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ERP and Business Continuity:
Though the benefits of Enterprise Resource Planning (ERP) are numerous, including improvements in scheduling, idle time, inventory slack, and access to distribution channels, the use of ERP presents significant business continuity issues. Companies don’t want to talk about how vulnerable they are – for obvious reasons. And ERP vendors are in business to talk about how their software works – not about what happens if it isn’t up and running. System integrators are driving toward the completion of ERP installation and, frankly, don’t have too much experience with disaster recovery anyway. Fault-tolerant equipment manufacturers assure clients that their systems have redundant capabilities, but don’t address what happens when the physical plant takes a hit or the power grid goes down. It is interesting to note that many companies now moving toward ERP implementation are also migrating to more complex, less robust client/server environments for the first time. In many ways, this technology transition can compound the effect of the new integration effort due to reduced platform reliability and lack of experience with client/server systems. To understand the impact to the business of an outage, consider ERP’s key strengths: • Integrated financials – once in place, the ERP system provides timely financial data without the need to "close the books" each month; there is no down time. But when an interruption occurs, the financial heartbeat of the company stops. • Inventory management – companies learn to live by the tighter timeframes. But when ERP stumbles, the supply chain of raw materials stops. • Sales – in a tightly managed ERP environment, this function is tied into inventory for availability and other systems for revenue recognition. But when the system is down, the demand loop stops. In the broadest sense, the potential "holes" in the ERP dike fall into three general categories. 1) Complexity: 2) Resources: 3) Education: BRAVE NEW WORLD In the pre-ERP world, a business had multiple points of failure, key junctures in systems and processes where a breakdown was possible, but there were lots of work-arounds. In the ERP era, there are far fewer points of failure – but now the company is entirely vulnerable all at once – with no recourse for manual procedures and no tolerance for a recovery lag time. When time becomes an increasingly critical asset, the organization must have a get-back-in-business strategy. In the past, a "traditional" recovery process would involve lag time between the incident and full restoration – involving travel time, tape retrievals, and often lengthy data restoration. For some organizations, a few days was acceptable, for others 24 hours was the requirement. What many now implementing ERP solutions fail to realize is that, for them, once they "go live," their strategy must include a real-time solution. Otherwise, while they are busy bringing systems back on line, the organization comes to a complete standstill. Production stops, billing stops, functions like sales and inventory stop, paychecks can’t be issued, etc. The list goes on and on, depending on the number of enterprise "modules" or functions tied together. To make matters worse, the safety net of manual procedures to recapture lost data – the "catch-up" as it is commonly called – may not be an option for an ERP-based company. Personnel are not available; the paper trail only exists electronically. In this new breed of organization, the automated system has so much control over the proceedings, that the system is the business. If traditional recovery efforts can be categorized as application recovery, then the ERP version of recovery is really infrastructure recovery. Recovering an ERP environment is an intricate three-tier process – which is not available unless all three tiers are in place: • Database server with all the master applications For the ERP-dependent organization, a traditional 48-hour recovery could be a death-knell. The company’s required recovery "window" has been narrowed substantially by the increased level of integration within the business, and alternative approaches are needed to remedy the situation. But how can this be done? Business continuity planning and ERP share a common thread: they are both business issues, not technology issues. The business model supporting ERP will clearly show the penalty for interrupting the supply chain – one that is high relative to the cost of protecting it. Planning performed at the same time as the system integration is far more cost effective and allows companies to do it right the first time. Done jointly, one process hones the other. THE CONTINUITY PLAN • Take on the business continuity issues at the start
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