Compliance or Strategy?

It’s encouraging to see how well public and private institutions have picked up on the importance of business continuity planning (BCP), even if originally forced into compliance through legislation. The scope of BCP is extending beyond the boundaries of IT into other areas including facility planning. However, as organizations try to strike a balance between thoroughness and efficiency, we wonder whether these efforts are being driven by a desire to manage risk strategically or simply to comply with new standards of organizational governance.

At a recent planning session, an institutional client engaged us to evaluate how well its facilities plan aligned with its business continuity strategy. A few things immediately struck me. From the outset the client stated they were not looking for a "Cadillac" solution, as they were bound by a strict budget. This is fairly common requirement, as many still consider BCP projects a "grudge spend" they're reluctant to make. No problem. We're used to working within budgets. The client presented us with what amounted to a one-dimensional wish list that requested facilities in pre-specified locations. Their first inclination was the task wasn’t overly complicated and in fact could be executed by a local commercial real estate broker whose database might provide a shortlist of potential locations.

However, we refined the process and initiated an interactive discussion involving participants from a few key nodes of influence that enabled the team to integrate essential elements that were missed during the first go-around. These included event probability, local geography, communications, construction standards and security, as well as disaster protocol. The most important element that was integrated into the plan was business operation and impact analysis.

Together with the client, we created a multi-dimensional strategy that exceeded the client's original expectations - all within budget and ahead of schedule. In this instance, a compliance-driven requirement was successfully replaced with a response that was strategic.

Enlighten Up: What if my Internet goes down?

No one knows when the Internet will fail. It could happen at any time, leaving you without your e-mail, your sports scores, and this weblog. Therefore, it's important that you and your family and your colleagues at the office have a contingency plan for just such an emergency. If your connection to the World Wide Web were ever to get severed, you should at least be prepared. Right now, write our Toll Free Number +1 866 773 7759 on a sticky note and put it on your phone. When your Internet goes down, and it will, call us immediately and we'll talk you through your crisis. Be patient. In the case of a wide area network failure, there will be many others without their Internet connections, too, and we may be helping other clients when you call. Remain calm. We'll get right back to you. While you're waiting for our call back, you can read these instructions -- if you've saved them to your hard drive before the Internet went down.

Blackout Report: Interim Comments

You'll excuse me if my prose is a little off today - just spent the night with a glossary of electrical power generation terms and a bottomless pot of coffee plowing through the 134-page interim report on the causes of the August 14th blackout (during the evening I instant messaged a friend and described this document as "hairier than a sasquatch that has overdosed on rogaine").

We plan to provide more analysis after digesting everything in this Interim Report, but we thought it might be a good idea to provide comments on some things that struck us, on first read:

1. $1 trillion dollars has been spent in developing the North American Power Grid.
   
   
2. The North American Electric Reliability Council (NERC) was established in 1968 in response to the 1965 blackout as a voluntary organization relying principally on reciprocity and mutual self interest; recent changes in the industry have altered many of the traditional mechanisms, thus it is inadequate to current needs and should be backstopped by Federal regulation in the US and Canada.
   
   
3. A tremendous amount of consolidation and changes in the industry have occurred since '68 that has led to the unbundling of generation, transmission and distribution activities into regional operating entities; this is actually a good thing, but more work needs to be done, particularly in the area of strengthening communication nodes between different control areas.
   
   
4. The system is already embedded with a great amount of redundancy that should have prevented this event from occurring, however, this wasn't a situation that was as much about one event cascading into many, as it was about three events occurring together - the likelihood of this happening again is infinitesimally small.
   
   
5. The report is set up much in the same way as the interim report that led to the release of The Interagency Paper on the Resiliency of the US Financial System released after the terrorist attacks; it provides the opportunity for input so changes might be made before the final report is released. (comments and recommendations to the task force in charge of this report can be sent to poweroutage@nrcan.gc.ca and blackout.report@hq.doe.gov)
   
   
6. Despite the report's meticulousness, and the manner in which it demonstrates how well cross-border task forces can work, it is descriptive and not prescriptive in its nature; the onus is still on us to recognize the demand side problems that will probably not be addressed in the final report.

For more coverage on the release of this important document, see the latest news reports.

Interim Report on Causes of the Blackout

Our September white paper on the blackout pointed out that in the aftermath of the event, most fingers were being pointed toward the supply side deficiencies of power distribution, while completely ignoring the demand side problems associated with consumption. We identified smart buildings as being an important contributor in managing demand, as office buildings consumed almost 40% of the total energy in the United States, and smart buildings could reduce power consumption anywhere from 20-80%.

We are now minutes away from the release of the interim report on the causes of the blackout - this is timely given the following interview of CBC’s The Current I heard this past Monday by John Bennett, Director of the Climate Action Network. In it, he stresses that the effects of the blackout may have been minimized if the infrastructure supplying power was decentralized and power officials paid closer attention to managing the demand side of the equation – this notion aligns very closely with the theme of our September paper. Bennett notes that even though “our infrastructure is fifty years old, we continue to add subdivisions, factories and buildings and keep making the wires a little longer”. Accordingly “we depend on very large power plants that need very large transmission lines and as a result when things go wrong, they go wrong very big.” He believes that the effects of the August 14th blackout were magnified because of the centralized nature of the distribution infrastructure and could have been minimized if growth was properly managed, “We should really be working on a system that is decentralized so that if one plant goes out, it doesn’t knock out millions of people.”

We are expecting the postponed report to be released today. It is widely believed that those who are producing the report will look for scapegoats in the form of people or companies, who will be identified as the root cause of the outage. This will be done in order to justify the massive amounts of money they’re going to spend to maintain the present system. If this is in fact what happens, the industry would miss its golden opportunity to make the same type of substantive infrastructural changes stressing reliability and security that were made in the Province of Quebec following the 1998 ice storm.

