Business disruptions happen every day and can cause companies to lose millions of dollars and suffer reputational damage. But these losses can be minimized. When astute executives, including CIOs, cheat disruption by focusing on business continuity management (BCM) programs that build resilience, the enterprise transformation can prosper.
CIOs should apply a business lens that informs how the business could be impacted (operationally, financially, legally, etc.) in the event of a disruption, and design solutions to minimize the impact. Understanding business requirements across the organization as they relate to resilience and remaining dynamic when business conditions change is key. CIOs must also account for the criticality and timing of each business process, from front-office processes such as sales and customer service to back-office processes such as operations, human resources and finance.
Technology touches all stakeholders. It is important for CIOs to stay ahead of disruption by:
- Championing core business requirements
- Thinking about cloud as a way to build resilience
- Obtaining steering committee and business leader buy-in
- Implementing more disciplined validation and testing
Next-level organizations go a step further and use business continuity and resilience as a competitive advantage. Customers do not want to wait — they want what they want, when they want it, and that when is now. Companies that showcase resilience and build it into their value proposition gain a competitive advantage.
Champion core business requirements
The CIO’s customer is the business itself. As such, the business’ needs must be understood. Proactivity also is a must. Asking the right questions to understand the business’ strategy and implementing architecture that supports the technology of the future is fundamental. Similarly, CIOs and CISOs must anticipate technology needs to build an IT infrastructure that defends against cyberattacks, a real threat that BCM and IT leaders must be prepared for now. Understanding business requirements, from technology recovery requirements to data loss tolerance, enables a dynamic technology strategy that morphs with the changing needs of the business. To gain a strong business understanding, CIOs should evaluate:
- Recovery time objective (RTO) – The length of time a business process can be without key technology (e.g., business applications, data sets, devices)
- Recovery point objective (RPO) – The amount of critical data a process can afford to lose before there is intolerable impact – also known as data loss tolerance.
Conducting a business impact analysis (BIA) is critical to identifying business requirements. BIAs enable an understanding of business activities and their outputs to position RTOs and RPOs as inputs into the transformation effort. However, completing a BIA is not enough – it must be maintained over time to allow for continued resilience as the environment changes.
Leverage cloud as a means to build resilience
Cloud solutions can be more secure and provide better failover capabilities than businesses can accommodate with their own on-premise environments. It is essential for organizations to have the expertise to govern and manage cloud implementations, keeping requirements of business process owners in the forefront. When businesses attend to these concerns, configuring disaster recovery features in the cloud is reasonably straightforward.
Obtain buy-in from business leaders
Business continuity and resilience cannot be accomplished in a silo. The CIO must ensure that technology solutions are designed and implemented with input and buy-in from leaders across the enterprise, including C-level executives, operations, finance, legal, communications and HR, among others. Organizations should establish a steering committee composed of leaders who frequently collaborate on all issues related to BCM and resilience. Business leaders who are invested devote the time, people and resources needed for a successful BCM program
Implement more disciplined validation and testing
A more disciplined methodology to validation and testing is essential to sidestepping shortfalls in meeting business expectations. If business leaders expect only 12 hours of downtime from a business interruption but technology workarounds require 48 hours, devastating consequences could ensue, including increased costs, reputational damage and other downstream effects. Testing and validation that back up technology assertions depended upon by stakeholders are elemental.
Collaboration is an all-way street
While technology is a driver for business resilience, it is not the only driver. People, processes and other factors must be considered. CIOs must understand the driving factors of C-suite members and, likewise, C-suite members must understand the driving factors of the CIO. Modern CIOs proactively collaborate to understand needs and they ask questions that inform how IT staff can assist and what technology must do to fulfill business demands.
Impact on the c-suite
While the impact that disruption brings to each C-suite member can be industry specific, there are key considerations across all organizations regarding resilience.
Chief Financial Officer (CFO) – Transaction processing delays cripple the CFO and the finance function by impeding the processing of financial information. With disruption, unplanned costs arise, most of which are the CFO’s responsibility. Engaging the CFO and collaborating on planning for cost minimization are key.
Chief Risk Officer (CRO) – Complying with regulatory guidelines may be challenging during times of disruption, especially in heavily regulated industries. Penalties for non-compliance can be damaging. Designing resilient technology solutions enables compliance with regulatory requirements while also mitigating secondary fallout. Commercial insurance is another critical risk-mitigation tool used to reduce operational risks. Organizations may acquire insurance to protect the tangible assets (e.g., workers, equipment and buildings) of the organization and/or to defray the cost of unexpected liabilities (e.g., civil lawsuits, regulatory investigations).
Chief Information Security Officer (CISO) – The CISO develops the cyber security program for an organization and drives IT security strategy and implementation while protecting the organization from cyber hacking and security threats. To ensure there are no gaps in IT and the cyber control environment, the CIO and CISO need to work closely together.
Chief Audit Executive (CAE) – To optimize risk management, the CAE and the BCM function should work in unison to leverage technology for assessing and mitigating risk. BCM, enterprise risk management and internal audit must work together and apply uniform principles to their respective areas of responsibility.
Chief Marketing Officer (CMO) – Understanding the impact of disruption, from viral pandemics to product delays, is key to a strong BCM program. Involving marketing in resilience efforts is extremely important to understanding which procedures are in place, how to supplement them and how to respond to a disruption event.
Chief Operating Officer (COO) – Because COOs are responsible for operations that drive the organization, it is important to design technology solutions that can minimize disruption to those processes, which can vary by industry. Collaboration between the CIO and COO supports operational resilience by applying technology solutions that can minimize disruption and the subsequent impact to the organization.
What should companies do now?
To design solutions that minimize the impact of a business disruption, companies should assess their current BCM status. CIOs should inventory current efforts to maintain resilience and determine a desired BCM state and what they need to do to achieve it. It is important to eliminate or modify iterative technology to cut costs. However, while determinable costs are central, soft costs are just as important to mitigate. Idle personnel, employee morale and reputation costs that are not easily definable in dollars can bring down a business.
Organizations can optimize BCM ROI by continually understanding business requirements and designing complementary business and technology solutions that satisfy business objectives during enterprise transformation, inclusive of the following:
- Governance over resiliency efforts should be directed by a steering committee to assess and supplement policy standards, obtain C-suite buy-in and secure resources.
- Key processes must be understood via the business-driven BIA, and the potential impacts of disruption must be addressed.
- A strategic plan leveraging a BIA to minimize impact and plan for disruption is critical.
- Implementing a disciplined methodology to validation and testing so that shortfalls in meeting business expectations can be avoided is imperative.
Last, resilience is not a goal that is achieved. It is an ongoing effort earned over time. CIOs who cheat disruption by addressing resilience holistically support an organization’s efforts to come back stronger in the face of adversity.
Learn more about our Business Continuity Management Services, visit the Protiviti website here.
Connect with the authors:
Managing Director, Technology Strategy
Associate Director, Technology Strategy
Director, Risk Assessment