Critical failure happens when a problem with one thing - tech, shipping, staff - stalls or stops the function of a business. It often results from easily-overlooked and seemingly innocuous things. But small issues can escalate into large, margin-squeezing, profit-hitting disasters.
For example: Your local supplier has not taken note of a new import regulation, meaning hundreds of state-of-the-art till units are stuck at customs. Store openings are postponed, resulting in lost revenue and a damaged brand.
Critical failure can usually be avoided with careful planning, but where is it likely to rear its unwanted head? And what can you do to stop critical failure becoming catastrophic failure? Here are some things to look out for:
A supplier that’s honest with you is much more valuable than one that tells you what you want to hear
1) OPTIMISTIC DELIVERY DATES
When a service provider promises to get five functioning servers to São Paulo, under budget, navigating customs, by tomorrow, that should raise alarm bells.
Large-scale infrastructure challenges are rarely completed ‘by tomorrow’. It’s not impossible, but very often suppliers will over-promise (to win your business) and then fail to deliver.
If a supplier promises to deliver something in half the time and half the budget of a rival, it doesn’t mean that they cannot do what they say, but it does mean you should forensically query their promise: what assurance (and insurance) is the supplier offering?
A supplier that’s honest with you is much more valuable than one that tells you what you want to hear, and late delivery can cost: in lost revenue, in wages paid to unused staff, and damaged reputation.
2) BROKEN EQUIPMENT (AND CONTRACTS)
Multinational companies spend vast sums on setting up service centres, servers and new departments. It can get a whole lot more expensive if the equipment delivered isn’t fit for purpose, or it’s simply broken.
Just as important as functional tech, contracts need to be in working order too. Recently, SAP sued Diageo for using their software without the correct licence, costing the drinks manufacturer millions.
To combat this, we’ve developed staging posts along the way to check equipment works before it reaches the final destination. Query your IT solutions company about their checks and processes for supplying the right kit and contracts.
It’s not uncommon for shipping to cost more than the
equipment being transported
Moving kit in and out of countries is notoriously slow and complex. And we’ve found that it’s not uncommon for shipping to cost more than the equipment being transported. However, if a factory in Manila can’t start production without certain equipment, it must be shipped.
Bearing in mind the expense, sloth and regulatory hoops to jump through, finding an experienced partner with local knowledge and a logistics background can speed things up immeasurably.
Specialist local couriers, with local contacts and years of ingenious problem-solving under their belts, are invaluable: our trusted partners are key to our logistics success.
4) NAVIGATING CUSTOMS
Customs regulations and requirements can be bafflingly complicated. They vary from country to country, in a constant state of flux. Without someone who understands how to move your kit in and out of the country, delays and fines will be costly.
We have also found that cash 'bungs' are common in some countries. Officials who are used to having their palms greased - flouting both the law and your company values - can be problematic. However, bending the rules for an easy ride will come back to bite you in the future.
Outlay on an expert to guide you through the customs maze is not money down the drain - equipment languishing at a border is.
Outlay on an expert to guide you through the customs maze is not money down the drain - equipment languishing at a border is
5) EXCHANGE RATE FLUCTUATIONS
IT equipment is usually priced in dollars, and wages and shipping costs may be priced in the local currency. This creates a lot of admin when all the receipts have to go through a global central billing system.
Critical failure can come from complicated financial backlogs. Unpaid bills can cause delays, unhappy clients and lost revenue.
Exchange rates too should be considered. Small fluctuations in exchange rates can be very expensive when you are trading with millions of dollars. It’s not strictly critical failure if you convert a bill a day after a currency tumbles in value, but astute financial advice can save a business a lot of money.
Ideally you’ll have a contingency plan for your contingency plan
6) CONTINGENCY PLANNING IS YOUR BEST FRIEND
One way to ensure critical failure will turn to disaster is not to have a contingency plan. At every point along the process, you should have questioned what happens when it all goes wrong.
And ideally you’ll have a contingency plan for your contingency plan.
By definition, no one can see unforeseen problems. But with more planning comes more visibility of the challenges ahead. Stress test your plans, stress test your resources, and hire expert partners with the knowledge you need (and stress test them too).
Critical failure is not completely avoidable, by nature, but you can take steps to null its impact on your business if it does strike. Our model involves using veteran experts, local fixers and trusted partners to deliver a frictionless service. That is not the model for everyone, but we hope that this article is useful for spotting where pitfalls may lie.