Just before Hurricane Katrina madelandfall last Aug. 29, Tom Oreck, president and CEO of cleaning products manufacturer and retailer Oreck Corp., took off from New Orleans on a plane bound for Houston. With him were his wife, his three kids (all under age 5), his dog and his company’s backup tapes. When he touched down, he FedExed the tapes to the company’s backup data center in Boulder, Colo., and began piecing his company back together.
Oreck’s headquarters are in New Orleans, and the company also has a 375,000-square-foot manufacturing plant and call center based in Long Beach on the Mississippi Gulf Coast. Though the company was back in operation 10 days after the hurricane (and now, more than six months later, has resumed normal operations), its disaster recovery plan was severely tested by the storm. The experience taught Tom Oreck some critical lessons about the role of IT in business continuity. First of all, in today’s networked environment, when one IT system breaks down, they’re all down, for all intents and purposes. Second, the public telecommunications system cannot be counted on. And lastly, although a good business continuity plan is essential, recovery from a disaster depends on what Oreck calls “aggressive improvisation” by employees.
The company owes its existence to improvisation. When Oreck’s father David first tried to sell his lightweight, heavy-duty vacuum cleaner in the 1960s, he had trouble marketing the product through department stores, which were the traditional channel of distribution. So the elder Oreck went straight to the consumer, turning the fledgling Oreck Corp. into a direct marketing company. Back then, Oreck’s systems consisted of a few telephones, typewriters and invoices to be filled out in triplicate.
Four decades later, with estimated annual revenue of $190 million (Oreck doesn’t publish its revenue), the mid-market company has 450 retail stores and an expanded product line (it now sells cleaning and air-purification products too). And its IT needs are complex. The direct marketing side of the business lives or dies by its data. Manufacturing depends on supply chain and logistics systems. Customer service needs its call centers.
Tom Oreck and his CFO approve all major IT investments. Nevertheless, Oreck is hard-pressed to name the applications that keep the company running smoothly (aside from that expensive ERP system he recently approved). He is less interested in the systems themselves than in the business results they deliver—or don’t. “Our business is about three things. It is about marketing. It is about controlled, aligned distribution. And it is about quality, both in the product and in customer service,” says Oreck.
“IT’s role is to support those three things. And as we continue to develop, IT’s job is to make sure that the information that’s needed is in the form it’s needed in, and in the location it needs to be in, for people to be able to accomplish their jobs.”
CIO: What surprised you most about IT’s role in the company’s recovery after Hurricane Katrina?
Tom Oreck: Communications was a major issue. That was a complete surprise. The first challenge we had was that we could not find people because the cell phone systems came down. The cell phone systems, as far as I’m concerned, have a fundamental design flaw: Every call is routed back through your area code, and if those towers go down, your cell phone does not work. That’s absurd in today’s world. We ultimately found a lot of our employees through text messaging.
Cell phones weren’t the only problem. Having transferred our backup data software from New Orleans to our hot site in Boulder, and our call center from Long Beach, Miss., to Phoenix and Denver (per Oreck’s disaster recovery plan), we were up and running again within five days. But we could not communicate with our Long Beach manufacturing site for 14 days. We expected that there would be problems with connectivity, but it was more of a hardship than we had recognized.
In the end, everything is—like it or not—linked. And so a breakdown anywhere in the system is a breakdown everywhere in the system.
How important was your relationship with suppliers and vendors in getting Oreck back online?
IBM [which provides Oreck’s data center services] provided support in areas that we never thought of and weren’t even in our contract. For example, more than 250 of our employees lost their homes and all their possessions. IBM provided access to trauma [counselors]. They also helped us set up insurance and claims assistance for employees. It wasn’t contractual. But we had a good working relationship with IBM before this happened, and this was an extension of that.
We also called on our relationship with UPS. We’re a big customer. With no connectivity in our Long Beach facility, we could no longer distribute our own products. Mike Evanson, our VP of IT, and Candy Mauffray, our director of logistics, worked out a solution: UPS would truck in food and water to our employees in Mississippi and then leave with Oreck products that it could ship from its facility in Atlanta.
We were able to get our distribution systems operating in their facility. Normally that would have taken six to eight weeks, but they worked very hard with us to get them operating within a few days. For a while, when a customer would call Oreck, the call would be routed to our backup call center in Phoenix or Denver; the order would go to our backup computer operations in Denver, and then it would go to UPS in Atlanta, where the shipping label would be printed and the product would be sent out the door.
We always knew these relationships were important. Being located where we are, we have the occasional [hurricane] scare. We implement the disaster recovery plan and come back online. But this time we couldn’t come back by ourselves.
In November, you and your executive team rewrote your disaster recovery and business continuity plans. What changed?
We did a lot of things right. But there were a lot of things we didn’t know then that we can now take into account.
The one thing that we did not expect was not to have one facility or the other to operate from. We always thought that in a worst-case scenario, we could set up assembly lines in New Orleans. Or if something happened in New Orleans, we could operate out of Long Beach. So now we’re talking about the need for additional manufacturing options.
We came up with solutions to prevent communications issues in the future. We’re making an information card for every employee that has two telephone numbers on it that will be activated in the event of a disaster. One number is where they can be reached, so they can leave their location, and the other will be the number for a daily 8 a.m. conference call, beginning the day after the disaster.
But I think the most important thing we learned is that, no matter how good your plans are, things happen that you didn’t anticipate. What really saves the day is what I would call “aggressive improvisation.” That means that people look at a problem and do whatever it takes to solve it. Our people found ways to make things happen.
Has your experience of the past few months changed your view of IT in any way?
That’s an interesting question. I’m not sure about IT specifically. But I will tell you that my view of the decision-making process in general has been altered. In a crisis, you find a way to make business decisions more quickly. There’s no reason that cannot be applied to business as normal.
As business grows, or any department in a business—such as IT—grows, decision making tends to slow down, and your ability to be nimble diminishes. You start embedding all this bureaucracy in things. Everything gets studied and studied some more, and eventually something gets decided. We have to trust that we’ve hired good people and empower those people to make decisions without having to jump through bureaucratic hoops, and that includes IT. That doesn’t mean I want my VP of IT or anyone else making rash, uninformed decisions. But I want him to accumulate all the facts, make a decision and move on.
Historically, the most frustrating thing for me has been the disconnect between expectation and reality. For a non-technical person like me, you see all of these fancy software packages that look like they will do everything for you but brush your teeth. But in reality there is no such thing as an easy software installation. Years ago, we had a point-of-sale project that came completely unglued. I had to pull the plug on it.
My experience lately has been better because my VP of IT, Mike Evanson, is grounded in reality. He is an expert, not just on the technical side but on the management side. Everyone wants to point the finger at IT when something goes wrong, but the business users have to take ownership. IT is responsible for finding the right solutions and making sure they function well, but they’re not responsible for the business process. Mike is not just a programmer or someone who implements software. He’s a businessman who happens to be in IT. He can manage the relationship between IT and its customers.
I’m always cautiously optimistic about what IT can do. But it’s important to recognize that IT is an enabler of business process. And it is an enabler of business objectives. It is not, in and of itself, the solution.