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As a follow-up to Monday’s post about ERP failure, we decided to take a look at some surprising data about the effects of such a failure on not only the companies who experience it — but the companies on both sides of the supply chain who also can be affected. After all, we work hard every day to protect our companies and their revenue streams. It’s why we return e-mails at 11 p.m., skip vacation days to ensure critical tasks are completed and spend our downtime reading blogs like this. But, according to a recent study out of the UK, if we don’t take the steps necessary to protect our companies from the effects of an IT failure in our supply chain, then all of our hard work might be for naught. The study found that sixty-percent of companies surveyed have lost access to their IT system following an unexpected incident and that forty-percent of these incidents lasted for more than six hours. If it happens to you or an organization that you depend on, than those are hours when your operations, communications and ability to access data can all be lost. And each hour that goes by in this state gives your customers another reason to doubt your organization’s abilities. It’s a sobering thought.

Even more sobering? The idea that the data you rely on to do your work can be irretrievably lost after an IT failure. As in gone. Forever. But even with that risk looming large, Symantec’s 2011 SMB Disaster Preparedness Survey of SMBs in Asia Pacific reported that 45-percent of companies would lose at least 40-percent of their data in the event of a disaster. Forty percent! Still, only half of companies back up at least 60-percent of their data and only 21-percent back it up daily. The survey goes on to show the enormity of an IT failure’s trickle-down effect on the customers of SMBs, who report that outages at their SMB vendors cost them $45,000 a day (compared to $14,500 of losses a day at the affected company). Not surprisingly, 59-percent of SMB customers have switched SMB vendors due to their unreliable IT and ERP systems.

None of us is an island. We depend on our supply chains to keep our own businesses running smoothly. These study results should not only lead you to question the security of your own organization’s IT systems, but also the security of your partners’ IT systems. Possible questions to ask include:

  • What ERP software are you using?
  • When was the last time it was updated or replaced?
  • Are you considering an ERP implementation in the near future?
  • What are the steps you’re taking to mitigate risk of ERP implementation failure?
  • What are your disaster recovery plans?
  • How often is your data backed-up?
  • Who are you working with to ensure your operations and systems are safeguarded?
You also should take into consideration how your organization might be affected if any one of your vendors suddenly ceased to exist — for that is exactly what a worst case scenario IT failure looks like. How long would it take you to recover? On the flip-side, do you have answers in place for these questions when your customers come asking? Contact us for more information about how to create an IT strategy to safeguard your company and position it for further success.

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