BY ARC ADVISORY GROUP                                                            DECEMBER 2001      Business Continuity an...
ARC Strategies • December 2001                           100%                            80%                            60...
ARC Strategies • December 2001BCRP Is Essential for SurvivalBusiness continuity and recovery planning (BCRP) is not a new ...
ARC Strategies • December 2001                                  recovery requires a focus on minimizing downtime and lost ...
ARC Strategies • December 2001Most risk analysis can be done using common sense, such as the risk of anatural disaster bas...
ARC Strategies • December 2001                                 Critical Operations Identification                         ...
ARC Strategies • December 2001IT OperationsIn most manufacturing environments, information technology is deployedthroughou...
ARC Strategies • December 2001                                 meeting customer expectations during difficult times. Autom...
ARC Strategies • December 2001competitive and efficient business model                                             Busines...
ARC Strategies • December 2001                                 as well as intangible assets such as software applications ...
ARC Strategies • December 2001responsibility with suppliers. For example, repairing a new automobile re-quires expensive d...
ARC Strategies • December 2001                                 Damage Assessment                                 A success...
ARC Strategies • December 2001Recovery Strategy and ProceduresMirrored hot sites that can immediately takeover operations ...
ARC Strategies • December 2001                                 Systems, SunGard, and Comdisco. SunGard provides software a...
ARC Strategies • December 2001Analyst: Houghton LeRoyEditor:    Ed BassettDistribution: All EAS ClientsAcronym Reference: ...
Cambridge, U.K.                                                       Düsseldorf, Germany                                 ...
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Business continuity and recovery planning for manufacturing

  1. 1. BY ARC ADVISORY GROUP DECEMBER 2001 Business Continuity and Recovery Planning for ManufacturingBCRP Is Essential for Survival .................................................................. 3Strategic Objectives ............................................................................... 3Business Impact and Risk Analysis........................................................... 4Critical Operations Identification ............................................................ 6Collaborative Manufacturing.................................................................. 8Disaster Prevention ................................................................................ 9Collaborative Asset Lifecycle Management ............................................ 10Damage Assessment............................................................................ 12Recovery Strategy and Procedures ........................................................ 13Recommendations ............................................................................... 14Enterprise & Automation Strategies for Industry Executives
  2. 2. ARC Strategies • December 2001 100% 80% 60% 40% 20% 0% 0 2 5 Years Business Failures After a Disaster without BCRP Disasters Cause 3 Out of 4 Businesses to Fail within 5 Years 10 9 8 7 6 Cost 5 Investment 4 Potential Loss 3 2 1 0 1 2 3 4 5 6 7 8 9 10 11 12 Level of Protection Balance BCRP Investment Cost for the Needed Level of Protection2 • ARCweb.com • Copyright © ARC Advisory Group
  3. 3. ARC Strategies • December 2001BCRP Is Essential for SurvivalBusiness continuity and recovery planning (BCRP) is not a new concept, butit has experienced an enormous amount of renewed interest since the Sep-tember 11, 2001, terrorist attack on America. A recent Web survey showsthat more than half of the businesses responding were not prepared for adisaster with a functional BCRP. However, all businesses are currently con-sidering, implementing, or updating a comprehensive BCRP strategy.Current events and available statistics support an overwhelming need fordisaster recovery planning.While failure to plan for a major disaster frequently results in many businessfailures, the chances of surviving a disaster double with a good BCRP strat-egy. About 40 percent of businesses without a BCRP fail immediatelybecause they have no plans for a rapid recovery and insufficient funds tocover the expense of extended downtime. Another 25 percent BCRP Systematic Approachfail within two years from lost business revenues and cash flowproblems. In fact, only 1 out of 4 businesses without a BCRP • Strategic objectivesstay in business more than five years after a disaster. • Business impact analysis • Critical operations identificationSurvival after a disaster is the name of the game for any busi- • Disaster prevention • Collaborative managementness. The impact may even be indirect if, for example, one of • Damage assessmentyour primary suppliers or key customers are the victims of the • Recovery proceduresdisaster and can