Important Update:

The U.S.-Canada Power System Outage Task Force has just published its Interim Report: Causes of the August 14 Blackout in the United States and Canada.

In the days ahead, we'll be reviewing this Interim Report and discussing the highlights we find interesting from our perspective.

Bushwhacking the Brits

President Bush is aboard Airforce One jetting his way across the Atlantic for a three-day State Visit to the UK (the last "State" visit - one that includes free lodging at Buckingham Palace - was made by President Wilson in 1918). When plans for the trip were made, it was expected to be a little more celebratory in tone, given the wide-spread belief that the war in Iraq would be "mission accomplished" and Blair and Bush could parade "shoulder to shoulder" through the streets of London. As it turns out, the "parade" is off-limits to the hordes of protesters expected. Amidst the uncertainty, officials from both the US and the UK have prepared themselves for protests.

However, it seems Britons have more than one issue on their minds. I came across this article today that describes a simmering trade war between the US and some of its European trading partners. Amazingly, the Bush Administration has encouraged US multinationals in Britain to "bring jobs home" by cancelling contracts and relocating those activities back to the US. This is simply amazing. I understand there is an election coming in '04, but to turn the clock back 70 years and revert to an outdated protectionist model, for the sake of some votes is astounding. This sounds very much like the flawed logic we have been talking about here recently.

It is not as if this policy is being encouraged in order to put a rogue regime in line; but instead it is being imposed against a most important ally, long-time trading partner, and the country that has stood side by side with America in its war against terrorism. Is Britain getting Bushwhacked?

Think Global

As the topic of global outsourcing gains momentum, barriers are overcome and the scope of what organizational functions can be sent abroad expands. I came across this article by Alison Diana last week which shows that beyond China and India, other places including Russia, Ghana and Canada are also becoming important as the world advances to a point where regional economic structures are replaced by an integrated global economy.

What I found particularly interesting in this piece was the assessment that the US centers that are most susceptible to having foreign functions replace local workers are large cities such as New York, Chicago and San Francisco. The author states this is mostly due to the high costs of living associated with those centers, and the high concentration of IT workers.

This got me thinking. I went to the US Bureau of Labor's website to gauge the accuracy of Ms. Diana's comments. She is bang on. Although I sourced statistics from 2002, these provided a good predictor of current trends. Of 331 metropolitan areas in America, these stats revealed a median unemployment rate of 5.3%, and a mean of almost 5.6% (it should be noted that as of October 2003, this number has increased to 6.0%). Set against the backdrop of these numbers, San Francisco was number 215 on the list with a rate of 5.9%, Chicago came in at 266th with a rate of 6.7%, and New York was sandwiched between Laredo TX and Shreveport LA at 289th with 7.3%. On of the most interesting statistics I discovered was for San Jose - the IT capital of the world - it registered 310th with an unemployment rate of 8.4%.

This outsourcing trend is consistent with one of our favorite themes: decentralization is happening today -- adjustments are being made to align organizations to manage costs in an increasingly competitive global environment, as part of business continuity strategies.

Q4 Newsletter Published Today

After a great week of quality time with the family, I'm back at work energized and ready to post our latest newsletter that summarizes an eventful quarter that has just passed. Storms, blackouts and solar flares are just some of the issues we discuss in this Newsletter, which is permanently posted with our previous editions on the Research page.

Business continuity issues, as they relate to facilities, can be understood better when presented in the context of a series of events and news items. Evaluated together in our quaterly Newsletters, these discussions form a more complete picture. Check our website often before the holiday season, as we will be publishing important new research and features before the end of the year. Now, back to work.

Real Life Continuity - It's a Boy!

Just after New Year's Day in 1999 I remember remarking to a group of friends that having child in this day and age must be so much more complicated than it was when we were all born in the 1960’s. A old college friend from Atlanta - Jerry Smith - took me to task by reminding me that this was precisely what our own parents had probably thought when we were born and what their parents thought a generation before.

He told me to think about world wars, social upheaval through the ages (both good and bad), waves of immigration and even the industrial revolution. “The world will always be complicated, Tone” he said, “but it’s up to us to provide continuity to our kids no matter how much things change – it’s not as though we’re the first having to adapt to change. Go with the flow, and along the way teach your kids well.” Those simple words made a lasting impression and today they take on added meaning.

I pause from business to use the blog to announce on behalf of my wife Simi and myself the birth of our son Shaan who was born this morning at 7:12, instantly making our four year-old Hana a big sister. We move forward understanding that we have little or no control of the events around us, but we do our best to teach valuable lessons to a new generation as we pass the torch of wisdom and experience to them. Clearly - continuity in its purest form. Welcome Shaan, the future is in your hands.

Strategic Advisors: CAMTOS and RMA

Given the volume of events, and the increasing visibility of facilities-oriented BCP initiatives over the past several weeks, we have been busy. In September, we mentioned the inclusion of CAMTOS Solutions on our team. CAMTOS is a Montreal-based business continuity practice and currently provides BCP Solutions for some of the Canada’s largest institutions. We will look to CAMTOS to provide robust BCP solutions for some of our larger and more complex assignments. Needless to say, we are very excited about having an outfit of this caliber on our advisory team.

You might recall a blog post I published a few weeks ago that emphasized the importance of strategic media communications. One of North America’s leading media consultants, Bill Patterson has presented over 1,000 workshops, seminars and speeches on how to better use and understand media. We are very pleased to have his firm, Columbus, Ohio-based Reputation Management Associates (RMA) as our newest Gill Advisor. RMA provides valuable consulting services to companies and organizations on news media strategy and crisis management planning.