Return on investment… a dilemma for business continuity practitioners. How to demonstrate the value of something that is designed for events which (hopefully) never occur? How to access, then budget, resources, organizational importance and leadership, as this ROI is potentially a part of the 'beauty contest' with resource competing disciplines? Providing concrete numbers is obviously challenging… so what could be the solutions?
Understanding the budget approving audience is a major prerequisite. What are current business and/or personal requirements and agendas? How would you concretely respond when being asked “what is in there for me” by this audience?
Important to know: the behavior of human beings can be influenced best with personal, immediate, certain, positive consequences… respective innovation and adaption considering the psychological background are therefore the key for designing the 'right' (personal) ROI strategy (mix).
Potential ROI types:
The emotional ROI
It requires the generation of emotions in particular fear of significant and specific events where a BC program could return a 'better sleep' or the avoidance of any form of reprimand or career impact.
And it works… however usually for a small time window only utilizing the post-event felt urgency for action, and with limited success over time. Human beings tend to normalize scenarios and fall back to the 'will not happen to us' and 'business as usual' reflex especially when the projected apocalypse does not occur in their own backyard. As a matter of fact, the dose of bad news has to be increased over time for achieving a constant attention level. At a certain point credibility may be impacted as a function of the risk appetite. This ROI approach should be used therefore economically and selectively.
The competitive ROI
BC Intelligence means collecting consistently concrete data on external incidents, good practices, business strategies, and BC activities and benefit, in particular concerning explicitly the same industry or major business competitors. Data is consolidated and illustrated provoking a 'why don`t we' reflex by generating the perception of a competitive disadvantage when not implementing a similar or even superior BC program. The return is a (perceived) competitive advantage with respective business consequences (market share, revenue etc) which may be qualitatively illustrated for supporting the ROI design.
The monetary ROI
Concrete numbers are challenging, however an indirect approach could work. BC should not be limited to the classical disastrous event role, but the view should be expanded to regular incidents by taking the discipline out of the fateful special and rare event corner. Joining forces with incident management and/or business functions in the frame of a resilience approach could facilitate the collection of respective and concrete data.
There is a variety of direct and indirect costs linked to incidents which could be (examples):
- Event management, alternative resource, recovery
- Product / service / process incl. for downstream - rework / penalties
- Clients / contracts - fines / reputation
- Revenue / billing / investment
- Cash flow / discounts / credit rating
Cost aspects should be formally recorded, if possible quantitatively (or at least estimated or qualitative statements if not). Taking all eventual costs into consideration may lead to surprising findings setting the breeding ground for BC ROI illustrations.
Records should then be explicitly checked for potential BC support aspects. Could, or have, plans, plan parts or linked action, the mapping of processes and business impact (BIA), interface processes (like crisis management, emergency response, and crisis communication) directly or indirectly mitigated the cost impact? If yes, to what extent? What is needed for optimizing this? What are quick wins? These findings are consolidated and illustrated bearing in mind the interests and requirements of those assigning resources. Found 'bright spots' could be used for driving change. Costs could be defined as a certain form of 'loss' which links the ROI to popular business strategies e.g. 'lean'. For tailoring this a sound understanding of business initiatives in particular of those dragging currently the interest of the budget and resource approving audience is beneficial.
Resource competition games require usually ROI strategies. The rules are set directly or indirectly by the business and budget owners, and apply to all disciplines competing for the resource pool. Practitioners need to be able to sell the BC value to those in the driver`s seat for budget and resources approval by tailoring innovative language, communication channels and ROI scenarios according to personal and business requirements and capabilities. Joining forces via a resilience approach might facilitate the designing of business cases.
Thomas Schildbach MBCI Ph.D. is the Risk and Business Continuity Manager at Post Technologies