no longer do business with you. The inabilityto obtain critical materials from a supplier or order cancellations from a keycustomer can hurt production, revenues, and profits. A serious disaster canimpact the entire value chain from sales and production to shipping and bill-ing, regardless of your direct involvement in the disaster. That is why everybusiness must create a good business continuity and recovery plan.Strategic ObjectivesA comprehensive BCRP should be developed using a systematic approach,beginning by understanding the strategic objectives for business survival.The main objective of any BCRP is to quickly recover from any business dis-ruption regardless of the magnitude. The recovery plan must insurecontinuity of important business operations by documenting the most costeffective recovery procedures for many possible scenarios. A cost effective Copyright © ARC Advisory Group • ARCweb.com • 3
  4. 4. ARC Strategies • December 2001 recovery requires a focus on minimizing downtime and lost productivity while maintaining customer satisfaction and avoiding disruption to existing supply and distribution channels. This is best accomplished by creating a disaster recovery team with assigned responsibilities and expectations. This team should consist of key personnel and alternates from each group in your organization. Selected individuals must understand existing processes and workflows within their areas. At the first meeting, the team should agree on a workable schedule for planning, preparing, reviewing, and testing the plan. The team should initially meet frequently to identify risks and im- pacts from various threats such as terrorism, vandalism, natural disasters, labor strikes, mistakes, and failures. What impact would various threats have on each team member’s area or department? How could they be pre- vented and what are the best procedures for a fast recovery? Business Impact and Risk Analysis Business impact and risk analysis (BIA) are essential elements of any busi- ness continuity and recovery plan. Knowing the probability of different business disruptions and their impact will help determine the required in- vestment needed for the desired level of protection. The disaster recovery team must determine the correct investment for the level of protection needed based on a comprehensive BIA. Certainly, the risks of terrorism have increased, but are still not as probable as the most common business interruptions such as power outages, hard- ware failures, software problems, or employee mistakes. Over 45 percent <1% Terrorism of survey respondents said hardware and software problems were 5% War, Strike 8% major disruptions, followed by 16 percent for power failures, 14 Natural Disaster 10% Theft, Vandalism percent for mistakes, 10 percent for vandalism and hackers, 8 14% Mistakes, Bad Planning percent for natural disasters, 4 percent for fires, and less than 16% Power Outage 1 percent for terrorism. All employees make mistakes, but45% HW/SW Failure Business Interruption Threats minimizing their business impact requires an in-depth cause and effect analysis. Proper planning, good train- ing programs, and enforcement of approved procedures can prevent most operational mistakes. Bad planning such as inadequate supply chain redun- dancy or lack of backup resources can be avoided with a better understanding of business processes and workflows.4 • ARCweb.com • Copyright © ARC Advisory Group
  5. 5. ARC Strategies • December 2001Most risk analysis can be done using common sense, such as the risk of anatural disaster based upon your geographic location. Similarly, a manmadedisaster such as terrorism, theft, vandalism, or a labor strike can be logicallyrelated to the type of business or proximity to a high-risk facility. Minimiz-ing your dependencies on single suppliers, sole distributors, and primarycustomers if they are impacted by a disaster can help prevent extended sup-ply and demand chain interruptions. If your business involves a vola-tile or sensitive environment, then unexpected mistakes or failures can Withouthave more serious consequences. BCRP LOSSPotentially unsafe or life threatening conditions warrant serious pre- Withvention and recovery investments. Agencies such as OSHA and the BCRPEPA enforce strict regulations and impose heavy fines for businesses DAYSthat do not comply with rigid standards defined by industry for creat- Loss from Disastering hazardous environments. For example, the chemical industry isexpected to conduct HAZOP analysis on dangerous materials and processesto determine the proper safety precautions and procedures for both normaland abnormal conditions. Knowing what to do in case of any emergency in-volving a hazardous environment can prevent injuries and save lives.The primary objectives of a risk analysis are proper safety and avoiding finan-cial losses, but it should also consider the impact of business interruptions onprofitability. BIA minimizes cumulative losses by establishing business conti-nuity objectives and identifying the cost of various outages with and withoutBCRP. Losses can become very significant as the time period for recovery in-creases