Business Continuity in Real Life: Can you spare $224,000?
I had to cross six lanes of traffic to get to the restaurant. While I was waiting, I noticed something interesting going on with the restaurant’s drive-thru. Car after car was exiting the drive-thru lane without receiving any food. I thought it was strange, but shrugged it off – I was three minutes away from getting my drink. I walked in and the manager greeted me, “Welcome back – we are cash only today. Is that OK?” I said no. I hardly ever carry cash. In fact, for security reasons, I love using ApplePay.
The manager must have seen a frown and said, “Our credit card machine is down. They are down at all our locations. We are working really hard to get them up. We should have them back later this afternoon. I am really sorry for the inconvenience.”
By some miracle I had a few bucks in my wallet, so I ordered my soda. I got my change and drink, and left.
As I walked back to the office, my mind was racing as I thought about the financial impact of this on the restaurant. My curiosity was getting the better of me, so I looked up more accurate data when I got back to my desk. This restaurant chain serves, on average, 2,000 people per day, per location. This location was not going to have credit cards available for … let’s say half a day. That impacts 1,000 people. 56 percent of fast food buyers use debit or credit cards, leading to 560 people impacted. Let’s assume 80 percent of those people do not have cash. Now we are at 448 people impacted. The average per person spend at this restaurant is about $5. That is $2,240 in lost sales for this location alone. Metro data suggests that this chain has almost 100 locations in this market. If they are all served by the same POS provider, then the half day’s loss is $224,000. There are some assumptions in the numbers above, but one thing is clear. Losing almost a quarter of a million dollars in one morning is likely preventable.
In business continuity terms, I wondered what the restaurant’s return time objective was. I was a bit surprised to hear they were hoping to have systems back up in half a day. If their efforts failed and it was a full day, the math suggests that we are close to half a million dollars lost. Questions began to race through my mind … Would frustrated consumers go somewhere else tomorrow? Now where are we? $600K lost? Are there plans in place to prevent this type of loss? What are the pros and cons of having a backup system run on tablets with those portable credit card readers? How would that plan work? What reconciliation would have to happen? Is that type of plan even worth putting in place? How do we work with our POS provider? Do we test this failure scenario with our POS provider? So many questions and so much money that did not need to be lost.
To quote the Aging Hippie in Forrest Gump on network TV, “Stuff Happens”. Stuff does happen. Are you prepared for when it does? In your organization, have you identified your major processes – and how they might fail or be disrupted? Have you categorized the processes by safety and by value and brand impact? Have you performed business impact analyses on your critical processes? (I completed one two paragraphs ago: they might be easier to do than you think). Have you determined how fast you need to get the process back in line? What if this example were a hospital and life support system instead of a restaurant and POS terminal? How does that impact how fast you need systems operational? Have you determined how much data you can lose? What brand impact would the interruption or data loss have on your business?
For singular processes, doing this in a handbook or an Excel document might be adequate, but once the business starts expanding and planning is required across processes and or locations, you will need to coordinate resources, examine priorities, and manage the unexpected chaos. Spreadsheets and handbooks won’t help you anymore. Organizations can prepare themselves at a fraction of today’s event’s cost with platforms designed specifically to help them with their business resiliency and continuity planning. Being prepared for an event like this could mean it costs you $10K instead of $224K or $600K. It might be worth it to check one out before you need one.