Disaster Preparedness in an Offshore Shared Services Organisation

Shared services organizations (SSOs) create value through consolidation, but placing vital eggs in fewer baskets carries the very real potential for increased risk. Because bad things can and do happen to good companies, it has become absolutely imperative for SSOs to have well-established business continuity plans (BCPs). Procter & Gamble's Global Business Services (GBS) is a good example of an SSO that is planning for the best, but preparing for the worst.

Background

Established in 1998, GBS exists to provide high-value, low-cost shared services to Procter & Gamble (P&G) businesses. With a vision to optimize, integrate, and innovate, "right sourcing" has been chosen as a pivotal strategy, delivering a blend of fewer sites, offshoring, and outsourcing with business services partners.

As we work through these significant changes in GBS, we continually ask ourselves, "Where are we vulnerable? Where must we mitigate risk?"

With on-the-ground operations in over 80 countries and sales in over 160 countries, P&G has managed through natural disasters, political unrest, and economic crises. Recent events – including terrorism, war, and SARS – have further heightened public awareness of the need for robust disaster preparedness. The message has never been clearer: disaster preparedness is a big deal for global companies and their shareholders.

Making Progress is Often a Process of Successive Approximations

P&G’s BCPs contain clear strategies and procedures to prevent, minimize, or quickly recover from interruptions to critical business operations. They carefully address risk management, crisis management, business recovery, and business resumption. Our disaster preparedness continues to evolve as we adjust to a constantly changing business environment, but the theme is consistent across our general offices (GOs), manufacturing plants, technical centers, and service centers: we must effectively protect our people, our assets, and our businesses.

In 2002, P&G’s San Jose Service Center in Costa Rica set the standard for disaster preparedness within P&G. Each business service developed a rigorous, customized BCP, which was integrated into an overall site BCP. Potential scenarios were studied and tested, and then a full-scale drill was conducted – complete with facility evacuation, fire department response, key resource relocation, and communication with senior executives. The results verified an excellent state of readiness.

Change, Ever Constant

But the world continues to change and so must our BCPs. A healthy BCP requires proper care and feeding, regular exercise, and checkups. New risks surface; technological advances present new opportunities – and often expose new vulnerabilities.

This past year, GBS launched the outsourcing of technology services, facilities management, and employee services. P&G now operates with strategic partners managing vital business services in local and offshore locations. Through commercial governance and comprehensive management, we're creating mutually beneficial relationships that enable us to outsource work not in scope just a few years ago, including certain BCP responsibilities.

Accountability will always reside firmly within P&G, but much of the management and execution of essential processes has now been outsourced.

The More You Prepare, the Luckier You Get

Detailed service level agreements (SLAs) are customary for prudent service providers, whether internal or external. To encompass disaster recovery, SLAs should also include business interruption limits and specific actions for service recovery. Business units have the responsibility to carefully and realistically define their needs, and service providers must describe how they will satisfy those needs.

Business services partners are well positioned to add value to the BCP process. Their core competencies should be leveraged to improve disaster preparedness in ways that are more effective and less expensive. IT services providers can bring the latest technology to bear to solve data management and telecom issues. They’re adept at supporting and protecting crucial applications, systems, infrastructure, and connectivity. Facilities management partners can add rigor to disaster recovery plans and thoroughly evaluate loss-of-building and relocation contingencies.

Be Prepared

In a nutshell, the essence of the BCP spirit is captured in the Boy Scout motto, "Be Prepared". Another nugget from the Boy Scouts: good leadership is fundamental. For BCPs to be kept alive and well, top leadership must provide visible and appropriate focus. In P&G, the BCP owner – the one who must truly embrace the cause and lead the charge – is the site leader. Daily management of the BCP is typically delegated to a manager who has the capacity to hammer out the details and coordinate the collective efforts of participating groups.

It’s also paramount to designate BCP leaders in the GOs to preserve a big-picture perspective. Corporate experts are needed to champion training and calibration, and, following a disaster, business leaders must be poised to control the flow of help to a site, administer the business resumption plan, and provide assistance to local communities.

Disaster preparedness doesn’t have to be expensive. There is a certain level of investment to be sure, but technological advances continue to provide ground-breaking solutions that are – or will soon become – cost-effective. For example, in countries with vulnerable telecom infrastructures, it may be prudent to incorporate satellite backup for voice and data communications. When spread across a number of business services, this investment can be considered fairly inexpensive insurance. Over time, the cost will no doubt diminish or become unnecessary as redundancies spring up (the proliferation of internet connectivity continues to expand the menu of options). It’s important to remain vigilant for innovations that can both save money and improve disaster preparedness. Sending voice traffic over internet lines as a standard offshore business practice ensures both cost savings and an excellent voice communications backup (developing "both/and" solutions is part of the GBS culture).

The Stuff of Corporate Legend

Character is manifested in great moments but cultivated in small ones. When disaster strikes, the indomitable spirit of good people shines through – solid preparation sets them up for success.

This past May, a Class IV tornado ripped apart P&G’s Jackson, Tennessee, Pringles plant with winds of over 200 mph. Category and plant business recovery teams immediately sprang into action to manage the key priorities of people, product, and production.

The Jackson BCP enabled the plant to focus on critical priorities while GO category leaders provided key resources, eliminated barriers, and drove the business resumption plan. The recovery, originally expected to take months, was accomplished in a matter of days and weeks as experienced P&G resources, retirees, and partners rallied to bring the plant back to life. Good preparation, good people, and a little bit of good luck turned disaster into one of our finest hours.

Another example from the P&G archives is the 1995 Kobe, Japan, earthquake, which killed 5,100 people and became known as one of the costliest natural disasters in history. P&G’s Kobe GO, built to strict seismic codes, was impacted but received relatively minor damage. The destruction to Kobe was horrific. P&G’s massive business and community response was orchestrated by then P&G executive vice president – now P&G CEO – A.G. Lafley.

Semper Paratus

The US Coast Guard is "Always Ready" because the sea is relentless. Even NASA, with its perennial "belt and suspenders" methodology, can fall prey to complacency and be humbled by disaster. Taking on tough challenges and accomplishing great things has inherent risk and is not for the faint of heart. To maintain the technical right to succeed, we must do our homework meticulously, keep up with current events, and be ready when the phone rings on a dark and stormy night.

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About the Author:

Dave Myers serves as a GBS site services leader for Procter & Gamble, currently assigned to the San Jose Service Center in Costa Rica. In this capacity, Dave is responsible for integrating the work of P&G businesses and strategic partners. Dave's 14-year career with P&G includes assignments in manufacturing, logistics, customer business development, and customer services – in North America, Asia, and Latin America. myers.ds@pg.com