Health Systems Ltd - ICT Case Study

Connecting the Dots & Improving Resilience

Prepared by Joanne R. Stevenson, Dr. Erica Seville and John Vargo

“You had to be a bit savvy and connect the dots … that made a huge difference to our business”  ~ Health Systems Ltd. CEO

 

Overview

Here we present a case study of Health Systems Ltd. (Health Systems Ltd is a pseudonym) a technology company, focused on specialised software sales, service, and maintenance, which was badly affected by the 2010/2011 earthquakes in Christchurch, New Zealand.

On 4 September 2010, the city of Christchurch was struck by a magnitude 7.1 earthquake. On 22 February 2011 Christchurch was struck again by a magnitude 6.3 earthquake, centred within 10km of the central city. This caused significant damage, and large parts of the Central Business District were cordoned off for more than two years.

The Resilient Organisations research programme began following Health Systems Ltd. approximately three months after the 4 September 2010 earthquake and has continued to track the business’s progress into 2013.

Health Systems Ltd.’s performed well in some aspects of their response and recovery to the earthquake, but struggled to implement improvements and maintain relationships with some staff and customers. Following the Christchurch earthquake, Health Systems Ltd. implemented actions to identify vulnerabilities and put systems in place to ensure business continuity and on-going development.

Organisation Description

Health Systems Ltd. started in the 1980s, and grew to have offices in Auckland and Christchurch, New Zealand, as well as Sydney and Melbourne, Australia.  At the time of the September 2010 earthquake, the Christchurch office had around 40 full-time equivalent staff. Health Systems Ltd. has local customers as well as international, though almost all of the organisation’s growth and development is in its international market.

Prior to the September 2010 earthquake, Health Systems Ltd. was comprehensively insured but had done no emergency or business continuity planning.

What happened to Health Systems Ltd.?

The September 2010 earthquake was a major shock for Heath Systems Ltd., but they suffered no damage and minimal disruption.  Their building, which was located in the Central Business District of Christchurch, was inaccessible behind the official cordon for less than a week (Table 1) after the first earthquake.  Health Systems Ltd. enabled their staff to work from home and rerouted business related calls through their offices in other cities.

Table 1: Earthquake Impacts on Health Systems Ltd.
September 2010 Earthquake February 2010 Earthquake
Building Located within the CBD cordon for 4 days, then approved for safe re-entry Located within the CBD cordon, “red tagged”  and demolished in 2012
Equipment/Computers/ Non-structural damage No damage Moderate damage to equipment, computers, inventory, and other non-structural features
Utility Disruption Electricity disrupted for up to 4 days Electricity disrupted (~ 1 month) Communications disruptions (~1 month) Road networks (reduced capacity for ~6 months)
Closure Temporarily closed for 4 days, reopened partially with many staff working from home for 2 weeks 3 weeks
Staff Loss No loss 2 full-time employees (FTEs) resigned soon after the February earthquakes 3 additional FTEs resigned during the recovery
 Staff Hiring Hired 1 FTE Hired 5 FTEs in 2012

The 22 February 2011 earthquake was far more disruptive. Health Systems Ltd.’s building and the surrounding area were severely damaged. Their IT server had gone down, and they had no way of restarting it or accessing their data without entering the cordon.  The CEO in Christchurch responded quickly, which enabled Health Systems Ltd.’s staff to access their cordoned building, restart their server and retrieve important files.  This reduced potential income losses and avoided damaging their reputation with international customers.

Health Systems Ltd.’s employees worked from home for approximately six months following the February earthquake, finding spaces for collective meetings as needed.   The organisation eventually relocated to a relatively undamaged suburb of Christchurch.

Health Systems Ltd. lost 5 full-time staff members in 2011 and 2012, in large part due to earthquake related stress and on-going uncertainty. They were forced to operate understaffed for nearly a year before fully replacing those who had left.

The company’s revenue remained stable between 2010 and 2011, but decreased from 2011 to 2012. Health Systems attributed this to slowed implementation of business improvement projects (planned before the earthquakes), delays to new product development, and decreased sales.  All of these issues were exacerbated by reactive and often slow decision making and a compromised internal culture which led to poor morale, reduced productivity, and resistance to change.

What can we learn from Health Systems Ltd.?

Crises and disasters can be excellent learning opportunities for organisations, but often an organisation will wait months to review their systems, evaluate their vulnerabilities, and assess their response and recovery procedures. Health Systems Ltd.’s story provides an important lesson to other businesses:

Evaluate vulnerabilities and implement any necessary changes as soon as possible following a crisis.

