Home » Uncategorized

Maximum Tolerable Period of Disruption (MTPOD) and External Vendors

19 January 2010 8,417 views 6 Comments

Nathan article photo small

–By Nathan Schoenkin–

January 19, 2010

When beginning the development of Business Continuity Plans (BCP) it is important to decide how long each process can be out of operation before causing your company serious damage. If your company manufactures a product, or serves as a call center for technical support, a decision has to be made as to how long your company can maintain itself without completing its essential tasks. The length of time before your company will have suffered irreversible damage to its image and financial stability is known as the Maximum Tolerable Period of Disruption (MTPOD). A company can typically resume operations shortly after an incident by outsourcing or redistributing work amongst different facilities within the corporation. The purpose of this article is to discuss two aspects of MTPOD’s for a company, the first being how long a corporation can continue without functioning in any capacity, and the second being how long a company could function working through external sources.

The Maximum Tolerable Period of Disruption is the maximum amount of time a company can go before its reputation or overall relevancy will be seriously questioned. MTPOD’s vary greatly based on industry. For an Information Technology or Telecom Company the MTPOD cannot be more than a few days, but for a manufacturing plant the MTPOD can be as long as there is still inventory in a warehouse.  Additionally, if there is a great deal of publicity focused on your company post incident, investors will become weary of your company’s ability to recover. While your warehouses might have enough product to continue distributing goods for several months, consumers and investors need to feel comfortable that they will never have a delay in shipments.

While your facility might be able to produce product externally without causing the broader organization any short term hardships, relying on external vendors for long periods of time can lead to a large amount of lost revenue and/or a sharp decline in customer satisfaction. If we consider what has happened in recent years with personal computer companies who have relied on providing technical support through outsourced call centers and the resulting increase in customer dissatisfaction, we can immediately see the importance of running operations internally. Whether you direct a manufacturing plant or a call center, the benefits of running operations internally is immense. With external vendors you will never have the control over operations that you would have with running operations internally, regardless of whether it  be a language or cultural barrier for outsourced call center’s or a quality problem for goods produced by an external vendor.

While the cost of outsourcing labor during an incident might be lower than reproducing a facility, a BCP that does not include employees returning to work will lead to significant resentment towards the planning process. Employees will be much more willing to assist in the business continuity process if they know that their jobs will be around after an incident. Creation of BCP’s with the cooperation of all levels of employees distinguishes between an implementable recovery plan and one that is missing critical information to recover.

The best way to ensure that your organization will be restored after a major incident would  be through the creation of highly detailed BCP’s.  Detailed BCP’s include complete lists of equipment and software, people, locations, and procuresses that are vital to the organization. While lists of equipment might be relatively simple for a small scale call center, manufacturing plants have a very extensive list of custom equipment that could take months to produce. Creating these lists of essential equipment will require multiple divisions within a company working together to decide what equipment can be shared, and what equipment is required exclusively for internal departmental use.

A multifaceted restoration approach would be ideal when designing continuity plans: [a] a team that would begin collaborating with external vendors to restore product flow, and [b] a second team that would begin to restore a new facility through the use of extensive documentation about the damaged facility.  A figure explaining the two different restoration teams can be found below:

mtpod

Through the use of these two teams your company will be able to restore product flow prior to the MTPOD while working towards the ultimate goal of restoring the facility to its prior condition.

In conclusion it is necessary to consider two different MTPOD’s when creating Business Continuity plans. The first would be the longest amount of time a company could “function” without actually providing its services or products, MTPOD, and the second would be how long a company could function while operating through external vendors. Different businesses have different needs, and extensive research on the ways in which the company functions need to be taken into account when determining which route to take. Decisions on the lengths of these MTPOD’s should not be made lightly, but rather with the guidance of Business Impact Analysts, Board of Directors, and experts in the field.

6 Comments »

  • Val said:

    Very informative! Appereciate the information and outlook!

  • Jon said:

    An excellent read. Thank you for this insightful piece.

  • Zev said:

    You make some interesting points. Thanks!

  • Rothstein Associates Inc. Business Survival ™ Weblog » Maximum Tolerable Period of Disruption (MTPOD) and External Vendors said:

    [...] Maximum Tolerable Period of Disruption (MTPOD) and External Vendors, by Nathan Schoenkin courtesy of BCP News. Share this [...]

  • Jamie Watters said:

    Thanks Nathan a very timely article.

    It highlights the ambiguous nature of so much of the terminology we use and how one man RTO is another’s MTPD, and indeed how the same mans MTPD can be two entirely different things.

    We really do need some simplicity and clarity with regard to the language of our trade.

    Thanks again,
    Jamie

  • Jake Whistle said:

    Thanks Nathan, a very good read. A little off topic but I think MTPD is better term than MTO, or the even older term MAO. Why? Because the term ‘outage’ has an IT heritage, and MTPD is much easier to explain to a broader audience.

    Thanks again,

    Jake