Continuity planning

9th April 2013

Continuity planning • Supermarkets must support wide spread operations continuously

– Successful acquisitions spread operations across brands and countries, with limited management attention to ensure continuity

– Process-by-process effort to identify continuity risks grind to a halt after mapping a few processes

• Legacy of acquisitions makes it hard to guarantee service levels – Acquisitions leave a patchwork of legacy systems which complicate

warm backup and other workarounds – Hard to cost justify rationalizing legacy with synergies

• Supermarkets need to put a value on continuity and propose a blueprint for legacy systems that makes service levels cost-effective – Put a value on continuity by identifying which value levers are at risk – Blueprint a rationalized legacy to make it feasible to buy warm backup

and other workarounds

Discontinuity disrupts key value levers, so you can put a value on continuity

Economic Value Added

Net operating profit after tax

Sales

Basket size

Customer demand

Lost sales due to out of stocks

Customer visits

Costs

Cost of Goods Sold

Price/unit

Price/unit from 3rd party

Price/unit for own label

Units sold

Operations (stores, logistics)

Losses/shrinkage Taxes

Cost of capital

Weighted Average Cost of

Capital

Capital employed

Inventory

Days of inventory

Days of payment terms to suppliers

Real estate (stores, logistics)

Discontinuities need to be assessed consistently for consequences and likelihood

Consequences People Safety Partnership Margin

Catastrophic Event attracting international attention

Multiple fatalities

Severe long term environmental impact High level of concern from community and NGOs

NPV > $1BN Cash flow > $100M

Major Event attracting national attention

Single fatality Environment > 3 years recovery Large complaints from community

NPV $500M-1BN Cash flow $50-100M

Moderate Event attracting provincial attention

Occupational injury with permanent disability

Environment 1-3 years recovery Repeated complaints from same area, NGO interest

NPV $250-500M Cash flow $25-50M

Minor Event attracting regional attention

Treatable lost time injury or occupational illness

Minor environmental impact onsite Legal compliance requires reporting

NPV $100-250M Cash flow $10-25M

Insignificant Event attracting company attention

Minor injury or illness with medical attention

Low environmental impact

NPV < $100M Cash flow <$10M

# Likelihood

1 Certain to occur

2 Possible in 1-5 years

3 Possible within life of operation

4 Possible beyond life operation

5 Practically impossible

Continuity planning mitigates risks that are severe by decreasing their likelihood

A Pra

ctica

lly im

possib

le

B Poss

ible

beyo

nd lif

e of

operat

ion

C Poss

ible

with

in lif

e of t

he

operat

ion

D Poss

ible

in 1

-5 ye

ars

E Cer

tain

to o

ccur

Grand To

tal

Co

nse

qu

ence

s

A Catastrophic 4 1 3 8

B Major 22 36 12 1 71

C Moderate 11 37 25 1 74

D Minor 1 2 15 1 19

E Insignificant 1 4 3 8

Grand Total 1 40 92 42 5 180

Co

nse

qu

ence

s

Frequency / Likelihood

Exhibit 6

IT governance for continuity

Organization

Performance management

Governance & processes

Application/data

architecture

Technical

infrastructure

Business context

Strategy goals and objectives of the business which define IT capabilities required and the strategic role of IT in the industry

Applications and data that support the business’s execution of core activities

Technology infrastructure that support development and production environments for applications

Structure, skills, style, roles and responsibilities that allow IT to effectively deliver technology and information capabilities

Key management processes that assure effective delivery and sustaining a high performing IT function

Processes and measurements to drive efficiency, effectiveness, quality and productivity throughout IT

7

Fonte: Exemplo

Contas

corrente

s

Online

Poupança

MIS

Outros

7,9M

50,7M

Transactions growing 15%-26% p.a. due to

internet channel & MIS, while current accounts

growing just 11,5% p.a.

SAT-pagtos. Serviços

19.000

44.000

Records growing 10%-12% p.a.

Satélite

Norte

Nordeste

São Paulo

ATM

Batch (offline)

Daily batch

End of month

Core banking

Online (users)

2000 01 02 03 04 2005

Carteira

Contas correntes

EXEMPLO

2000 01 02 03 04 05 2006

Technical infrastructure

8

Application/data architecture

Channels

Administration

Modules with many

records require

scaleability

Modules with few

records can use a PC

LAN

Administrative

modules are

invisible to end

users

Channel modules

are highly visible to

end users

Hard to justify strong

customisation because

low visibility and few

records

Easy to justify

customisation

because high

volume and visible

to customers

Produtos

9

Fonte: Entrevistas com desenvolvimento

COBIS/Sybase/Visual Basic

Sybase Solaris/Visual Basic

SQL NT/Visual Basic

Internet

NT/Oracle

Oracle NT/ Delphi

Administração C

on

tas

po

up

ança

(1

02

.99

0)

7%

Ad

m. c

artõ

es (

16

6.6

21

) 1

4%

Tran

sfer

ênci

a d

e ca

pit

ais

(?)

Co

nta

s co

rren

tes

(32

.12

6)

10

%

Cré

dit

o (

?)

Car

teir

a (1

2.7

67

) 1

2%

Inve

stim

ento

s (?

)

Ad

min

istr

ado

ra f

un

do

s (?

)

Câm

bio

s (?

)

Segu

ros

(37

1)

23

%

Mes

a d

e d

inh

eiro

(?)

Car

tão

co

rpo

rati

vo (

?)

Co

mér

cio

ext

erio

r (4

.88

6)

18

%

Leas

ing

(70

1)

18

%

Fact

ori

ng

(8

8)

14

%

Produtos

BPM (?)

Canais

Contabilidade (?)

Administração (?)

MIS (438.891) 14%

Finanware (?)

Armazenamento de dados (?)

Recursos humanos (?)

Câmara (?) Remessas (?)

Intranet (?) Cheques (?)

Firmas (?) Digitalização (?) Garantias (?) Pagamentos (?) Cobranças (308) 16%

Escri- tórios

Caixa autom.

SAT faturam.

24 Telefone

24 Celular

IVR 24

online

EXEMPLO Mapa de sistemas de x

(número de arquivos 2005, crescimento médio a.a. 2000-2005)

Application/data architecture – Post Merger