Quilts have been passed down from generation to generation as a way to link the past with the present. Modern technology ensures our financial futures can do the same if proper practices and procedures are followed.
As an example, my wife has a small business that she has run out of the house for the past few years. It has provided her with a way to have a self-funded hobby, as well as providing an outlet for her creative talents.
Along the way, however, we have faced many of the same dilemmas that many other small business owners face – along with many of my financial customers, too. I am speaking about accurate records retention and duplicative business processes.
My wife’s business consists of creating quilt patterns and books with a set of instructions written such that anyone who has a rudimentary knowledge of quilting can follow and create their own unique twist to her original design. Her business requires that we keep the different versions of those patterns that have evolved over the years – as some have required “tweaking” to account for requests on different quilt sizes, mistakes that may have been found, etc. Think member loan turnover!
On the business side, it also requires very accurate record keeping that satisfies the demands a home business must meet to maintain its operations. Unfortunately, that is my part of the deal. I have the business degree and finance experience, so I get to handle the accounting and business functions.
This business-side reality hit home recently, as the server that housed my wife’s quilt patterns and the accounting backups took a hit. Even though we had adequate backups, the time needed to rebuild the server and re-load all of the software seemed to take forever. I’m just happy we do not rely on this business for our sole income.
To get things going again, I had to buy a new machine as the other had outlived its technological lifecycle. To compound the problem, however, it would be necessary to migrate to a new version of the O/S, which meant upgrading a lot of the existing programs, restoring backups, etc.
Because of this requirement, I stepped back for a moment and put on my consulting hat and thought about what I wanted to implement for the next 12-, 36- and 60-month time periods.
The first critical requirement I determined was to make sure we would always have access to her inventory of patterns. They are the lifeblood of the business. This inventory access would also require more redundancy and possibly a better offsite backup strategy.
The second requirement, although equal in importance, was to ensure we could keep our financial records safe. If cash flow or cash management were non-existent, there was no business either.
Next Page: The 'Aha' Moment
Then the “aha” moment hit. This scenario is exactly what I have been trying to teach credit unions for years: The business and operational side of the credit union is just as important as the core data processing side. They complement each other. But at the end of the day they are two very separate and distinct operations that need to be treated accordingly.
Once that enlightened idea took shape, I simply starting putting together my Electronic Content Management (ECM) plan for the patterns and re-addressing my accounting functions for the business side of things.
Simply put, I needed to confirm we could duplicate our business processes should anything ever happen to the DP environment. No rocket science here. For the patterns and books, I created an offsite backup strategy that would store the data locally, back up to a separate drive and also provide offsite retention via an online backup service.
This was key because the patterns could in effect be reproduced on any Windows machine running Adobe PDF – which was our imaging archive format. As a result, we could provide deliverables on demand from any accessible machine. Think member documents.
The accounting and financial side would be a little more difficult because it would require a machine that could be reloaded with the accounting software – think core DP system. So the key was to ensure the backup was offsite and stored such that if I had to buy another machine and re-load everything I could still continue on with the business operations. Actually, a virtual machine would be a good solution here, but this is a small home-based business, so realties and costs are considerations.
Credit unions must account for their financial operations, as well as their business operations in much the same manner. That is, the financial data are important. Unlike our little business, they are dealing with members’ money and livelihoods. However, the fact remains that unless they are able to re-create their business operations and access the documents that spell out their processes, procedures and business workflows, they could very well be dead in the water, as well, should disaster strike.
So what are a few of the key lessons to be taken from our small business example?
- Realize that your core financial operations and business operations, although related, are two separate and distinct functions. Putting your eggs all in one basket here may create a problem should anything happen. Risk Management 101: diversify!
- Make sure you have properly built out and accounted for your disaster recovery and business continuity plans to ensure that each business function and operational area has been addressed and properly backed up.
- Make sure your business operations and workflows are replicable. That is, if someone had to return to your organization not knowing anything about your business, is there adequate documentation and detail such that it could be successfully reinstated. (Side note: A well-publicized Gartner study several years ago found that approximately 43% of businesses were immediately put out of business by catastrophic disasters, with another 51% closing their doors within the following two years if adequate business processes and data backup requirements were not in place – leaving only 6% of businesses able to continue operations.) Sound familiar?
- Test your backups and business continuity operations continually and refine them so if they do need to be put into place, there is a high degree of confidence they will function as desired.
- Create a technology refresh program to make sure you are keeping up with the ever-changing tech environments.
This article is by no means complete with respect to what each credit union must do to ensure that its survival will continue in the event of disaster or catastrophe or disrupted business operations.
But in light of everything we have seen happen from natural disasters, to government shutdowns, to bankruptcies, etc., it only seems prudent to take a good look at these operational areas in greater detail.
It’s also revealing that many of the same discussions I have with my customers about their operations are also very applicable to our own small business operations, as well. I sleep a little easier at night under one of my wife’s quilts knowing that if disaster struck, our little business could continue on.
As a wise man once said: “Happy wife, happy life.”