due to a lack of a proper plan. ARC’s survey placed average downtimelosses at $35,000 per hour, ranging from less than $10,000 per hour for smallbusinesses to over $100,000 per hour for large companies.A comprehensive BCRP can speed recovery to profitability by minimizingtangible and direct losses such as lost sales, lost production, and missed de-liveries. A good BCRP requires a BIA matrix that identifies the bestprocedures for most business interruption scenarios. The BIA identifies andcan eliminate tangible and indirect losses resulting from penalties, fines, un-expected fees, and lost market share. It should also include the best ideas foravoiding the less visible, but equally serious, intangible losses from lack ofconfidence in meeting expectations, eroded customer satisfaction, and dam-age to reputation. Copyright © ARC Advisory Group • ARCweb.com • 5
  6. 6. ARC Strategies • December 2001 Critical Operations Identification A comprehensive BIA includes mapping the current operational model of your business with the major profit and loss centers and their primary proc- ess workflows, procedures, and information requirements. This exercise will provide the disaster recovery team with a better understanding of the critical business dynamics and permit identification of the critical operations re- quired for a faster disaster recovery. Knowing the critical operations will help with financial justifications for special precautionary duplication of im- portant functions and information. Duplication means faster recovery times, but it can be expensive to implement fully redundant and fault tolerant envi- ronments, disk and server mirroring, or backup wireless communications. Limiting duplication techniques to criti- cal operations is a good way to balance investment costs with the needed level of protection. Production Once critical operations are identified, then a minimum working business model is determined, consisting of product sales, production, and delivery. For most manufacturers, recovery of plant floor operations will be the most challenging, given the complexity of production logistics. The first challenge is how to complete or recover any Work In Progress (WIP) operations for both damaged and undamaged goods. The next is future production plan- ning and scheduling based on capabilities versus expectations. Production objectives after any interruption must be based on predetermined options, influenced by real-time data such as the extent of damage, supplier & cus- tomer commitments, revenue opportunities, and backup production options. Supply chain problems such as insufficient materials are a common cause of production downtime following an unexpected disaster or business interrup- tion. The BCRP must identify how to obtain sufficient raw materials internally from inventory and externally from suppliers that are essential to sustain production along with maintenance, repair, and operating materials to keep critical equipment running reliably. Any problems with perform- ance, availability ,or reliability of equipment assets can severely impact production and jeopardize compliance with quality standards and regula- tions. Lack of compliance can easily ruin product quality or shutdown operations, resulting in significant losses.6 • ARCweb.com • Copyright © ARC Advisory Group
  7. 7. ARC Strategies • December 2001IT OperationsIn most manufacturing environments, information technology is deployedthroughout the facility from the shop floor to the top floor. Network infra-structure and communications exist for all organizations from sales andmarketing, through production and engineering, to distribution and servicesupport. Recovering all these complex systems and maintaining levels of inte-gration enjoyed prior to a disaster is extremely difficult if not impossible. The9/11 disaster totally destroyed the facilities and infrastructure of many busi-nesses, making alternate site redundancy the only option for fast recovery.Fortunately this type of disaster is rare, but must still be covered by the BCRP.Many IT disasters are self-inflicted through poor planning and lack of properchange management. Large manufacturers often paralyze their business op-erations by improperly implementing a new enterprise application such asenterprise resource planning (ERP), customer relationship management (CRM)or supply chain management (SCM). Examples include the three year com-bined ERP, CRM and SCM implementation at Hershey that interrupted orderprocessing and shipping functions for three months, causing third quartersales and profitability to drop 12.4 percent and 18.6 percent respectively.Other companies experiencing business interruptions from poorly plannedenterprise application implementations include Nike, Whirlpool, Dow Chemi-cal, Boeing, Dell Computer, and Apple. Implementation problems arefrequently caused by bad timing for a switchover and the complexity of appli-cations. In any case, most of these mistakes can be avoided or quicklyrecovered with a good contingency plan within the scope of BCRP.A good contingency plan requires guaranteed system and data availability,tested backup procedures, and