven Time to Recover equals the time your Emergency Response Team has to gather, evaluate the situation, and declare the disaster in order to ensure your RTO is met.

RTO – PTtR = Maximum Time to Declare

Your Emergency Response Team needs to be aware of all of these factors while performing their response tasks.

You do not decide the RTO or the PTtR at time of disaster – it is too late.

The RTOs are established in the BIA process.  The PTtR are established through a series of tests and exercises.

I do not disagree with most of what people are arguing in the discussion thread – I just disagree with the words they are using in the argument.  You are overcomplicating the point and mixing apples with oranges.  Sometimes I think it would be better to just throw out the common terms in use today and come up with new terms at each company that do not have a preconceived notion of what they mean.  Then define the new terms the way you want to use them so everyone in that organization has a common understanding.  That may be throwing out the baby with the bath water, but it might stop me from pulling out what little hair I have remaining while reading this agonizing discussion thread.