Instead of incorporating lessons learned from the September 2010 earthquake ‘near miss’ Health Systems Ltd. delayed the improvement process to focus on the immediate needs of the business.

Despite doing almost all of their business remotely, Health Systems Ltd. had no data or services on the cloud and no apparent way of transferring operations if their onsite server went down. Prior to the September 2010 earthquake, Health Systems Ltd. had no business continuity or emergency response plans.  In February, even though they were able to restart their server quickly enough to avoid major losses, the situation served as a major impetus for change in the way Health Systems Ltd. approached business continuity planning.

What could have gone better?
  • Staff became resistant to further changes that needed to occur. Employees were run down by the persistent nature of the earthquake series, dealing with disruptions to their own homes, in addition to being required to work remotely.  There was push-back from staff and delays when trying to implement business operation changes, with the consequence of slowed growth and development through 2013.
  • Health Systems Ltd. waited 6 months for a permanent location to become available. Working from home, however, put a burden on staff members and their families, they needed more options to work together and work outside of their own homes. Clear communication about the relocation process and further consultation about supporting work space needs may have mitigated staff strain.
  • Following the earthquakes, Health Systems Ltd. had significant issues maintaining staff morale and they lost 5 employees during this time. It was difficult to find technically proficient staff or attract new staff to Christchurch and the company was forced to operate at sub-optimal staffing levels for nearly a year.
  • Customers were generally empathetic and supportive, however, with delayed improvements to their software delivery and support systems, goodwill eventually ran out. The CEO felt that their reputation had been compromised, potentially costing them new business.
What went well?
  • Rerouting calls and redistributing the workload through offices in other parts of New Zealand and Australia, Health Systems Ltd.’s Christchurch office could more effectively focus on recovery needs.
  • Quickly enabling employees to work and organise meetings from their homes; Health Systems Ltd. were also able to bring their finance team together, working from an employee’s house.
  • Health Systems Ltd. was well insured and had a good relationship with their insurance company.  They received payment advances that allowed them to meet their immediate needs during the recovery process.
  • Providing a supportive environment for other earthquake affected ICT companies to share their stories and discuss recovery and redevelopment strategies.
  • Health Systems Ltd. sought sources of additional financial support to supplement their revenue during the recovery period:
    • They received a travel grant from New Zealand Trade and Enterprise and used this to visit existing customers to reinforce relationships and connect with new markets.
    • They applied for a technology development grant through the Ministry of Science and Innovation.
    • The received the Earthquake Support Subsidy, from Work and Income, to help continue paying wages.
  • Health Systems Ltd.’s Board of Directors recognised and rewarded the employees that went above and beyond during the earthquake response.

How have they changed?

  • Throughout 2012 Health Systems Ltd. has worked to identify areas of vulnerability and ensure business continuity in advance of another disruptive event, they have:
    • replicated data so it can be held in multiple offices,
    • installed improved firewalls for their systems,
    • put more uninterruptable power supply (UPS) systems in place, and
    • transferred emails and a number of services to the cloud – internet based network of servers
  • Health Systems Ltd. has recognised that appropriate business continuity planning can actually enable organisations to think on their feet, be flexible and responsive and find opportunities post-crisis.  They now have someone in a business continuity role.
  • They are in the process of reviewing their management systems to improve customer relationships and internal staff relations.

Review: Lessons Learned

  • Have offsite and cloud based backup systems (backup systems for your backup systems).
  • Being together matters. Having a space where staff can work together helps communication, collaboration, and can reinforce organisational identity.
  • Recovery takes work! Redistribute core workloads to other parts of the organisation. Other businesses that have experienced similar crises can be a source of support.
  • Don’t underestimate the emotional burden of a disaster. Manage staff stress, and ensure that uncertainty and strain are reduced through clear communication and transparent goal setting.
  • Be honest and realistic with customers, communicate clearly, and ensure those relationships are maintained.  Post-crisis empathy is finite.
  • Utilise available aid. The grants and subsidies reduced the financial burden of the recovery and enabled additional activities (i.e. sales travel).

Health Systems Ltd. ‘connected the dots’ during their recovery by accessing support from other parts of their organisation, other businesses dealing with the recovery, and forging new connections to serve their immediate response.

However, they were slow to make connections between the near miss of the September earthquake, and events that could happen in the future. They emphasised reactive responses over strategic and transparent planning and decision making which damaged relationships with employees and customers. They are currently in the process of re-evaluating their systems and becoming a more resilient enterprise as a result.