proven implementation methodology withbest practices for change management. The ability to recover all systems,applications, and information for critical operations is an essential require-ment for contingency planning, business continuity, and disaster recovery.The methods may vary from comprehensive system backups or fully redun-dant and fault tolerant environments to a duplicate backup site. No matterwhat the approach is, the ultimate objective is to return to normal operationswith no loss of functionality or information.Sales and ServiceCustomer satisfaction is the key to success for any business. Maintaining itfollowing a disaster or major business interruption is paramount. That iswhy every business continuity plan must consider the best ways to continue Copyright © ARC Advisory Group • ARCweb.com • 7
  8. 8. ARC Strategies • December 2001 meeting customer expectations during difficult times. Automating sales and support processes using appropriate enterprise applications such as ERP and CRM can help with recovery efforts for orders, deliverables, financials, and service. Although ERP and CRM are often complex applications, they do create a comprehensive database of customer sales and support requirements that can easily be backed up and recovered by IT operations. Automation can be the medicine for quick recovery. But as a minimum, every business should document a manual system for sales, delivery, and support A Web-based portal can become as a last resort recovery procedure. a primary communication vehicle for employees, suppliers, and In many cases, a good e-business strategy can provide sufficient customers following a disaster. capabilities to satisfy customer requirements for ordering prod- ucts and obtaining needed support. A web-based communications portal with e-commerce and e-support functions should be considered for collaboration between your company employees, key suppli- ers, and existing customers. The actual network hardware and software infrastructure can be outsourced to a reputable service provider, reducing your risk of losing all capabilities after a disaster. The portal can also act as the primary communication vehicle for your disaster recovery team while planning, communicating, and even executing the BCRP. Collaborative Manufacturing The new Internet economy has greatly improved the efficiency of product and asset lifecycle management from on-line ordering and just in time pro- duction, to rapid delivery, and real-time support. A new Collaborative Manufacturing Management (CMM) model has evolved that encourages suppliers, customers, and partners to share knowledge and best practices for optimizing business operations and improving profitability. CMM improves supply and demand chain operations by optimizing product and asset lifecy- cle phases. It shortens latency times between ordering and product delivery by significantly improving process workflows through collaboration. These highly optimized CMM models rely heavily on proper coordination of the supply chain between suppliers, manufacturers, and customers to opti- mize production costs and maintain lean inventory levels. Any extended interruption to this business model can result in major supply chain disrup- tion and significant losses. Manufacturers that adhere to this very8 • ARCweb.com • Copyright © ARC Advisory Group
  9. 9. ARC Strategies • December 2001competitive and efficient business model Business Enterprise Axismust consider multiple recovery options or t ppto minimize losses from unscheduled HR ERP FIN Su Lifecycle Axisbusiness interruptions. Buy-Side Buy-Side PLM/S Sell-Side Sell-Side Exchange Exchange EAM CPS/ Exchange ExchangeThe preferred options are to transfer SCM APS CRM TMS Customers Pro-production to another existing manufac- Suppliers cure GLS Value Chain PLM/D BPM Axisturing line within your plant or to Logistics Logistics Logistics PAManother plant site with equivalent capa- CPM Exchange Exchange RPO PIMbilities and extra capacity. Many n /PSO MAS ig D es Automationindustries such as food and pharmaceu- Productionticals already use multiple productionlines and plant sites to optimize produc- ARC’s CMM Modeltion costs based on regional demand, andthey should deploy these options in their BCRP. Other manufacturers with-out redundant production capabilities must consider using third partymanufacturers or even competitors to survive an unexpected disaster. Thecompetitive approach must be handled carefully to avoid losing customers,but is possible through contracting, repackaging, or even negotiated referrals.Disaster PreventionAvoiding an unnecessary disaster is a far less disruptive approach to busi-ness continuity and recovery planning. The old saying “an ounce ofprevention is worth a pound of cure” has significant meaning with respect tobusiness interruptions. The losses from unexpected downtime can be verysignificant and often avoided by simple precautions. There are many policiesand procedures that can be implemented to prevent accidents and protect abusiness against common disasters. Fire and water damage can be preventedthrough periodic safety audits and careful facilities planning using fireproof-ing, proper drainage, and other proven techniques. Power interruptions canbe minimized with a UPS and backup generator for critical equipment andoperations. Even theft and vandalism can be deterred by implementing abasic security model.ARC’s basic security model focuses on prevention and detection of securitythreats and rapid recovery of impacted operations when security is breached.The model looks at securing tangible assets such as equipment and facilities Copyright © ARC Advisory Group • ARCweb.com • 9
