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What is the cost of failure?

Aug 24, 2016

Failure comes in a number of ways, and this isn’t always just in mobility. This is just in general technology.

If I’m a company who has some sort of an outward-facing solution, or a solution that drives my business, and I work with this solution — what is the cost to me when my solution is not working properly?

What’s the cost to my organization when the solution’s working, but it’s not optimal for my business?

Delta Airlines power outage

And what’s the cost to my business when the solution stops working — like at Delta Airlines?

What did it cost Delta, do you think, when they recently had a power outage at their Technology Command Center in Atlanta and they had to shut down all of their flights, because their main system went down? (One early estimate put the figure at $82 million.)

What is the effect of things like this? If it’s a failure based upon a legacy solution that you refuse to invest in, what is the cost of the failure of the system to meet your needs?

If it’s complete failure of the system — the system just stops working — how does that affect a business?

The Internet of Things raises the stakes

Now everybody is talking about the Internet of Things (Iot), and that’s great. The Internet of Things is a marvel that has built upon itself and will continue to build upon itself, and the things that will come from the technology that is pushing out constant information are really quite fascinating.

However, the Internet of Things is just that — it’s data, it’s information being fed. But a business entity has this process, this thing they do to be in business — whether it’s delivering manufactured products to a buyer, whether it’s performing a service — all of these things have a value. That’s why people pay you.

A guy comes to my house to repair my refrigerator, and there’s the value. If there was no value, I wouldn’t have that guy in my house, and I wouldn’t pay him money to fix my refrigerator.

But what happens when the system that refrigerator repair company uses to order parts — or manage customer interactions, or manage their dispatch, or do billing and receiving — what happens when there’s failure to that system?

How does it impact an organization financially? How does it impact your customer base — and what are the long-term effects?

Some might say that Delta’s failure was just for a day. Okay, well what’s the cost? Financially, how many millions of dollars in free airfare did you have to give away? Upgrades, refunds — all the people who came to work that you had to pay even though your airplanes couldn’t fly? What about all the people who say, “I’ll never fly Delta Airlines again?”

What does a data breach cost?

What does it look like to a company when, say, you have a cybersecurity breach, like Target? What did that cost Target? All of these are aspects of the business.

Envoy Data Corporation tells us:

The key point here is that hacking is not accidental. You have the information, you did not protect it, and there are consequences. Lost sales, legal costs, free credit checks. Stolen intellectual property. Compromised sales lists.

  • Credit checks at $58-$100 per person.
  • Loss of credit card processing for PCI violations.
  • Time and effort to source a solution to fix issue.
  • Lost revenue due to bad press.

The top ways to reduce costs are by (1) having a plan, (2) pervasive use of encryption, and (3) control access to data.

These will offset costs by $16 and $13 respectively per capita. Examples of two expensive actions: extensive cloud migration could increase your costs by $12 per capita, and giving the keys to a third party could cost an extra $14 per capita.

Business used to be simpler

It used to be, you would unlock your front door, put the “Open” sign out, and that’s all you had. You were good to go.

If you were a company performing services, you sent your guy out in the truck, he had a pencil and some paper. You had a lady back in the office and everything was handwritten journals. You business was simpler. It was smaller. It was not as complicated. It took a lot more to grow, because it was just organic.

But now that all of the IoT and everything else is involved in our businesses, while it’s a great thing to have, there’s direct impact — and a correlation to the impact — when it’s not working, or not working properly.

I can send a guy out to do a delivery today, but what’s the impact when suddenly his application fails and he doesn’t know who to deliver to next, or the quantities to deliver, and he can’t take payment? What does that look like? There’s a cost to that. How often does that happen?

Does it cost you to miss delivery schedules? A lot of facilities only accept deliveries at certain times.

So while we don’t outcast the Internet of Things — this growing culture of constant data and information all the time — we look at this approach and say, “You as a business need to constantly take your business to get an evaluation, to get a checkup.”

Is your solution working?

You invested in your routing and scheduling and dispatch. Did you invest in other aspects of your distribution business?

Let’s say you’re a service business, and you bought new trucks, and you put new tablets in your guys’ hands. But what about the rest of the solution that is now evolving based on the IoT? Is that performing properly?

And if it’s not performing properly, what does that cost you as a business? Is there an attrition of customers?

Every time a service guy comes to my house, I like to check out what he’s using.

“Oh yeah, they gave us these devices.”

“Well, do they work? They don’t look like they work. You’re not even using it.”

“Oh, yeah — it’s really crappy.”

So you as a company invested in a solution that your people don’t even like, it doesn’t work — yet you put money into it.

Hackers can now take you hostage

What does it look like when a company with a mobile operation has a hack, or some sort of cyberattack or a system breach, and it brings you down? They new thing as that the hackers take you hostage.

You can be in your own office. One of my vendors one day said, “We can’t work.” She said, “Somebody hacked our system, and until we pay them a hundred thousand dollars, they won’t release our system.

 

One of our cybersecurity experts tells me there are only two kinds of customers: The customer who’s been hacked, who says, “Come in and fix this,” and the customer who thinks there’s no problem until we expose their system to them, and they ask for help before they get hacked.

What is the cost of failure? There’s a tangible value you can put on it, and also an intangible cost — customers, people, employees. There’s a loss. As a business, you need to take into account what it is that you’re doing to make sure that you’re not jeopardizing or risking yourself.

These are the things we see, and the reasons we work with organizations. It’s not always that you need the latest and greatest mobile technology. Sometimes, you just want to stop the bleeding, because if you keep using a Band-Aid on an arterial wound, at some point you bleed out.

What can be done?

So what can we do in order to prevent failure within a solution or a company? There are a few steps you can take.

The first thing is to do an internal analysis of your mobility solutions. Understand where the strengths and weaknesses for your company lie within those solutions. A solution does not just include software, it includes hardware, managed services, and any other powerful pieces that affect your day-to-day business and the success of your business.

A company also needs to look at technology and how it has adopted (or not adopted) any of the new leading practices for businesses today. Many companies fear that adopting new practices will be too bleeding edge for their company, and may cause failure rather than success. Nevertheless, a company must constantly “keep up with the Joneses” to mitigate risk, while also implementing new technology that allows your company to gain more success, more profit, and less risk exposure in today’s information-rich business world.

Talk with an expert

The next thing a company can do is to have a consultant-advisor come in and discuss with them what they have identified as potential failure points in their solution, and the technology available today that could have a very positive impact on their type of business.

For example, many companies today understand that they need security — but they don’t understand what types of security will impact their mobile business. While there’s applications security, there’s also a network security, and there’s cybersecurity. Understanding which and why and how these types of securities impact of business will help an organization make a decision on which services will suit them best.

Engaging an expert helps you to not only review potential failure points within your system, but also helps you understand how to take the steps forward securely, while maximizing your time and your money and minimizing your risk of exposure to making the wrong decisions or implementing the wrong solutions for your company. InTu Mobility consultant-advisors understand how to analyze and help companies uncover potential areas of risk and failure and take the correct steps in avoiding failure in your mobile business.

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