Prudent businesses plan for disasters. But how do you prepare for the unthinkable? Outsourcing is one way.
Outsourcing suppliers are responsive in a crisis. Forty-five minutes after the first plane hit the World Trade Center, Compaq executives were on the phone, putting together a triage of support for its eight financial clients with Recover-All contracts as well as its many other customers headquartered in the twin towers. Tom Simmons, vice president of Compaq Managed Services in Stowe, Massachusetts, says within three hours Compaq had organized a crisis center routing telephone questions to Colorado Springs and opened a walk-in facility near Madison Square Garden manned by its Northeast sales team. A crisis Web site was online that night.
Compaq called all of its customers in the affected area to see how it could help. Simmons says these calls generated requests for computer equipment as well as pleas for help in finding office space for data centers. All eight Recover-All clients were ready for business when the opening bell of the New York Stock Exchange rang on Monday, September 17.
Some of the requests required Compaq to canvass its worldwide network for some unusual items that needed replacing. For example, one company was using an older VAX 7800 system that wasn’t readily available in current inventory.
“Outsourcing suppliers are better prepared to solve problems because they have a broader pool of resources in their specialized field,” says Peter Bendor-Samuel, CEO of the Everest Group.
Most of the big multi-national companies in lower Manhattan had elaborate disaster recovery systems in place, including “hot” back up centers far from Manhattan, observes Graham Stuart, vice president, operations, eastern region, for Getronics, a global IT services and solutions outsourcing supplier with U.S. headquarters in Billerica, Massachusetts. However, they sadly discovered they had no way to access their applications or their saved data with their offices gone.
“The data centers were operating, but the employees couldn’t access their wonderfully preserved back up systems from these off site centers,” Stuart explains. None of these companies had built a remote computing infrastructure that could support large numbers of displaced workers who had no access to their regular company network, he continues. Getronics had five employees in the World Trade Center at the time of the attack. All escaped safely.
Getting Back to Business from Anywhere
Getronics already had in place its “Remote Computing Program.” The service, which includes software, security and support, allows employees to access their office computer systems from anywhere in the world “as long as they have a dial up connection,” explains Stuart. Getronics developed the program in 1997 as a productivity tool for traveling employees who needed to access company information and email when they were out of the office.
Getronics used this program to help its financial services customers in lower Manhattan after the attack. One client had just begun a pilot program for remote computing the week before the tragedy. After September 12, many employees had to work out of hotels, others at home.
Within a few days, Getronics had expanded the pilot program to cover several thousand employees. Getronics created and shipped CDs that included automatic set up protocols and applications so the displaced workers could access the data from their new office sites. For example, if an employee working out of a temporary office needed to access an SAP application, the computer code required to enter the program was on the CD.
The CD also has authentication software for security. “It forces you to prove you are who you say you are,” says Stuart.
The Remote Computing Program has a help desk, which typically answers telephone queries 24/7. Stuart says the number of calls to this help desk tripled during the days after September 11. During the first few days after the bombing, Getronics also stationed experts “all over the world,” ready to go to an employee’s temporary workplace to get a finicky PC up and running.
Stuart says Getronics’ clients “now view this program as a critical part of their disaster recovery plans. Companies know they can function if 20,000 of their employees have to work from home if their office is blown up – as long as the data has been preserved,” he says.
Printing Paychecks After the Bombing
Payformance, a Jacksonville, Florida business-to-business technology company that helps companies disperse their funds through automation and the Web, works with the Metro Transit Police in New York City. The bombing destroyed the automatic clearing house (ACH) lines between banks in Manhattan, which meant the hard working police force could not be paid. Payformance enabled the police accounting department to switch from ACH payments to paper check production. The Metro Transit Police printed their checks themselves in-house.
Preparing paychecks and handling payables “is one of the last things you need to worry about in a crisis,” says Payformance President Neal Anderson.
The outsourcing supplier has lowered its $2,500 set up fee to $500 so its existing Secure32 software customers can rely on its remote payroll and payables service if a future crisis hits. Once set up, Payformance customers can continue to process their payroll checks the way they are doing them now. But they know if terrorists destroy their offices (or the hard disk dies thanks to a virus), Payformance can produce their payroll checks using data from their disaster recovery sites. “This one-time fee is low cost insurance,” says Anderson.
How Outsourcing Helped during This Crisis
Many of the companies hurt by the bombing were financial services companies. “Delivering IT services is not their core business,” points out Stuart of Getronics. Companies that specialize in IT were far better at figuring out Plan B during the crisis.
Ditto for disaster recovery. Mike Jones, CEO of (i)Structure, an Omaha, Nebraska infrastructure services outsourcing supplier, says “disaster recovery is a primary service we offer. We are constantly testing our ability to recover computing facilities and refine our procedures. We’re familiar with best practices. We consider it a core competency, not just something we’re required to do.”
In addition to superior staff expertise, buyers who outsource have scale on their side. Outsourcing allows companies to increase or decrease production or payroll according to market conditions. Tom Petersen, CEO of ThreeCore says some of his clients have to accelerate their manufacturing output while others have to suffer a dramatic decrease because of the terrorist attack. “Since buyers doesn’t own the equipment, they can cut off production quickly to meet changed market conditions,” he explains.
Providio, a Boston, Massachusetts-based outsourcing supplier, provides code writing for Fortune 500 companies and systems integrators using strategic partners around the world. Providio is gearing up to aid companies who lost work product and resources in the World Trade Center. “We’re helping them scale up. Many firms need assistance completing existing projects and rebuilding IT systems. We just want to help in any way we can,” says CEO Rob Linder. The supplier can ramp up quickly because it has partners in India, the Philippines, Russia, Mexico and Brazil ready to write code.
Finally, outsourcing lets the supplier shoulder the capital investment. Jones says (i)Structure has already received three inquiries from companies headquartered in the World Trade Center who now have to rebuild their imploded computer environment. They want to outsource the process from the outset. “Outsourcing their infrastructure gets them back in business faster and without a large capital outlay,” says Jones.
(i)Structure maintains an expensive telecommunications infrastructure for its hot sites that enables applications to “fail over” to another data center in seconds, only losing in-flight transactions. Companies rebuilding from ground zero don’t want to invest their scarce capital in building this capability.
“Outsourcing frees up a company’s overstretched resources in a crisis. They have the time and energy to focus on their businesses’ most pressing issues,” concludes Bendor-Samuel.
Lessons from the Outsourcing Primer:
- In a crisis, a company wants to focus on its core competency. Outsourcing takes over everything else.
- Companies rebuilding from the rubble don’t have to expend scarce capital on infrastructure that IT outsourcing suppliers provide.
- Outsourcing provides scale, so companies can gear up or cut back quickly.
- Suppliers thrive on responsiveness to problems.
About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, Managed services provider, strategic sourcing, BPO, Cybersecurity Managed Services, and IT Outsourcing. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides invaluable insights and guidance to buyers and managed services executives. Contact him at [email protected].