  10. 10. ARC Strategies • December 2001 as well as intangible assets such as software applications and information. Securing physical assets starts with locks for protection, alarms for detection, and spares for recovery. Similarly, protection against environmental threats on assets such as power failures can be protected as previously mentioned with a UPS and generator. Once a power failure is detected the equipment can undergo an emergency shutdown to avoid damage and be automatically restarted for rapid recovery when power is restored. Business knowledge and information is probably the most valuable asset for many companies and is usually the most difficult to capture and preserve. Most IT organizations spend considerable time managing critical business systems and data that is often integrated with plant floor production sys- tems. The security threats to critical data have increased exponentially as more manufacturers rely on Web-based solutions to optimize operations and generate additional revenues. Protection, detection, and recovery of business information is an essential part Security Model Physical Viral Access Backup Power Failure of every BCRP. Protection locks shield passwords scheduled UPS / Generator Software applications and data Detection alarms scan trace notification shutdown Recovery spares clean change restore restart must be protected from com- puter viruses introduced by hackers or unintentionally by employees during everyday operations. Ac- cess by hackers and unauthorized users must be prevented using password protection. Business data must be protected using scheduled backup proce- dures in case of corruption or accidental loss. Breaches in information security must be quickly detected with scan algorithms for viruses, trace routes for unauthorized user logins, and notification of successful data back- ups when completed. Rapid recovery of critical business applications and data must be guaranteed to minimize downtime and enable continued opera- tions. Recovery procedures include data cleaning procedures to eliminate computer virus signatures, password changes to prevent future unauthor- ized access to business systems, and system backup restores to repair corrupted applications and information. Collaborative Asset Lifecycle Management The complexity of many new assets requires extensive training and costly equipment for proper maintenance, forcing customers to share maintenance10 • ARCweb.com • Copyright © ARC Advisory Group
  11. 11. ARC Strategies • December 2001responsibility with suppliers. For example, repairing a new automobile re-quires expensive diagnostic equipment and frequent training to understandcomputerized performance indicators and fault detection parameters. Onlydealerships can justify the cost of this equipment, forcing customers to relyon them for most maintenance requirements. This embedding of intelligencein new products is becoming popular because it reduces support costs andoptimizes performance, availability, and reliability.Smart technology is driving Collaborative Asset Lifecycle Management(CALM), which promotes collaboration between suppliers, customers, andinternal organizations for sharing knowledge and integrating important ap-plications for optimization of the various asset lifecycle phases. Customersare demanding better support from suppliers through the entire asset lifecy-cle, from sourcing to redeployment. Suppliers are assuming more assetmanagement responsibilities through out- Collaborative Asset Lifecycle Managementsourcing agreements with performance Manufacturer Supplier & Manufacturer 3rd Party Serviceguarantees. Source Operate Maintain DecommissionPlacing more responsibility on suppliers is abest practice for business continuity and Current EAM Solutionsrapid recovery from a disaster. A fast andproper response to a business interruption Capital Equipment Lifecyclecan prevent a serious disaster. Knowing how to contact the right person orsupplier immediately or having access to the right asset information andspare parts will minimize downtime. Having a good supplier contractuallyinvolved with revenue responsibility can expedite a rapid response to yourproblems.A rapid response from anyone will require an accurate and fast evaluation ofthe situation. Several new remote monitoring, access, and notification tech-nologies can expedite the recovery process. Simple network managementprotocol (SNMP) can monitor device health, performance, and configurationover an IP network, while global positioning systems (GPS) and radio fre-quency identification (RFID) can track asset location. These and othertechnologies properly supplemented with email notification can identifyproblem areas, expedite spare parts and tools, and notify the needed re-sources for the solution. Remember that action speaks louder than words inan emergency and that CALM provides strong decision support based onproactive asset management. Copyright © ARC Advisory Group • ARCweb.com • 11
