Monthly Archives: December 2014

Airports chaos: “Back-up plans worked exactly as they were designed to”

15 Monday Dec 2014

Posted by in Business Continuity, Digital Transformation, Financing Decision, Innovation, Risk management

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On the 12th of December at 3:24pm, NATS, the UK-based global air traffic management company, confirmed that  a system outage occurred at Swanwick air traffic control centre. “The outage made impossible for the controllers to access data regarding individual flight plans and UK airspace has not been closed, but airspace capacity has been restricted in order to manage the situation”.

On the 14th of December, NATS declared  in a statement that the “back-up plans and procedures worked on Friday exactly as they were designed to and the NATS system was back up and running 45 minutes after the event the failure“.

Ok, so why the Transport Secretary, Patrick McLoughlin, has described the shutdown of much of southern England’s airspace as “simply unacceptable“?

According to the NATS  annual report and accounts 2014, NATS “operates under licence from the Secretary of State for Transport“.

On page 35 of the same report, chapter “Principal risks and uncertainties”, the very first item mentioned under “Loss of service from an air traffic control centre”, is “result in a loss of revenues” and also that  “NATS has invested in developing contingency arrangements which enables the recovery of its service capacity“.

Later on, under the “Operational systems’ resilience” section, we can read that in order “to mitigate the risk of service disruption, NATS regularly reviews the resilience of its operational systems“.

It is very surprising that the loss of revenues is mentioned whereas nothing is included on Service Level Objectives/Agreements (SLO, SLA) and Recovery Point Objectives (RPO).

In their statement,  NATS mentions that their systems were back up and running 45 minutes after the event.

According to the FT, “Air passengers faced continued disruption into the weekend even after Nats declared its systems were back to full operational capacity. A spokesman for Heathrow said 38 flights were cancelled before 9.30am on Saturday “as a knock on from yesterday”.

From a Service impact perspective, the service coulld’t be called ALL CLEAR until at least  the 13th of December at 9:30am when 30 flights were still cancelled. Therefore the service impact was at least of 18 hours, but we will need the full investigation to find out the full extent of the problem.

What does it mean that  “back-up plans and procedures worked on Friday exactly as they were designed to”? It means that the investment decisions, risk assessments, business recovery plans were designed, validated, tested and approved for at least 45 minutes system outage with reduced capacity. 

According to Telegraph.co.uk, “Britain is now the only country that is using the 1960s software. It is due to be replaced with a new system from a Spanish company in about two years, but until then they will just have to manage.”

At least we know!

Taking orders is great but how about delivering on time and on quality?

10 Wednesday Dec 2014

Posted by in Digital Transformation, Retail, Risk management

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In my last post I wrote about the issues that some of the large retailers had, in order to cope with the online demand on Black Friday. I also questioned the ability of the same retailers to deliver on time.

It was reported that M&S was Hit By Pre-Christmas Online Delivery Delays and that  “share price has fallen 3% as investors fear overall sales will be affected”.

Unfortunately, M&S aren’t an isolated case, as written by Zoe Wood in the Guardian, Christmas shopping surge puts retailers under strain online. In this article, we learn that Tesco Direct, Debenhams, and many other retailers are trying to clear the backlog of orders whilst impacting the delivery date of new orders.

Taking in consideration the entire commerce chain, including delivering on the retailer’s commitments:

Should the retailers be taking orders when they can’t deliver one time ?

A purchase isn’t just made of the item sold. Especially when everyone can compare online. The product is made of the online experience, the quality of the communication during the sale process until and after delivery, the delivery itself (timing, product condition, item missing) and the after sale services such as customer services and guarantee (for example John Lewis offers free extension guarantees).

Should the retailers adapt their online stock levels to their actual capacity to deliver on time and on quality? Or the other way around, should they adapt their delivery capacity to meet the demand? In other words, does it make sense to sell 100 items when they know that they can deliver only 50 on time and on quality?. Customers get frustrated.

The question is, would you accept as a customer to be informed during the online shopping process that your items can’t be delivered in store on time, potentially too late for xmas? Or is it an accepted inconvenience that the rebate offsets?

They are  number of lessons to be learnt from the Black Friday and Cyber Monday sales.  In particular, the operating costs incurred in order to minimise the delivery delays, coupled with the reduced margin and the impact on the delivery chain during the following days and weeks.

Overall, £810m was spent online just on Black Friday. It will be interesting  to know the total amount spent online until Christmas, hence the real impact on the bottom line for the entire peak trading period.

Black Friday

01 Monday Dec 2014

Posted by in Black Friday 2014

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According to the BBC, Amazon’s “website recorded orders for more than 5.5 million goods, with about 64 items sold per second.”

Meanwhile, Tesco direct, Argos, Currys and John Lewis implemented queuing on their site.

On Tesco Direct, the queuing technic involved a rolling 30-second period when your browser would try to access the site. If unsuccessful, the browser would start yet an other 30-second period.

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Argos had simply put an holding page up, informing their customers of the massive traffic and asking them to try again.

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In the case of Tesco Direct and of Argos, the tactic used was aimed at mitigating the customer’s experience already on the site.

Basically, the retailers  implemented an e-bouncer at the entrance to ensure that if you were lucky enough to be on the online shop, you could still move around and buy stuff. And if you were kept outside of the online shop, you would have to wait for someone to get out of the shop first before being allowed to get in.

The objective is to avoid that the entire online shop collapses and then no sales could be processed.

This tactic is required when the demand exceeds the technical capacities (software, infrastructure, network) of the online shop.

Meanwhile Amazon had put in place a smart demand management. The deals were opened for a period of time, openly communicated, informing customers of the remaining stock level, and offering a wait list when not full.

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Throwing more tin into the mix or e-bouncing shoppers is not the only answer and Amazon got it.  They developed a control demand strategy coupled with great marketing. Well-done Amazon.

The question is whether all  orders will be delivered on time. Some retailers have already extended the delay when you buy online and collect in store.

In my opinion, all these technical glitches are far less terrible than the events in stores. As Barbara Ellen wrote in The Observer, Sunday 30 November 2014: “The Black Friday shopping scrums are so shaming”.