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BUSINESS CONTINUITY - A lemon by any other name?
Ignoring business continuity is no longer a reasonable option, yet many companies are wary of being sold a dud. Patrick Roberts looks at the positive steps that can be taken to ensure a better-informed choice of solution
According to the Chartered Management Institute’s 2006 Annual Survey of Business Continuity Management, less that half of the organisations surveyed (49 per cent) had a “Business Continuity Plan covering their critical business activities.” In understanding why so many businesses are still not investing in business continuity, despite the proven benefits, it is instructive to look back at an article, “The Market for ‘Lemons’: Quality, Uncertainty and the Market Mechanism”, published by Nobel Prize-winner George Akerlof over 30 years ago. The article is an elegant exploration of the situation that evolves when the buyer of goods or services does not know the true value of what they are buying: they cannot distinguish between a high quality product and a ‘lemon’.
Consider, for example, what would happen to the used car market if only two types of vehicle were offered for sale - high quality cars worth £10,000 and jalopies worth only £2000 – and prospective purchasers cannot tell the difference. If a buyer believes that there are equal numbers of both types of vehicle on the market then they might be inclined to think “I have a 50/50 chance of getting a good car or a ‘lemon’ so I’ll offer up to £6000 for a car.” But on further reflection he or she realises that the owner of a quality used vehicle is very unlikely to sell it in a market where people are only willing to pay half of what it is really worth (they will find an alternative means of selling it) so, in reality, all you will have in this market is jalopies. The prospective buyer then determines not to pay more than £2000 for a car bought in this way.
Measuring the true value of an investment in business continuity management is extremely challenging for the most experienced business continuity practitioners let alone a prospective purchaser with little knowledge of the subject. The stage is therefore set for a classic ‘lemons’ problem where prices in the sector are forced down and, ultimately, both buyers and sellers are driven away from the market. Whilst, in the illustration above, there are numerous practical alternatives to buying a second-hand car (eg buying new, public transport), simply ignoring business continuity is no longer a sensible option for most organisations. Obviously the onus to remedy the situation lies largely with the business continuity profession and much is already being done by both individuals and professional bodies, such as the Business Continuity Institute, to improve awareness and understanding. However, those involved in purchasing business continuity products and services - including training, consultancy services and IT solutions – also have a vested interest in becoming more knowledgeable in order to ensure that they are getting the best value for money. The rest of this article concentrates on the positive steps that people in this latter group can take to ensure that they are better-informed consumers.
The publication of BS 25999:1 in November 2006 was a very important milestone, establishing a simple and robust lingua franca for business continuity management. The document itself is less than 50 pages in length so any prospective purchaser of business continuity services would be well advised to take the time to read it. Building on this foundation, a great deal of general business continuity information is available in the form of public presentations: business continuity practitioners speak regularly to audiences from numerous professional and business organisations and many of these events are free. As one becomes more knowledgeable, it is also worth considering attending specialist events such as the Business Continuity Expo and Business Continuity Institute Annual Symposium where industry-leading practitioners discuss best practice and examine topical issues. These simple steps give the knowledge and confidence to ensure that what is being purchased is actually appropriate to the business needs.
Finally, a wide range of high-quality business continuity training is now available, ,with many organisations offering inexpensive one or two-day introductory courses to the subject. Some providers also offer courses in a convenient evening-class format or can even deliver bespoke training in your workplace. Scenario-based crisis management exercises, where a management team has to wrestle with the difficulties of a simulated incident, are also a very enjoyable and effective way to raise awareness of business continuity issues and improve the ability of individuals and teams to manage in a crisis. Taking advantage of some of these numerous training opportunities is undoubtedly the best way to equip yourself as a sophisticated business continuity consumer and ensure that you are getting good value from your investment.
In conclusion, the following simple case study is offered as a recent illustration of how improved buyer understanding can create real win-win outcomes for buyer and seller. The client in question was a small public-sector body who received a day of Crisis Management training for their executive team as part of a national programme delivered by Needhams 1834 on behalf of the Cabinet Office Emergency Planning College. As a result of this training, the executive team realised that their existing business continuity plan was not fit for purpose; it also gave them the confidence to ask Needhams 1834 to conduct a review of their plan and deliver a simple exercise. In the event it only took an additional seven days of work to provide the client with a far more robust business continuity plan and facilitate a simple exercise to familiarise the crisis management team with its contents. Surely this is a far better outcome (for both parties) than the client struggling on with an inadequate plan or paying for a great deal more consultancy than they really needed: improved understanding by the buyer led to a win-win situation.
Patrick Roberts is Senior Consultant with Needhams 1834.
Needhams 1834 Ltd will be exhibiting at the Business Continuity Expo and Conference held at EXCEL Docklands, London from 28th - 29th March 2007.
www.businesscontinuityexpo.co.uk
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