CMI report charts an interesting year for the BCM profession

Disruption and resilience, 2010 from the CMI

Over the course of the past 10 years the annual Business Continuity study by the Chartered Management institute has plotted the progress and expansion of the profession. 2010 is no exception.  Over the past 12 months the country has faced widespread disruption through extreme weather events, recession and the potential posed by the swine flu pandemic ... it has been a year to challenge most working in the field.

Amongst the summary headlines of this year’s report are some surprising conclusions though. First amongst these has to be the reported fall in the number of companies adopting Business Continuity Planning which has fallen from 52% in 2009 to 49% this year. For the past few years the overall rate of adoption across the sample used by the CMI has been relatively consistent at around 50% so this may be a minor statistically variation linked to the sample, but one would have thought that with the serious disruption seen across the South of the country in the February snowstorms and the rapid developments in April from H1N1 influenza that this would have been an ideal time to those without plans to act.

This circumstance may though be related to the general economic pressures seen over 2009 and not necessarily a waning commitment to Business Continuity. What is clear is that the CMI study reports some 79% of managers who had cause to activate their plans firmly agreed that their measures were effective at reducing  disruptions they face.

The research also reveals that whilst the benefits of Continuity are clearly very real the main reason triggering planning remains corporate governance with nearly 40% reporting this as their most significant  driver for their Continuity programs.  Client pressures also feature highly with both current and potential customers cited in 31% and 21% those surveyed respectively.  This demonstrates the increasing commercial benefit arising from an investment in effective Business Continuity programmes.

Christina Scott, the new director of the Civil Contingencies Secretariat commenting on the report’s, which was once again sponsored by the Cabinet office, said “that this year’s report is encouraging in that the number of small organisations and charity/not-for-profit organisations with Business Continuity plans had increased. Despite the increasing economic pressure more senior managers in those organisations which do plan can see the importance of preparing for possible disruption caused by the commonest kinds of hazards in the national risk register.”

She went on to say “the report also shows the benefits of an all hazards approach to business continuity planning. For the first time disruption to information technology has been supplanted by extreme weather as the most pertinent disruptive challenge that organisations have faced. The increased risks of disruption by severe not just extreme cold weather will be one of the features of the next update of the National Risk Register” 

You can download the whole report by clicking this link  

CONTINUITY FORUM COMMENT

In previous years there has been considerable consistency between the findings of the CMI research and our own. This year however there are some areas where we are seeing considerable separation in our findings, key amongst these are the following:

BCM responsibility 

CMI report suggests that there has been a realignment in the stakeholder engagement of Business Continuity referring to a higher profile for Human Resources department during 2009. Our opinion on this is that this ‘engagement’ has driven by the threat of pandemic  and organisations realising that better preparation on personnel issues was necessary. This factor arose primarily to a general lack of planning in previous years on the human factors affecting Business Continuity and does not represent any substantial change in the decision-making process within organisations. The majority of HR departments will continue to rely on the expertise of their Business Continuity planning colleagues to develop effective strategies to address human factors such as posed by the pandemic threat and we do not feel as though HR involvement is likely to be significant or substantial in the future.

BCM budgets

The difficult subject of budgets requires a degree of interpretation and one must differentiate between spending on specific activities related to current events and general investment in the development of effective ongoing business continuity measures and program activities. This year a combination of events occurred which required a response. The impact of both the extreme weather and the pandemic threat are clear examples of reaction expenditure rather than proactive investment. The issue this raises is whether or not this should be counted as a direct investment in business continuity management or if it should be attributed differently. We would argue that this expenditure is fundamentally different from formal and structured investment in BCM. It represents a more tactical response, taken in reaction to a more general lack of preparedness within the organisation.

We have certainly seen numerous examples across the country of both public and private sector organisations rushing to respond particularly to the threat posed by H1N1.  What has been particularly apparent in many of these circumstances has been a general shortfall in the core business continuity programs, which confirms the proposition that this is not so much  properly budgeted and applied investment, but rather a knee-jerk reaction that is more closely linked to the events themselves rather than the Management process.

Further we do not feel as though there is sufficient accuracy within the sample base to properly conclude that the general economic climate has not impacted on budgets. Without the impact of the weather and the threat from influenza we believe we would have seen a significant reduction in public sector spending on Business Continuity during 2009. We hope that looking forward across 2010 and beyond that more structured  investment can be made in building the business continuity capability across all aspects of public service.  From the lessons learned over the past year, it is clear that both the Public and Private sector still have way to go before they can moderate investment in this area.

Sample size and the SME Community

The Continuity Forum appreciates just how difficult research into the business continuity sector can be. However, one aspect of this year’s research gives us cause for some concern. In establishing an effective baseline to the conclusions being drawn it is essential that there is a sufficient data sample to back up the conclusions. Further on research as significant as this we consider it imperative to avoid any bias that may inadvertently occur.

This year the CMI report encompasses the views of some 903 respondents, this provides a wealth of data that provides some great insight into developing sector but which also appears in one specific area to substantially overstate the levels of business continuity planning within the smaller organisations. Taking the statistics as presented and performing a small amount of arithmetic we see that from the total sample base captured only 442 organisations have business continuity plans in place.  Looking at the sector and size data provided we see that over two thirds of organisations responding are either large organisations or ones from the public sector, this would equate to a minimum of 300 of the positive responses to those using business continuity management within the organisation. Once further thought is given to the remainder it appears to result in too small a sample size relative to the total number of organisations in the UK to be statistically valid.  

We certainly do not wish to undermine the integrity of either the report or its authors, and no slight should be taken from this observation. However, our own research undertaken across the year and encompassing many more smaller businesses suggests a far lower level of BCM adoption across all sectors of SME activity.  We feel that in part this will be down to the self selecting nature of participants,  and perhaps include smaller organisations who are either involved all connected with the sector itself. Of course, Chartered Management Institute members are by their very nature more professional in many areas of their business and as such may well be far more evolved in their thinking on the topic of Business Continuity.

Our experience unfortunately illustrates a very different landscape across all sectors of small and medium sized businesses, the levels of adoption we see rarely exceed 30% and more often fall below 20%. Further, when one looks at the detail of the planning undertaken its scope and capabilities would fall far short of the expectations of anyone experienced in business continuity management. This is not to say that this sector is lost to us, but rather there is a huge opportunity, these organisations typically have relatively simple needs when compare to  larger and more complex organisations. 

It is our opinion that rapid development of SME resilience could be achieved with a little positive encouragement for this part of our economy. One simple measure could be extended easily, encouraging investment and development, not just of core continuity plans, but also boosting local community resilience. We would urge government to consider reducing VAT on services or products directly related to Business Continuity, and even potentially offer the ability to offset other costs against tax. 

This is not a tax break, as this investment is currently not being made. It would indicate that the government is serious about boosting capabilities and sends a clear signal of the value of Business Continuity Management to our Business Communities, as well as the businesses themselves and it would be a great way of spreading the message and encouraging smaller enterprises to build their resilience. The overall effect should be revenue neutral to the Treasury, but the cost and losses that cause such harm could be substantially reduced. 

Many of you reading this will have your own perspectives and we would welcome your thoughts on the points raised, please do get in touch with your feedback by clicking here