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Thinking through ROI for Preparedness Planning

10/17/13 webinar sponsored by Everbridge

David Lindstedt

on 10 October 2013

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Transcript of Thinking through ROI for Preparedness Planning

Risk and Reward: ROI for Incident and Emergency Preparedness
Six Traditional Answers
How Do We Decide?
We need an external model
The Solution*
The Problem
Does preparedness planning have an ROI?
(Does it matter?)
1. Zero ROI: Preparation has no value for the organization. Organizations survive because of culture, individual responsibility, strategic planning, and other factors not related to preparedness; recoverability planning is irrelevant.
2. Insurance ROI: Preparedness is the same as insurance – it is a sunk cost and is only there to protect the organization in case of disaster; it does not have an ROI per se.
3. IT ROI: The real value of preparing to recover is in its synthesis with production IT; by providing information about business owners’ requirements for IT, preparedness helps inform IT on how best to allocate resources and spend money.
4. Risk Mitigation ROI: Preparation efforts are only best served as an arm of Enterprise Risk Management to identify, quantify, evaluate, and mitigate risk.
5. Qualitative ROI: Preparedness efforts provide intangible, secondary benefits throughout the planning process, such as increased: alignment with business goals, credibility, customer service / loyalty, and quality improvements.
6. Quantitative ROI: There can be an actual dollar value to each dollar spent on preparedness.
DRJ and BC Management Infographic
The precise details and constituent elements of the model are immaterial for the purposes of this discussion on ROI. The model simply provides a way to categorize investments in preparedness.
Simple Examples
III. The IT division purchases a new VM server (resources) for disaster recovery.
a. If IT finds a way to utilize the server in the production environment while still making it available for DR, e.g., providing data warehousing services, then there is an ROI.
b. If the server provides no help other than to be available at time of incident, then there is no ROI apart from an incident.
II. The facilities division creates new procedures (procedures) to quickly send messages, record outgoing voicemail, and post web site information.
a. If these procedures are used to improve daily services, e.g., enhanced web site design and high quality customer interactions, then there is an ROI.
b. If these procedures are only used at time of incident, then there is no ROI apart from an incident.
I. Nine regional retail stores are shut down by a hurricane.
a. Preparedness planning allows them to resume business three days before their competitors
b. ROI = additional days of revenue + market capture - cost of preparedness planning
Subtle Examples of
Non-Disaster ROI
I. The establishment of off-site service recovery center resources may provide new meeting locations, conference space, and consultant work space, thus improving vendor relations, increasing productivity, and boosting R&D and sales.

II. The act of creating specific service recovery procedures may help with process reengineering, Six Sigma quality improvements, and ITIL implementation.

III. The effort to increase the organization’s competencies specifically to more regularly and actively monitor threats may improve strategic planning, inform the Project Management Office, decrease time to market, and enhance customer relations.

Are We back in the Woods?
Both the practitioner and the organization must be able to take advantage of positive ROI opportunities. If the preparedness professional is smart and creative enough, and if the organization is receptive, s/he can manipulate those occasions to provide additional benefits to operations.
Off the Map
Into the gray...
Three Recommendations
1. Be creative! ROI
be achieved

the ROI question; it's not about ROI to begin with...

3. Measure
(not ROI)
Back to Day-to-Day
Next Steps
Measure Preparedness
If there is a disaster, there is a clear and measurable ROI
actual savings > preparedness costs (plain and simple)
(Much harder to measure)
Solution Tables
Poll! Which of the six
do YOU think is correct?
1. No ROI
2. Insurance ROI
3. IT, risk, and / or qualitative ROI
4. Quantitative ROI
5. It depends...
Does high ROI =
high preparedness?!?
Maybe ROI is NOT what we should use to measure the value of a preparedness program...
Note: A smart presenter would stop right now!
Poll! NOW which of the six
do YOU think is correct?
1. No ROI
2. Insurance ROI
3. IT, Risk, and / or qualitative ROI
4. Quantitative ROI
5. It depends...
Full transcript