As a firm’s reliance on technology increases, so does its risk!

Last Friday, shoppers were forced to abandon their shopping trolleys in Coles stores. Every one of the supermarket behemoth’s 800 stores was affected by a “technical issue” which disabled every single checkout terminal.

Although Coles restored their checkout terminals by Saturday morning, this was a significant business disruption. An inability to conduct transactions would have left hungry customers frustrated and turning to competitors and costing the firm half a day’s trade.

What Coles experienced on Friday evening is a garden variety business continuity event (a similar event struck the business in 2018). In both instances, an external factor (IT disruption) rendered the company unable to conduct transactions and therefore, unable to trade.

IT disruption is a common risk our experts advise our clients on. In business continuity speak, when you cannot eliminate a risk, ‘manual workarounds’ are typically turned to as a contingency plan. At first glance, readers might be asking themselves, “why didn’t Coles accept cash from customers?”. Although this manual workaround is intuitive, it may not be possible.

Ironically, as business’s IT systems become increasingly sophisticated, so does our reliance on it, and therefore a risk emerges. The more complex a system is, the greater the chance there are weak points which can bring the system crashing down. At this juncture, complexity and reliance may make common-sense solutions like taking cash payments unworkable. This combination of factors leads to unnecessarily complicated and frustrating experiences for customers and staff.

We suspect that Coles would have activated their business continuity plan in response to this scenario to soften the blow to the business. An obvious benefit of such a plan.  Coles would have known their exposure to such a risk in advance, the likelihood of that risk eventuating, and how long they would be unable to trade before the business began to haemorrhage customers and business.

Likewise, Coles would have activated an IT recovery plan which, credit to Coles, allowed for the systems to be restored the following day.

The morals of this story are twofold.

First, firms are becoming more reliant on technology by the day. An IT disruption to checkout terminals is a reasonably foreseeable scenario; the inability to work around it, however, speaks to our dependency on our technological masters.

Second, under this regime, planning for disruptions is the best way to mitigate the risk. Although Coles could not trade for a period, they did not panic, likely activated their plans, and were online the following day. Without carefully crafted business continuity and recovery plans, this would not be possible.

Finally, as an olive branch to disgruntled customers, Coles has offered free home delivery for all orders over $50 and triple points on their rewards card before the 18th October. Their share price also dropped that day, so the costs to their shareholders were immediate. The overall cost may never be known, but it is substantive. In addition, the organisation’s reputation is tarnished. Business continuity plans cost less than a fraction than a lost hour of trade for an organisation the size of Coles.

We also suspect internally that they will be developing a workaround for the next time an IT system inevitably fails.

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