InformationWeek
Defining The Business Value Of Technology
August 24, 1998
The Business Partner Connection
Online forum: How to work with suppliers and customers
| Discussion Panel | |||||
 Richard Bergeon President of Systemic Solutions Inc., a consulting group in Seattle, and co-author (with Peter de Jager) of Managing 00 (John Wiley & Sons, 1997) |
David Bettinger Former year 2000 project manager at L.L. Bean and now director of business solutions for CST 2000 LLC, a consulting company in Portland, Maine |
Irene Dec VP of corporate IT and year 2000 program manager at Prudential Insurance Co. of America in Newark, N.J. |
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Leon Kappelman Associate professor at the business school at the University of North Texas in Dallas, co-chairman of the Society for Information Management's year 2000 task force, and writer of the "Millennium Crunch" column for InformationWeek |
Jennifer McNeill President of Cipher Systems Inc., a year 2000 consulting company in Calgary, Alberta |
Brian Robbins Senior VP at Chase Manhattan Bank in New York, and manager of the company's year 2000 program |
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t's not enough for companies to make sure their computer systems don't shut down at the stroke of midnight on Dec. 31, 1999; they also need to determine whether their partners will be able to conduct business as usual.That's why a key part of any year 2000 contingency plan must include assessing the status of suppliers and customers. For tips on how companies should address this aspect of their year 2000 efforts, InformationWeek invited several IT executives, consultants, and other experts to share their experiences and observations in a recent online forum moderated by contributor Scott Leibs.
InformationWeek: Why do companies have to make sure their business partners are year 2000 compliant?
Kappelman: What are the options? Shutdowns, lost profits, regulatory problems, shareholder lawsuits, lost market share. Management is responsible to control risk and reduce uncertainty. If a business partner poses a significant risk to the operations, profits, and/or survival of the enterprise, management must deal with it.
Bettinger: There's a limit to how concerned companies should be about the year 2000 status of their business partners. I use a bull's-eye image: The first ring from center indicates the first-level vendors, suppliers, jobbers, and major customers that have a direct impact on an enterprise's operations. Businesses must take whatever steps are necessary to contact these partners, ask about their year 2000 status, and schedule integrated testing. There is no such thing as a verbal or even written year 2000 warranty. The only proof is a successful test.
Businesses shouldn't contact second- and third-level vendors and suppliers, unless they are extremely important. Otherwise, a company will find itself contacting every organization, agency, and government in the world.
Bergeon: Businesses are so interconnected--one company may be ready, but its customer could bring down its supplier. The best defense is to view partners through the lens of risk management--define what's most important, assess the company's relationships with its suppliers, determine how they'll meet your needs if not compliant, and create a contingency plan.
InformationWeek: How should a company assess the year 2000 efforts of its business partners?
Dec: We did a full inventory of all partners and rated each one as "core" or "noncore." We then put hardware and software suppliers into one group, all other partners into another, and created two separate databases to help us track our assessment efforts.
Two years ago, we began to survey hardware and software suppliers, asking questions such as which versions of their products are or would be complaint, and when. We prepared profiles of other types of critical partners, in which we looked at the impact they'd have if they weren't compliant, whether they could be replaced, and, if so, by whom.
InformationWeek: Many companies are using surveys to assess their partners. Are they effective?
Robbins: Surveys can be a good way to stimulate discussion, but you can't extract from them nearly as much as you can from a real-time discussion. We've had face-to-face or phone conversations with most major partners.
InformationWeek: Once a company gathers information from a partner, what's the next step?
Robbins: Testing. If the other organization isn't ready, or if tests fail, alternatives should be implemented. These can range from lining up alternate vendors to completely changing a method of operation--for example, having a messenger service on standby should electronic delivery fail. The key is to anticipate potential problems and be ready with solutions.
McNeill: Contingency planning is a matter of developing strategies to deal with suppliers and partners who aren't responding or don't have good project plans. A company has to audit its suppliers' project plans to see where they are in their processes and gauge whether they will be successful. A company also needs to evaluate its own resources. It's beneficial to share information, but most organizations are so stretched trying to handle their own issues that it's unreasonable to expect them to be able to assist their partners. In addition, they're being slapped on the hand by lawyers who tell them to be careful about what they share because of liability issues.
Dec: We've posted some material to our Web site [www.prudential. com/corporate/techatpru] that can help smaller companies learn from our experiences how to assess partners and evaluate other aspects of contingency planning. We're happy to share data, but we need to do it efficiently.
InformationWeek: Given tight resources and liability issues, how does a company strike the right balance with its business partners?
Bergeon: Work directly with critical suppliers. In one case, a supplier was given additional funding so it could upgrade its systems.
Also, find out why a supplier is behind and work with them to address the delay. If the problem is awareness, go straight to the owner or the board. As a customer, you have leverage. Be specific about your requirements. A request to have one service or product working is better than demanding the supplier be fully millennium compliant. And expect to be smarter than your supplier. They may not be aware of some problems.
Kappelman: Sadly, most surveys are sent to protect a company legally rather than to solve the problem. To some extent this is necessary, but most of the information is useless. To really know what's going on, you need to see the actual plans, progress reports, and test results.
Bettinger: Show me that your system, file, or date-sensitive piece of equipment--and the company itself--will continue to function beyond 2000, and I will accept your statement of compliance. If a company holds a less-critical status, I may accept its position statement at face value, but only if my risk assessment has proved that my company's bottom line will not be hurt if that vendor fails.
Robbins: It can get very confusing when so many partners and other parties are sharing information, unless there's a structure in place to keep everyone informed. We've had success with the establishment of "command centers" that serve as single points of contact and have significant decision-making authority.
InformationWeek: As time grows short, how should a company focus its efforts?
McNeill: It's more important than ever to get in the face of key partners. They're getting queried by lots of people, and they may have a hard time responding to everyone. Smaller companies in particular may have to shout louder in order to be heard.
Dec: Things change. You can't assess a partner once and then forget about them. We build detailed contingency plans around our most important partners, going into more detail about more options, but even our lower-risk partners get reviewed every three months on average.
Bergeon: A triage plan helps--work from most important down, and get as far as possible until time runs out.
InformationWeek: Will the increased communication between partners outlast the year 2000 crisis?
Robbins: I'm the eternal optimist. Once you get used to calling someone up and discussing one issue, you won't stop just because that issue has gone away. Going forward, we'll be working better and smarter with a lot of our partners.
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