Business Disruption; the Unseen yet Underestimated Cost Driver..

Music Moods at ORT airport in Johannesburg- South Africa.

Thursday 27 April I am at ORT international Airport, Africa’s largest air transport hub in transit to Zimbabwe. Not a second passes by without sounds of boeing, airbus and embraer engines and people dashing to boarding gates to travel to a wide spectrum of destinations. I found it amazing to see the beautiful SAA, Emirates, British Airways, TAG, and Air France cabin crew attendants walk majestically to their respective boarding gates. Growing up as a son to a highly respected man who had 3 stripes on his shoulder, made me envy being a Captain of a Boeing 737 one day.

My visual after that was electronic boards flickering and updating with flight arrival, departure and delay times.

Departure gate section at ORT airport. The airport is studded with visuals that leverage on technology.
Departure gate section at ORT airport. The airport is studded with visuals that leverage on technology.
Every time I travel I love to shop at the duty free shops as their music, colognes, whisky and chocolates are usually more affordable than they are from normal shops at shopping malls where clients are charged a rent premium.

I’ve always loved music so much that whenever I transit through ORT, I ensure that I pass through Music Moods in search of oldies like Black Mambazo, Paul Matavire, Bundu Boys, Oliver Mutukudzi or Paul Simon releases to ensure a smile on my old mans face upon my return.

Passengers walk past stores to purchase items before boarding their respective flights at ORT.
Passengers walk past stores to purchase items before boarding their respective flights at ORT.
A number of passengers like me walk past stores to purchase similar items before boarding their respective flights at the airport.

On this fateful day I walked into music moods, picked out my music collection, pulled out my credit card to pay and sadly the link was down. The attendant asked me to hang on for 5 minutes in the hope that service would be restored. Being a man of patience, I took to check messages on my phone only to discover that the wifi signal was down too, on three service providers. I looked on as other clients tried to make payments but were faced with the exact challenge I had.

Due to my career role as a Digital Analyst, I was able to correlate my wifi connectivity fluctuation to the point of sale machine operational failure. I then concluded that internet service had been disrupted and that all broadband dependencies were ripple affected by the disruption. When i stepped up to the shop attendant to explain why his link was down on his Point of Sale – POS machine, he opened up to me and confirmed that the link usually collapses between 6-8am and comes back up after that. The only pain was that 6-8am are peak hours as customers want to transact in purchases generally but are incapacitated to do so due to the disruption usually faced.

The attendant had an understanding of the concept of disruption and what its effects are.

“Oh Jesus, we have lost out on sales,” he said.

Over 30 clients for game cartridges and CDs left without a successful purchase in the 20 minutes I stood in the store because POS was down. The only clients that transacted are those with cash. Sadly not every client moves with cash but place reliance on plastic money (ATM debit and credit cards).

Yesterday Zambia Business Times carried an article entitled Downtime Costs Businesses Financial and Reputational Loss of $22million Annually – Veeam 2017 Report. It revealed a quantification of Business forgone to the annual tune of $22million according to the report conducted by 1,500 IT Specialists accords 25 countries.

Business Disruption, Resilience and Opportunity Costs
Most business if not all place reliance on technology to improve efficiencies and service clients better. I’m tempted to believe because data is the new oil, internet connectivity is the life blood and fuel of most businesses. You can imagine the escalators may be driven by mechanical motors but at some point the motor will receive wireless instructions via the internet cloud. The POSs in every shop that enable transact-ability require internet links to be able to transmit instructions to the respective banks. Reality is that most people in travel may not afford roaming costs but yet need to communicate via social media like WhatsApp, Facebook, Tweeter or FaceTime which makes wifi a necessity. Airport systems depend on internet links to transmit electronic messages and instructions on the various applications they use as well.

Escalators ferrying countless passengers to departure gates all need some form of technology. Most passengers will not board without purchasing duty free merchandise. Business disruption caused by internet outage affects transactability that costs businesses millions of dollars in revenues representing forgone sales.

Escalator ferrying countless passengers to departure gates. These passengers will not board without purchasing duty free merchandise. Business disruption caused by internet outage affects transactability to cost businesses revenues in forgone sales.
Escalator ferrying countless passengers to departure gates. These passengers will not board without purchasing duty free merchandise. Business disruption caused by internet outage affects transactability to cost businesses revenues in forgone sales.

Business Resilience then measures the ability for a business to withstand adversity, inadvertent disruptions and adapt seamlessly to a dynamic ecosystem. The paradigm mindset shift required by businesses is one that acknowledge that every second in business counts. Time is money. Many businesses are comfortable with just making profits and it ends there.

Interesting food for thought questions that any business should linger on are listed below:

1. Do businesses ever ask themselves if there’s a chance they could have made higher margins despite the disruptions? Or is it that businesses are too complacent with the invisible nature of opportunity costs?
2. Do businesses understand fully the interdependencies of key services such as Internet with other internal processes? If internet is down what critical process or services will be impacted adversely? What is the prioritization map of key processes, applications and services?
3. Do businesses have data analytics tools that could measure downtime and how much it costs the business annually?
4. Do businesses have an idea of how many of their clients have switched to competitors because of mediocre service and dissatisfaction?
5. Have businesses take keen interest in addressing disruptions and align this to the required resilience capabilities such as back ups and disaster recovery sites?
6. Do businesses have enforceable service level agreements with third party providers?
7. What is the general business culture in an organization? Are disruptions business as usual? Are disruptions treated with urgency? Does business strategy align to reflect zero tolerance to disruptions?

It is things like this that eventually give businesses a competitive edge over competitors. It is the small things that wow clientele and makes them loyal and laggards to brands as opposed to frustrations that make them want to switch to other offerings that businesses need to pay attention to. It’s sad to try and transact on a weekend when one cannot access cash because automated teller machines are either off completely, cash depleted or can’t dispense cash. This is a norm that is becoming common in Africa. All this points to business disruption.

A good example of entities that have mastered the art of wowing clientele are South West Airlines. They have decided to offer one product line the Boeing 737 so that they don’t worry about hiring a heterogenous crop of engineers in case of aircraft breakdown. A 737 engineer will always work on any other boeing 737s fault. Instead of being greeted by cabin crew at aircraft entrance, the captain of the flight meets the passengers to welcome them. Why are we emphasizing service? Because there’s a thin line between business disruption and customer service. When a business process is down the client will not be serviced optimally and this could wane sales.

Businesses need to embrace and invest more in resilience capabilities if they are to widen their margins to remain competitive.

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