Contingency planning by the numbers.
A big part of contingency planning involves calculating costs. Costs to prevent or recover from certain events must be weighed against the cost of the actual impact should that event happen. This impact analysis involves calculating and attributing a value to each customer contact so the team can calculate the cost of being out of operation.
Even in those centers that do not generate revenue directly, it is important to agree on a value for each answered contact to serve as a base. Then each measure of prevention should be evaluated to see if the call center could realistically afford each one. Sometimes the cost of prevention is much higher than what the cost of recovery or lost business would be. But more than likely, the cost of an ounce of prevention is less than the pound of cure that might be needed in the end.
The Federal Emergency Management Agency (FEMA) recommends an impact analysis using a format similar to the one provided here.
To use the chart, list the types of emergencies identified down the left column. Estimate the probability of any risk that has been identified. While this is a subjective exercise, it will help in determining which risks to prioritize in the prevention process. Use a scale of 1 to 5 with 5 as the highest probability. For example, a fire has a low probability and a network failure has mid-range potential, according to the sample analysis chart.
Next, assess the potential human impact of each emergency, including the possibility of death or injury. Assign a rating of 1 to 5 with 5 as the highest potential impact. The sample chart shows a fire as having a high impact on people, but the network failure has a low impact rating.
Assess the potential impact to property in terms of losses and damage. Once again, use the 1 to 5 scale with 5 being the highest. Consider the cost to replace, the cost to set up temporary replacement and the cost to repair. The fire in this example would have a high impact on property and a network failure would have little impact.
Score the potential business impact, including loss of market share. Consider business interruption, employees unable to report for work, customers unable to reach the company, company in violation of contractual agreements or regulations, fines/penalties/legal costs and lost sales. The impact of a fire and the network failure are rated relatively high.
Look at the internal and the external resources to calculate your ability to respond. In this case, a low score is better. Consider the following questions for each type of emergency:
* Do we have the needed resources internally to respond?
* Will external resources respond as quickly as needed or will there be higher priorities for them to serve?
In the sample, the internal resources available to respond to a fire are considered higher than those available to respond to a network failure. External resources are considered high in both cases.
The final step is to add up the columns. The lower the score, the better it is. This ranking will help prioritize the planning and funding of solutions in the efforts that follow. The sample shows both the fire and network failure are relatively equal in their impacts. Of course, the rankings that would be assigned by any planning team could be quite different from those in the sample.
Once the impact and resulting priorities are known, the next step is to determine what the prevention techniques are and estimate the cost of each option. The possibilities must include changes of procedures and other simple options along with the more elaborate solutions such as dual vendors and major system enhancements. Management will want to see a variety of possibilities and the costs associated with them before authorizing funds for a solution.
The options should provide a range of prevention possibilities, with some offering full prevention and others providing only partial protection. The team should apply a score to the potential for the prevention technique to mitigate the risks, and to be consistent with the impact analysis, a rating of 1 to 5 is reasonable with 5 representing total prevention.
An estimated cost must be determined for each technique. When compared to the other options under consideration and the score for the prevention effectiveness, the best choices should become clear. A sample prevention options analysis chart is shown here.
The planning team will also need to consider the recovery options should the contingency plans fail. Once again, the recovery options will range from simple manual processes with minimal expense to complete building replacement scenarios. Recovery can be partial or full, in stages or all at once, and the techniques considered must cover the full range of options.
In this stage, scoring the recovery techniques for their effectiveness (partial to full recovery) should be done along the 1 to 5 scale with full recovery options scoring a 5. This will be compared to the cost of each option and compared to other choices to find the best solutions to present to management for consideration.
Assigning some numbers to the risks, as well as the prevention and recovery options, will assist you in determining priorities and selling the plan to senior management so you are prepared should a disaster hit.
Vulnerability Analysis Chart Human Property Business Internal Type of Probability Impact Impact Impact Resources Emergency 1 to 5 1 to 5 1 to 5 1 to 5 1 to 5 Fire 1 4 5 4 2 Network 3 1 1 4 4 failure Flood Other External Type of Resources Emergency 1 to 5 Total Score Fire 1 17 Network 2 15 failure Flood Other (Resource: Emergency Management Guide for Business and Industry, found at www.fema.gov.) Prevention Options Analysis Chart Option A Prevention Risk Impact Score Option A Score Option B Network 15 $15,000 3--both $138,500 Failure annually for available carriers initial and dual carriers share part of $15,000 for cable route dual carriers and added cable construction Option B Prevention Recommended Risk Score Option Network 5--protects A Failure from one carrier failure and cable cuts Recovery Options Analysis Chart Option A Recovery Risk Impact Score Option A Score Option B Network 15 $7000 per 2--phone tag $15,000 per Failure day--send problems and day--reroute calls to outbound long- calls to out- network voice distance call sourcer mail and call costs back Option B Recovery Recommended Risk Score Option Network 4--Handle calls B Failure as they arrive but outsourcer not as effective in selling as in-house staff
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Penny Reynolds and Maggie Klenke are founding partners of The Call Center School, a Nashville, Tennessee-based consulting and education company. This article is an excerpt from one of their books entitled Business School Essentials for Call Center Leaders. Contact them at email@example.com or firstname.lastname@example.org or call 615-812-8410.
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|Title Annotation:||Managing By The Numbers|
|Publication:||Customer Interaction Solutions|
|Date:||Oct 1, 2004|
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