Building the Business Case for Emergency Notification How to Justify Your Investment and Accelerate Your ROI

Floods ravaged northern California and tornados took lives and destroyed property in the Midwest this year. The Gulf Coast and New Orleans still lay largely in ruins from the onslaught of hurricanes Katrina and Rita. Natural disasters, bird flu, global warming and terrorist activities can and will extract a heavy toll in their aftermath as individuals, families and businesses struggle to cope with personal and financial losses.

The economic health of a city is the business community and its ability to deal with disasters, whether man-made (power outages, plant accidents, computer failure) or ‘natural’ (hurricanes, tornadoes, earthquakes). Recovery will be much faster with strong business continuity plans. A critical issue in any plan is emergency notification – responding to scenarios ranging from full blown disasters to daily employee communications.

Emergency notification systems allow businesses to automate the process of giving employees, their families or neighbors – with phone, wireless and email contact – important information in a time of crisis. The messages can be individualized, allowing managers to sending different divisions different messages asking them to attend a strategy meeting, leave their premises or simply report their locations.

The name “emergency notification” implies usage only in disaster situations. This may be a hard sell to executives who demand accountability and wonder about making an investment their companies may deploy. They may ask: What is the return on investment? Isn’t it a waste of money if we never use it?

The Ethical Considerations
Let us begin with a simple ROI – saving lives. The ROI of an emergency notification system begins with the belief that protecting employees and others from harm should be a priority. People matter most! In all jobs, including service jobs, the loss of employees due to disaster can be devastating, as many restaurateurs and hotel owners have discovered in New Orleans. At all levels, even entry positions, the institutional knowledge of employees is invaluable. The loss of human life, especially when avoidable, should be of the highest concern of employers.

Moreover, the unnecessary loss of lives due to poor planning can result in a rash of lawsuits by grieving family members of employees and a public relations debacle that can last months or years. Some companies located in the World Trade Center are still involved in court wrongful death cases brought by relatives. A notification system may not have had a huge impact in an enormous catastrophe such as 9/11, but it would have helped in the court of law and public opinion.

The Financial Argument
Ethics aside, the economic arguments are compelling. The Sarbannes-Oxley Act (SOX) of 2002 mandates that companies in the financial markets have a programmatic approach to business continuity management as related to financial reporting and internal fiduciary controls. Companies attempting to comply with SOX have formed risk management or mitigation committees and created internal controls for dealing with business interruptions or disasters.

The presence of an emergency notification system will offer the federal government and investors a reassurance that risk mitigation has been a priority of executives and boards of directors. It indicates an interest in complying with SOX as well as an opportunity for companies to concentrate funding on other areas with risk of failure.

So what if you’re not public? Not effected by SOX? Well, disaster happens, and it is costly. The Santa Barbara-based Strategic Research Corporation, a market research and consulting firm, puts the financial loss of a major system outage at a major brokerage at $6.5 million, per hour A credit card sales authorization system that goes down costs $2.6 million an hour, a broken ATM a mere $14,500 an hour. A disk array that goes bad in the financial services industry drains $29,301 an hour; in manufacturing it bleeds $26,761 an hour. Do you know your cost of downtime? How much a business interruption will cost you largely depends on the size of your company, its hourly revenue, the existing offsite backup capacity and many other issues. Business continuity planning (BCP) is a hot topic for good reason. Plenty of formulas exist for determining what a down time episode will cost your company. Once you have gathered those statistics, you can compare them with the options offered by emergency alert notification vendors. You may find notification can pay fairly quickly even if you only manage viruses and network outages on an annual basis.

Downtime costs the study does not include might be plummeting employee morale, a public relations debacle, the delay of countless projects and the diversion of resources to mitigate and manage disaster rather than more productive work.

Other Uses
Emergency notification is another form of insurance. But unlike most insurance, it is a technology that can be used in a variety of business applications. For example, companies in the service and trade sector use the software for sending and receiving orders from the field and for dispatching vehicles. Some emergency notification applications can be employed for red-flagging staff about computer viruses that may be hitting their inboxes in the next 12 or 24 hours. The software can remind a team they have an appointment that day with a client, or broadcast a critical staff shortage in a certain area and request other employees consider coming in to work.

Managers can use emergency notification for making announcements to their team. Also, team members can send messages – questions, requests for information – to a group of colleagues and receive replies through the notification applications. Executives and public relations’ staffs can use it as a corporate communications’ vehicle for sending daily messages or monthly newsletters.

Some of the notification software programs are designed as communications tools which happen to work exceptionally well as an emergency notification system. But most companies do not want a system that will lay dormant for months or years at a time, waiting for disaster to hit. They prefer to invest in a multi-functional technology that can be used daily or weekly, as well as during a disaster.

The benefits to life safety, reduction in downtime costs and other business uses of the emergency notification application can combine to make an excellent ROI case. Emergency notification can be that unusual insurance, offering peace of mind and security, along with payoffs with non-emergency applications.