Monday, April 14, 2014

Beware of depending on Third Party Services to assure your daily business and recovery

By Howard ‘Coach’ Pierpont

More organizations are outsourcing portions of their operations these days. Concentrating on the core competency for the organization makes sense in many cases. This allows for the streamlining of internal operations while maximizing the non-core section by utilizing best in class third parties.

The people making the decision to go with a third party need to completely define the statement of work [SOW] and assure that whoever gets the contract follows the SOW. Let me give you an example of a system that was implemented and appeared to be working. At least there was money coming in.

I went to a supplier and requested an item be drop shipped to an east coast location. The supplier had my physical address [not the delivery address] and my mailing or billing address. The supplier contacted the vendor and had the product shipped to the proper location. The vendor was responsible for monthly billing based while I was using the product. Somehow the physical address was sent to the vendor and not the billing address.

Granted, I am in a community where they are creative on their street names, but there is a method. My address is 2124 W 17th Street Road. The vendor input the following address: 2124 W 7th Street Road. There is no such address, but that didn’t seem to make a difference to the vendor who was in turn outsourcing their billing process. Each month they transmitted my information to the billing company. The billing company outsourced the physical bill creation to another party. Each month a bill was created, mailed and later returned by the Post Office as undeliverable.

One month the carrier that handles 7th Street Road went to see the carrier that handles 17th Street Road and asked if there was such an address on that street. Yes, 2 different carriers 10 blocks apart, but at least in the same sorting facility. The 17th Street Road carrier took the mail and put a big question mark on the front and delivered it.

I opened the mail and it contained 4 past due with collection notices and a current invoice. I called the customer service number to get my address fixed. The representative only wanted to set me up for electronic payment. I finally got to speak with a supervisor. She did agree to correct the mailing address and remove the dunning messages before sending me new copies of the invoices.

Soon in my physical address mailbox came the invoices without the dunning messages. Another call revealed a significant flaw in the process. It turns out the process between the billing company and the people that create the physical bill is to create the bill first, make the hardcopy and mail the hardcopy bill. Then in a following process they do the address changes.

Another call to customer service to get the address corrected indicated that their process sequence was flawed. I asked for a good invoice with no penalties for still not having paid.

This took 6 months of my working with either no bills or incorrect bills. This took time on my part to initialize the calls and, on the customer service side, to talk to me and try to resolve the issues. Ultimately this was resolved.

Customer service is a cost to any organization. The best run customer service group can reduce their own costs, adding money to the bottom line as well as potentially up selling the customer due to the positive customer service.

If an organization is going to use a third party to handle the non-core business processes, the methodology needs to be highly defined. It also needs to be tested and reviewed. Someone needs to assure that excellent service is delivered to the customer.

If the process is flawed in daily practice, it will not serve the organization well during a crisis or in recovery. Tabletop tests will not always show how things will work in a disaster situation.

A great Business Continuity Practitioner needs to ask the business how the business knows the process really works.  Use of the Socratic approach to the BIA and reviews will serve every BCP well.

About Howard Pierpont

Contact information: website:

With almost 30 years of Business Continuity experience, ranging from global large-scale precision manufacturing to small, stand-alone single site operations, Howard has an extensive and unique background in merging business continuity into continuous operations.
Howard is a Certified Recovery Planner from the University of Richmond, VA as well as a Certified Business Manager with the Association of Professional in business Management, Chicago, IL. He maintains a CBCP from DRII and holds an MBCI designation from BCI.

He is a Charter Member of ICOR and is currently an instructor and training partner with ICOR. Currently, as a DHS/FEMA Reservist Community Recovery Specialist, he works with businesses, nonprofits and municipal governments in communities having received federal disaster declarations. Howard also serves as Board Chair for the Disaster Preparedness and Emergency Response Association.



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