When an American communications satellite recently failed, 90% of the country's pagers - some 36 million units - went with it. Credit card transactions were refused, stock-market deals delayed, and several TV and radio networks went off the air. Service was largely restored within a few hours but the incident provided a sobering glimpse of the chaos that such breakdowns can create. While businesses increasingly reap the benefits of systems that rely on communications technology, how well prepared are they for the day the system goes down?
Not very. 'Companies tend not to ask the right questions about communication system failures,' says Keith Baxter, risk-management specialist at consultants AT Kearney. 'The technology is increasingly transparent, so users only see the results and don't worry about how they are achieved.' This tendency is exacerbated by 'redundancy' built in to communications pathways - if one phone line or microwave link fails, there is another waiting to take over. Yet as Baxter points out, it is dangerous to assume that this will always be so. 'There are critical failure modes - points where all the different pathways meet - and these are a major source of risk,' he warns.
Richard Denny, a director at Inmarsat, the satellite communications service provider, is acutely aware of the need to avoid breakdowns but he remains upbeat. 'Because of the nature of our business, we have unusually high levels of redundancy throughout our network and our back-up systems are tested regularly,' he says. This results in a very resilient system, he claims - even the simultaneous loss of several satellites would not interrupt the service.
Companies such as security specialist Securicor are less trusting. It runs its own private control network for monitoring its vehicles. The business even shuns the global positioning system (GPS), a popular standard, preferring its own dedicated radio network to track the movements of its fleet. 'Our vehicle tracking systems cannot be allowed to go down, and they never have,' says Steven Blakemore, product manager for Securicor's network operations. 'GPS is a system we do not control and is too easy to jam.' So is the Securicor system really failure-proof? 'I'm not saying that it couldn't happen, but it would have to be pretty catastrophic,' he says.
Securicor may have cushioned itself against the risk of system failure but, for many companies, a private control network is too expensive and the cost cannot be justified. Instead, they choose more affordable technology containing so-called 'disaster recovery' programmes. It is a question of weighing up the risks, as Martin Nye, chief executive of Exel Logistics Electronics, the logistics service provider, knows only too well. Disaster recovery schemes should kick in when needed, but the problem, as he admits, is that they are rarely tested in full because of the disruption involved.
'Serious systems failures are a frightening prospect, especially as there is so much inter-reliance between systems,' he says.
Car manufacturer Nissan UK, a pioneer of just-in-time manufacturing processes, relies heavily on its IT communications systems. 'All our logistics systems have manual back-ups,' says Julie Heads, senior logistics controller at the company's headquarters in Sunderland. 'We do have breakdowns,' she admits, 'but they do not affect production because the supply chain is resilient.' Nissan simply matches the appropriate level of technology to flexible and comprehensive contingency plans.