Recently, professionals in the Disaster Recovery (DR) Industry have experienced a period of significant growth. In the US, events surrounding 9/11, natural disasters and infrastructure failures such as the blackout of 2003 have forced businesses of all sizes to acknowledge the criticality of their mail and document stream in sustaining cash flow, building customer relationships and managing the flow of communication in and out of the organization. But while these "high-water" catastrophic examples underscore the vulnerability of some of our basic business processes, there are more subtle drivers behind growth in the $4.5 billion a year industry.
Historians will look back on the early part of this decade and note that shareholders and the investment community questioned management's ability to ethically and responsibly manage their businesses. No doubt that headlines focusing on troubles with Enron and Worldcom added to these perceptions. In this challenging business environment, DR has become an essential part of business planning and having back-up print and mail capability is no longer perceived as something that is "nice to have." Rather, it is an essential part of senior management's mission to protect the organization and shareholders from risks and increased costs associated with cash flow disruption, inability to meet payroll or penalties associated with new government regulations due to an interruption in communications.
As an example, a company that bills $30 million annually and is deprived of the ability to print its bills and invoices · loses approximately $125,000 in revenue each day. In addition, communication interruption can damage corporate reputation and create a loss of customer confidence and satisfaction. Companies should also assess the impact on their businesses if these applications could not go out for a day, a week, a month or longer. How is this damage calculated? How will insurance pay for the disaster? How much would penalties and fees cost based on time periods of disaster interruption? In our customer conversations, we are just as likely to hear that the impetus for DR planning is being driven by the CEO, a board member or an internal/external audit committee.
While companies have made significant investments in protecting and backing up data, it is only recently that they have realized these investments must be coupled with an alternate channel to get the data printed on the page in order to maintain communication continuity with customers.
Today, paper-based communication is still the preferred channel to deliver mission-critical documents such as trade confirms, insurance policies and ID cards, Explanation of Benefits (EOB's) cancellation and shut-off notices, payroll, treasury and healthcare reimbursement checks. At the end of the day, any investment in data back up is marginalized if a patient's healthcare check doesn't arrive in the mail. If you are an executive in charge of these relationships without a DR plan, you are breaching your duty to the organization. Today, these higher-level influencers are driving this need down to the production people.
This creates an unusual scenario for document professionals. For the first time, they may have conversations with executives on a higher level and may be asked to validate and express in quantifiable terms the value and necessity of having print back-up capability as part of their DR plan. The most fundamental question is, "How do I validate the costs of this potential 'insurance' policy versus the costs that I potentially need to invest in my own platform and redundant policies?"
In helping our customers respond to these questions, we may ultimately work with them to perform a break-even cost analysis. When they consider whether they have to build a redundant site, invest and install new equipment, and whether they want to support excess capacity including increased staff, they find that the costs can be excessive. In today's business climate companies may want to outsource some critical functions.
While using a third party may be the best option, production professionals need to do more homework before approaching the marketplace to secure a vendor. There are far more factors to consider today than there were even a few years ago. Technology has advanced, and we have seen shifts in strategy from many of the leading providers in the portfolio of services they offer.
To begin, companies must first decide what critical applications they want to back up and what the costs would be to the organization if those applications failed. Typically, our clients do not give us 100% of their output requirements. They will identify key or critical applications important to their business, and those will be the ones they will back up. Perhaps it may only be 30% of our customers' entire output that is backed up, but these applications are extremely critical to the operation. Very few need 100% redundancy. Customers may want to only back up the ones that have financial, cash flow, market share or regulatory impact on the business; however, this may apply to many different applications.
Those businesses who would expect significant costs caused by an interruption would therefore need to choose a vendor that would seamlessly take over operations at the flip of a switch, a
Companies should also expect that any reputable vendor should be able to manage the data and replicate existing processes. As the familiar slogan goes, you should "have it your way." Companies that are force-fed a solution or narrow options in handling data or print output will spend significant time in re-engineering risk operational "glitches" when the service is turned on and experience more expenses in re-testing applications.
Finally, the most important aspect in planning and selecting any DR provider is looking at the quality of the expertise in staffing and training. As advances in printing technology continue to lower production costs and print becomes more of a commodity, print shops may consider offering back-up print output as a way to supplement their own revenue. Unfortunately, these shops may not have the trained staff experienced in crisis situations or may be affected by the same geographic disaster, such as a hurricane, power failure or local disruption in mail service. They may not be able to meet the demands of rigorous SLAs or have the human expertise in the mailing industry to get that mailpiece out the door or re-direct it if needed. Vendors need to show their expertise across all parts of the communication chain. Getting the page printed is useless if it never makes it to the customer's mailbox.
Today, document professionals share responsibility with their CEOs and senior management in protecting their company's reputation, image and cash flow by guaranteeing the viability of the communication chain during times of crisis. Thus, executable DR provides the cornerstone for maintaining trusted relationships and communication continuity between businesses and their customers. By outsourcing to a third-party company, your are helping to guarantee all your critical data if something should happen to your business.
Nick Kopernik is director of Pitney Bowes Business Recovery Services. For additional information, please visit Pitney Bowes on the Web at www.pb.com/outsourcing.