  12. 12. ARC Strategies • December 2001 Damage Assessment A successful recovery requires identifying the problems and potential dam- age. A good measure of disaster magnitude is the time and cost to recover. Recovery in less than a day is usually minor, although short outages may hide less obvious damages such as loss of customer confidence. Comprehen- sive damage assessment procedures will help quickly assess losses. The best way to identify and measuring damage should be documented. Before and after photos of assets and operations can help determine losses and damage when a major disaster destroys all or a portion of your facilities. Event Category Extreme Impact Major Impact Minor Impact No Impact Health and Safety Loss of Life or Limb Hospitalization Local First Aid None Financial Loss $$$ $$ $ 0 Information Loss $$$ $$ $ 0 Compliance FDA Revoke License FDA Suspend License FDA Review License None Production Loss Days/$$$ Hours/$$ Minutes/$ None Environmental Damage Permanent /Offsite Long term/ Onsite Temporary/ Local None Loss of Trust or Reputation Permanent Long Term Temporary None In fact, loss of facilities, such as in the case of the Oklahoma City bombing, should be a special consideration of any BCRP with provisions for backup mobile communications and replication of operations at an alternate or mir- rored site. Availability of an alternate site is an important safeguard for rapid recovery from any disaster where damage is extensive. Safety concerns or extensive damage to the facility, information center, or any other critical operation makes relocation to the alternate site a practical decision. Reloca- tion time to the new site will depend on the estimated time for recovery as determined by the damage assessment process. A mirrored site can normally assume full redundant operations very quickly with minimum business in- terruption because it provides real-time backup for business information. The right level of protection will depend on the likelihood of various threats, the risk tolerance of the business, and the cost of deploying redundant opera- tions. Any manufacturer fortunate enough to have similar multi-site operations should consider mirroring each other’s information as a more cost effective solution.12 • ARCweb.com • Copyright © ARC Advisory Group
  13. 13. ARC Strategies • December 2001Recovery Strategy and ProceduresMirrored hot sites that can immediately takeover operations for anotherdamaged site is the ideal scenario for BCRP. Unfortunately, very few busi-nesses or manufacturers can afford this model. Results from our surveyshowed a very small percentage of companies performed real-time backup ofdata, and few could tolerate more than a day of unexpected downtime. Mostcompanies relied on comprehensive planning and daily backups for a fastrecovery, with smaller businesses even settling for weekly data backups. Thesurvey showed that a 1-to-3 day downtime, although costly, was not fatal. Italso indicated that the average BCRP solution was 3 years old, with annual orperiodic updates. Unfortunately, less than half of the companies tested theirBCRP, and only a few companies had adequate recovery teams in place, withthe average being five or fewer members.In any case, successful recovery Supplier BCRP Supplier Solutions Referencesrequires a complete backup of Binomial Phoenix Disaster Recover Bayer, Unocal, Chevron,current information, available Glaxo, Raychem, Tranespares, and properly trained Comdisco Revolution, ComPAS, IFF, Dow Chemical, Unionpersonnel. This is best accom- Complete BIA, CPT, Pacific, Thomson Consumerplished by frequently moving Continuity Resource Electronicsmission critical data offsite, Compaq DRTape, Storageworks Molson, Borden Chemicalcross training personnel in im- Ernst & Young e-Risk, e-Security Morgan Stanley, Americanportant areas, and maintaining Expressthe right spares and latest HP Business Continuity Services Mitsubishi, Rockwell, Pacificadocumentation at multiple sites. IBM Business Continuity & Degussa, Eli Lilly, InverThe BCRP should be docu- Recovery Services House, Gillette,Tennecomented, updated, and tested Presage Business Recovery Planner AT&T, Braun, Chrysler, Cocaperiodically, as well as shared Cola, Emerson, GM, Sie- mens, US Navywith strategic suppliers and cus-tomers. It is also wise to SunGard Precovery, e-Planner, CBR, Domco, NYSA and other Megacenter WTC Companiesparticipate in the BCRP of your Strohl Systems BIA Professional, LDRPS (web Alabama Power, Lockheedkey suppliers and primary cus- server), Incident Manager Martin, Nestle, Solectrontomers, since their failures canseriously impact your opera-tions. Every BCRP should include provisions for alternate supply and distri-bution channels for suppliers, partners, and customers.There are many BCRP service providers including Compaq, Ernst & Young,HP, and IBM, but only a few large software solution suppliers such as Strohl Copyright © ARC Advisory Group • ARCweb.com • 13
