With list and budget in hand, by this stage in contingency planning the planning manager is finally ready to shop around. Dangers to their business have been assessed for level of danger, budgets have been allocated to spend on each priority level of danger and it’s now time to start sourcing solutions.There can be many levels of solution for a given problem, depending on scope and level of response. The contingency manager has to make the important decision about what level of response is appropriate to each problem.
Does an IT company go full out and install a backup generator to protect itself from a power outage, or does it spend much less money on uninterruptable power supplies for key machines that can be shut down in an organized manner resulting in as little data loss as possible even though for the duration of the power outage productivity will be lost?
The levels of solution will also be affected by the type of business. A shipping company can likely make do with an uninterruptable power supply on its server machine, with possibly a second means of backup power to give temporary switchboard power since a power outage for this company is not going to affect its trucks already on the road.
There are also degrees of scope within the identified danger as well. Uninterruptable power supplies can keep 110v or 240v appliances, such as fridges and cookers or computers and switchboards, running for a short time but they are not powerful to operate industrial plant or heavy duty equipment. Is the cost of a backup generator too much given that it is a gamble on an event which might not even happen, or is it essential to have regardless of cost because the lost productivity or efficiency costs outweigh the cost of the initial standby equipment?
Also requiring assessment is the market for a given solution. How many providers are there and how easily can they be made to compete against one another, potentially lowering the cost of that solution to the purchasing company? How new and untested or how proven is a technology or solution that a provider is offering, and is it worth going “cutting edge” on an essentially mainly untested solution that may be being offered at a lower, introductory price over an established and effective but equally expensive solution?
All of these questions will affect how quickly the contingency budget is spent, and how effective the resulting solutions are to the crises they are purchased to prevent. Given that the importance of making sure a solution – regardless of how much or how little it costs – must be affective in addressing the problem it is purchased for, since there is no point whatsoever in having an inadequate solution as it simply won’t work, it is vital that a balance be found between cost and effectiveness. Newer solutions may have more up to date technology and may have the latest in methodology, but is it reliable? And is it more expensive because it is new or is there negotiation room since you will have to be trusting untested solutions and thus can negotiate a better price to compensate for the potentially increased risk.
Once all of these factors are taken into account, then the list of potential solutions and providers of potential solutions can be narrowed down to a shortlist for which further competition among the remaining companies or solutions should be sought to further lower the eventual cost. Companies who find they are ‘shortlisted’ as among the finalists to be able to pick up a lucrative sale or contract are even more likely to be persuadable to make further concessions in order to be the eventual winner of the tender.
Finally, legal responsibilities must be compared with the potential shortlist. Will the shortlisted companies’ solutions still meet the legal requirements of your company, if there are any. If not it does not matter how cost effective a solution is, the solution has to be crossed off the list because the selection criteria – from a legal standpoint – cannot be met.
By the time all of this has been taken into account the result of all this planning should be a short list of providers of either services or equipment that matches the available budget and is suitable for overcoming the obstacles it is being purchased for. Finally the concept stage is over and it is at last time to move on to the action stage, purchasing the solutions and beginning to integrate them into the business. Finally the theory stage is over and the practical stage begins, remembering that at this point it may still be necessary to replace certain parts of the plan if they later turn out to be unworkable from a practical point of view. But at this stage, the contingency manager is ready to implement and fine tune the plan. The end of the procedure is finally in sight.