Business Impact Analysis for Louisville Corporate Data Center

The business assets to be protected are approximately $120 million in revenue per month that is based on US revenue of $1.4 billion annually.

The business groups identified the following systems as important for the success of StorageTek:

• SAP – Finance, Accounting, Customer Information, Manufacturing, Logistics
• Email – both Outlook and Unix                                                   
• Web – Intranet and Internet                                                             
• Network connect                                                                      
• Clarify – Customer/product information                                            
• Pinnacle – customer and development problem tracking                    
• Hyperion – Financial consolidation                                            
• OFA – Financial analysis
• LPA/DRP – logistics
• OSW – Reporting
• Resumix – resume tracking and new hires  
• Trim – training
• CTMS/CSTR – timecard entry         
• Brio – reporting tool  
• Trilogy – commissions  
• Siebel – Sales tool     
• Seritrack – re-manufacturing system  
• Livelink – specification reviews

StorageTek with its size and position in the IT marketplace, should be a leader in the industry for high availability (HA) recovery. With competition such as IBM, EMC, and SUN, if key systems are unavailable, it is the same as if the light is out and no one is in the shop. Across the street, so to speak, the light is on all the time and business will flock to those "open" businesses. Sunguard Recovery Service's CEO, Jim Simmons, a leader in the Business Continuity field for over 22 years, says "I’m here to tell you that the recovery window is no longer 48 hours or 24 hours or 8 hours. Today, the recovery window is officially closed….the acceptable window for an outage has been reduced from days to minutes to, effectively, nothing". As I listened to the StorageTek business leaders reflect on the importance of their data to their everyday work, these statements by Mr. Simmons ring true. Not one business leader hesitated on the high cost of embarrassment when our systems are down and they are unable to respond to customers.

StorageTek is a data storage company. Customers and partners trust that StorageTek products will reliably protect their data. Some managers interviewed said they believed customers might understand if StorageTek had a system outage for 2-3 days for a major event. However, other managers felt that StorageTek would suffer an immediate impact if our IT systems were unavailable. All agreed however, that the company faces an enormous potential for embarrassment (over a million dollars) and image erosion if long term IT system outages prevent us from doing business. Jim Cely, engineering director, said there would be a "big time impact that would start the moment StorageTek has to admit to a customer that we've lost data that prevents us from delivering or developing our products."

Most business areas had a critical timeframe. However, each area had different timeframes within the month/quarter. For example, Finance needs their system to close the books during the 3^rd and 4^th week after the end of the quarter. This could also change when they go to closing the books every month-end. Order fulfillment has a critical timeframe of 2 weeks before quarter-end and on holidays. The critical time frame for Accounts Payable is daily with savings of over $4,000 in discounts if checks are mailed daily. In Logistics with no supply of parts in Puerto Rico and only one week in Louisville, every day that parts can’t be ordered and shipped in time is another product not built for shipping to a customer. Every day is a critical day for our business. You never know which day an event will bring down the system.

Loss of productivity could be much higher than most people would think. Most areas said that productivity loss would be immediate if the IT systems were unavailable. For example, John Woods said that in his group the productivity goes down 10% the first hour and 70% by the 4^th hour. This is probably a typical scenario where the work group could find work for a while but would need their IT systems shortly in order to continue to work. If you take 10% the first hour by 3,000 employees at a cost of $30/hour, StorageTek is losing $9,000 for the first hour the systems are down. If you take a 4-hour outage, the cost multiplies to $63,000 per hour! Of course if only one system is down, then the cost decreases by how many people are affected. Therefore, the more people affected by one application, the more it costs in productivity loss. Email, SAP, Network, and the Web affect the most people at the same time and therefore would cost the company the most in lost productivity.

Looking at the interdependencies of business units, one unit will affect at least one or more other units. The domino effect exists where if one business unit is stopped due to an IT outage, many other units may also stop due to that unit’s inability to deliver. For example, if logistics can’t order parts, manufacturing can’t complete their units for shipping to customers. If sales can’t enter a sales order, shipping can’t send the product to the customer and accounts receivable can’t send a bill to collect income for the sale. Another example is if customer service can’t log service calls, then field service can’t be dispatched, engineers don’t have a trouble ticket to fix the problem, logistics can’t send the needed parts to the customer site. The list goes on and on.

SAP and Clarify are used throughout the company and a BIA for these systems was performed about 9 months ago. Since the original BIA for SAP and Clarify additional information was obtained from Sue Cole, Judy Dunn, Travis Waters, and Jennifer Oden. To briefly summarize the business impact of SAP and Clarify, they are the most important systems in the CDC. According to Sue Cole in the Customer Service area, SAP has a 4-hour window of minimum impact to the business and Clarify has 7 minutes. Travis Waters, Director of US Shared Services, indicated that in one day the impact loss could be as much as $4 million. This loss would be due to accounts payable not receiving discounts for mailing payments on time, no invoices mailed, and can’t enter orders which would delay shipping, just to name a few. Jeff Begalle, Manager in manufacturing said that manufacturing would stop after 5 days. The sheer quantity of departments and personnel that depend on this system alone would justify the criticality of the system. For additional information on SAP/Clarify see attached presentation.