  14. 14. ARC Strategies • December 2001 Systems, SunGard, and Comdisco. SunGard provides software and services to its customers. Several service providers including IBM and Compaq de- ploy Strohl Systems BCRP solutions for their clients. SunGard is acquiring ComDisco, and HP may merge with Compaq creating several stronger BCRP solution suppliers. For do it yourself companies, Binomial International, Presage, and several other suppliers offer a low cost entry-level solution. Most BCRP suppliers provide critical support after tragic events such as fires, storms, floods, and terrorism. IBM, SunGard, and Strohl Systems operate worldwide recovery centers that can mirror sites or load backup tapes to support IT operations during a disaster. For example, both Gillette and Mer- cedes Benz took advantage of IBM’s Sterling Forest, New York, recovery center to support operations during hurricanes in Puerto Rico and New Jer- sey. Morgan Stanley built its own fully redundant data center at the World Trade Center, which was completely destroyed on September 11. Mirroring permitted the original site 15 blocks away in Manhattan to continue full op- erations with little disruption. Morgan Stanley is currently working with Ernst & Young to recover and rebuild WTC redundant data center operations at another location. Recommendations According to the ARC survey, most businesses have implemented strong user authentication and data integrity security with user passwords, daily backups, and virus protection software. Few businesses, however, have in- vested in proper BCRP documentation with good risk analysis and understanding of security threats, nor have they adequately prepared a dis- aster recovery team to deal with an unexpected disaster. The likelihood of a serious manmade disaster has increased significantly since 9/11 making BCRP an important investment for most companies. ARC suggests that every company focus on the following. • Determine business interruption risks and action responses • Identify the recovery team and strategic objectives in advance • Deploy safety and security measures to minimize risk • Understand and automate repetitive critical operations • Develop procedures to quickly assess extent of damages • Document and periodically test a comprehensive BCRP.14 • ARCweb.com • Copyright © ARC Advisory Group
  15. 15. ARC Strategies • December 2001Analyst: Houghton LeRoyEditor: Ed BassettDistribution: All EAS ClientsAcronym Reference: For a complete list of industry acronyms, refer to our webpage at www.arcweb.com/arcweb/Community/terms/indterms.htmB2B Business-to-Business GPS Global Positioning SystemB2C Business-to-Consumer HMI Human Machine InterfaceBCRP Business Continuity and Recovery IT Information Technology Planning ITRAMIT & Remote Asset ManagementBIA Business Impact Analysis MRP Materials Resource PlanningBPR Business Process Reengineering OSHA Local Area NetworkCAGR Compound Annual Growth Rate PAM Plant Asset ManagementCALM Collaborative Asset Lifecycle PIMS Process Information Management Management SystemCOM Component Object Model RFID Radio Frequency IdentificationCNC Computer Numeric Control ROI Return on InvestmentCPG Consumer Packaged Goods SCM Supply Chain ManagementCRM Customer Relationship Management SNMP Simple Network ManagementCMMS Computerized Maintenance Protocol Management System UPS Uninterrupted Power SupplyEPA Environmental Protection Agency TMS Transportation Management SystemEPM Enterprise Production Management WIP Work In ProgressERP Enterprise Resource Planning WMS Warehouse Management SystemFounded in 1986, ARC Advisory Group is the leader in providing strategic plan-ning and technology assessment services to leading manufacturing companies,utilities, and global logistics providers, as well as to software and solution suppli-ers worldwide. From Global 1000 companies to small start-up firms, ARCprovides the strategic knowledge needed to succeed in today’s technology driveneconomy.ARC Strategies is published monthly by ARC. All information in this report is pro-prietary to and copyrighted by ARC. No part of it may be reproduced withoutprior permission from ARC.You can take advantage of ARCs extensive ongoing research plus experience ofour staff members through our Advisory Services. ARC’s Advisory Services arespecifically designed for executives responsible for developing strategies and di-rections for their organizations. For subscription information, please call, fax, orwrite to: ARC Advisory Group, Three Allied Drive, Dedham, MA 02026 USA Tel: 781-471-1000, Fax: 781-471-1100, Email: info@ARCweb.com Visit our web page at ARCweb.com Copyright © ARC Advisory Group • ARCweb.com • 15
  16. 16. Cambridge, U.K. Düsseldorf, Germany Munich, Germany Hamburg, Germany Tokyo, Japan Bangalore, India Boston, MA Pittsburgh, PA San Francisco, CA Visit ARCweb.com for complete contact informationThree Allied Drive • Dedham, MA 02026 USA • 781-471-1000 • Fax 781-471-1100

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