The Hidden Infrastructure Holding Your Business Together

Every business relies on infrastructure to keep things running. But some of the most important parts aren’t buildings or equipment – they’re the people, systems and relationships you count on every day. Here are several key areas to consider, along with ideas to reduce the risk when one of these key areas changes.

People – “Only [insert name] knows how to do that.”

Your best employee gives two weeks’ notice, and suddenly everyone starts discovering what this person actually knows. He/She knows why certain customers are billed differently, understands the workaround when the ordering system misbehaves, knows which vendor to call when you need something yesterday.

The danger isn’t having highly knowledgeable employees. You want those people. The danger is having knowledge that leaves the building when they do.

What you can do: Conduct a key-function audit by asking what would stop, slow down or become significantly more difficult if a critical employee disappeared for 30 days. Then prioritize the highest-risk responsibilities for cross-training, paying particular attention to tasks where nobody else has the system access, customer relationships, vendor contacts or judgment needed to take over.

Technology – “Whatever you do, don’t touch that computer.”

Every company eventually seems to acquire some piece of technology that nobody particularly likes but everybody is terrified to replace. The question isn’t whether old technology is automatically bad. It’s what happens when it stops working.

What you can do: Determine the recovery time for each critical system: If it died at 10 a.m. tomorrow, how many hours or days would pass before you could operate normally again? Systems with unacceptable recovery times deserve a replacement plan, tested backup or documented workaround long before the machine finally decides today’s the day.

Customers – “They’ve been with us for 20 years.”

Customer loyalty is wonderful. Customer dependence isn’t.

Know if your firm is generating a significant amount of its revenue from one customer you have enjoyed for decades. Now realize the customer’s ownership can change. Its purchasing manager can retire. It can be acquired. A new CFO can decide to consolidate vendors.

Remember, nothing has to go wrong with the relationship for the relationship to disappear.

What you can do: Calculate what losing each of your largest customers would do to gross profit, not just revenue, and determine how quickly the business could absorb the loss. Then set a concentration threshold that triggers additional sales efforts so a growing customer relationship doesn’t quietly become a growing business risk.

Vendors – “We’ve always bought it from them.”

The same concentration risk exists with your suppliers.

Maybe only one supplier produces a critical component. Or perhaps alternatives exist, but nobody has bothered qualifying them because the current supplier has always delivered.

Even worse, perhaps a monthly contract for a billing tool your agency uses goes up 10x, like when a private equity group purchased the popular job tracking tool, Harvest.

The worst time to discover your backup supplier is six weeks away from being able to supply you is when your primary supplier tells you it can’t fill tomorrow’s order or asks you to pay $1,000 per month when you were paying $100.

What you can do: Identify your key suppliers and keep a ready list of alternatives. Remember key suppliers are not just those you pay a lot of money to, they also include key tools used heavily by staff. Determine whether these alternative suppliers could actually provide what you need, in the quantity you need and on the timetable you need it. Periodically place a small order with critical backup suppliers or otherwise qualify them so your Plan B has been tested before it becomes Plan A.