Email is not just a method of communication between two people! Email is an integrated part of today’s business. Email is used by every employee and allows business to work at a faster pace. At StorageTek email is used for many key business processes. For example some of the comments from those interviewed were:

Transfer order information between ICOA and LPA

Audit trail. Need 24 hours due to time zones for quarter-end close information.

Send documents through email both internal and external

Fiserv transactions through email

Marketing sends huge graphical and video files through email

Distribute master schedule and forecasts, large distribution of reports

Extremely important in commissions. Distribute commission information on sales. Print emails for hardcopy audit trail.

Emails to customers, Siebel emails through system, send orders to order processing.

Link to IBM for microcode changes. Used lots in Marketing

Absolutely critical to send large files to field.

Some might say there are workarounds for email. Our business leaders say no. US Mail, phones, faxes, etc. are not able to meet the business need. Email is the only method capable of sending large files, graphics, documents, and videos with acceptable speed and automatically interfacing with computer applications. There are not sufficient personnel to even attempt using any other method. Company embarrassment is also a factor since everyone these days expect your email to be available and these goes hand in hand with our ability to respond to our customers. Email is a key business tool as well as a communication tool in today’s world.

The Internet and Intranet are not far behind email. Again the Web is used as a communication and business tool that is integrated with our business processes. Today, email far exceeds the Web but the trend is shifting more and more to the Internet. The Web today is used for field services to list part shortages and parts availability, earning release information, research, competition information, employee HR forms, ISO processes, knowledge map, shared knowledge of projects, sales contracts, engineering information, microcode distribution and customer presentations. The Web is also used today by StorageTek partners to get product information and configurations, and for customer support and software updates (PTF distribution). Tomorrow the Web will be used for E-Commerce to sell our products and services. The Web could become the most important application in the company. StorageTek is currently investing $10 million to upgrade our Web sites and content. Executives expect revenues to average $1 million per day next year. To emphasize again, "Today, the recovery window is officially closed."

Phones and printers are utilized a lot less than in the past before the PC and email but are still critical in some areas. The business units that have prioritized the phone are: Customer service/technical support areas, Legal, Public Relations and Sales. Most of these areas have workarounds for campus phone outages. Areas where printers are critical indicated that they could do business for at least one day without the printers. This too has workarounds of taking print files offsite to print.

There are some regulatory fines and contracts but these are not a significant impact on costs. Most service contracts are written such that the company’s exposure is a percent of monthly uptime. Most Var/Vad/OEM contracts are vague and state that there could be legal action for non-compliance. Potentially this could have a huge impact but no one interviewed had a clear picture of the business cost in this area.

From the BIA, the following applications/systems are categorized by criticality for IT to meet the business needs.

Most critical systems:
    Clarify
    SAP
    Email
    Pinnacle
    Siebel
    Network (LAN, WAN)

Critical systems:
     Web
     Seritrack
     Hyperion – depending on time of quarter
     LPA/DRP
     Trilogy
     Phone

Key systems:
     OSW
     Resumix
     Brio
     Livelink
     CTMS/CSTR
     Printers

The criteria used for the application distribution into the categories were:

Cost to the company if the system were unavailable

Was there a work around what could be used

The more areas using the same systems, the more impact that system had on the entire business

When does the unavailability become a cost factor

Does the application unavailability affect customers, vendors, suppliers

Engineering Development

Engineering business areas were interviewed for this BIA even though they were outside of the scope of this project. The engineering groups do not process through the CDC. However it was important to gain some insight into how they do business because IS is responsible for their support. StorageTek engineering groups, especially Software Engineering, are heavily dependent on systems that IS maintains. All of their source code is on mainframe, Unix, or NT servers. If these systems go down, particularly at critical points in the development cycle, schedule slippage quickly becomes hurtful to the business. Management's more immediate concern is that customer services engineers would not be able to fix some customer problems with StorageTek products if they did not have access to the source code. The most critical systems for engineering are: SCM systems that contain product source code on the mainframe and servers, Mentor (electrical designs), and ProE (mechanical designs). Bill Farnum, VP of Disk Product Quality Assurance noted that most of their processing is done in the data center in Bld 2. Therefore if the CDC were unavailable they would not be affected. If bld 2 was unavailable he believed that they could continue their work on the systems in bld 4. Jim Cely’s group processes in Bld 4 – the ECC lab but could use bld 2 if this data center was unavailable. This will need to be further investigated at a later time.