Business Continuity Management of Virgin Trains, the UK - Example

BUSINESS CONTINUITY MANAGEMENT Virgin Trains, UK 1. Analysis of Virgin Trains UK Operating Environment and Stakeholders Virgin Trains is jointly owned by Virgin Management and Stagecoach PLC which also composed the Virgin Rail Group, a joint board for the two shareholders that directly manage the operation of Virgin trains (Virgin Trains Factsheet 2010, p.1). Virgins Trains is synonymous to its co-founder Richard Branson which has gained powerful reputation for quality and service from his other companies such as the Virgin Records, Virgin Megastores, Virgin Atlantic, and many more. The Virgin Group won their bid for two railway franchise in the 1980s and also inherited some problems from British Rail such as poor overall services and low staff morale. For this reason, despite significant investment and strategies, the company suffered continued criticism from their customers. However, when the company introduced a range of modern rolling stock to the public in 2002, it had regained its reputation and quickly transformed into a competitive business (Groucutt et al. 2004, p.288). Currently, Virgin Trains operates the 15 year term West Coast rail franchise which was awarded and started operation in 1997. In the same year, the company also started operation for their Cross Country franchise which was awarded a year before. However, as part of the re-mapping being implemented by the Department of Transport, the franchise was re-tendered and awarded to Arrive Trains in 2007. Similarly, Virgin Trains received another franchise to operate the Birmingham and Scotland in November 2007 (Virgin Trains Factsheet 2009, p.1). Virgin trains employs a total of 3,115 staff that include drivers, onboard, staff, station staff, casual and other employers. Operating 330 trains a day, it has an estimated 25.4 million passengers a year. The company operates a mixed fleet of tilting trains that include electric Pendolino and the diesel powered Supper Voyager trains that are all fully air-conditioned. According to their factsheet, the company had already invested £1.2 billion for these types of trains. Out of 43 stations being served, the company directly operates 17 stations that include those that are in Rugby, Coventry, Birmingham International, Preston, Lancaster, Carlisle, and others. Virgin Trains’ onboard facilities have shops, Wi-Fi facilities, CCTV, enhanced mobile phone reception, facility for charging mobile phones and laptops, public address, quiet zones, and facilities for mobility impaired passengers. First class passengers are being offered complimentary food and drinks (Virgin Trains 2010, p7). Virgin Trains offer their customer various convenience such as a buy anytime options for ticket buying customers. These tickets can be bought anytime and use to travel at off-peak hours which gives customers savings by travelling in less busy hours. Similarly, “buy in advance” offers the customers best value since the further in advance they bought their tickers, the cheaper the fare. These and other best value offers are being implemented by the company including “Best Fare Finder” facility at their website (Virgin Trains Factsheet 2010, p.8). Virgin Trains is concern about the environment as their electric Pendolino trains are environmentally friendly. Compared to cars, a Pendolino train emit 76 percent less CO2. These trains are also capable of generating electricity which gives 11, 825 homes its electric power yearly. When the driver applies the brakes, electricity is being returned to the national grid. These trains power return features gives the National Grid around 2.6 billion cuppas of power a year (Virgin Trains Factsheet 2010, p.9). 2. Critical Activities and Assessment of Maximum Tolerable Period of Disruption As mentioned earlier, Virgin Trains is a train company with existing franchise from Department of Transport and belongs to the Category 2 in Civil Contingencies Act that will be involved in incidents affecting the transport sector. It is generally a train company running units of trains and stations all around the United Kingdom. The critical activities of the company are the day to day operation of transport trains and stations. For this reason, the management focus is in the improvement of their operations as evidence by their continuing effort to offer more trains and faster journey times (Virgin Trains Factsheet 2010, p.1). In 2008, the company increased its overall train services by 30 percent and increase train frequencies in routes from Manchester and Birmingham to London by 20 minutes. It has also slashed travel time from Manchester to London by 2 hours and 5 minutes. Moreover, the company started its hourly service between Chester and London in 2009 (Virgin Trains 2010, p.2). The train operation and associated activities is not just about trains and journey but about people’s safety, time frames, and sustainable transport. For this reason, their critical activities are those sustaining their almost 24 hours operation and economic survival of the company such as train maintenance and operation, customer service and satisfaction, employee and community responsibility. Transport is important to the economy since in general people travel because of some benefit that can be obtained at the final destination. For this reason, the journey should be as short but safe as possible (Button 1993, p.1). Transporting millions of passenger a year is a great and very critical activity for the Virgin Trains while maintaining its employee, customer, community, and environmental responsibility. Disruption of critical activities that support critical services can damage the reputation and future of the company thus maximum tolerable period of disruption must be determined (Davies 2008, p.109). The maximum tolerable period of disruption is the maximum allowable time before a company’s viability can be negatively affected by the disruption. This can be determined by identifying the maximum time period after the start of disruption within which the activity needs to be resumed. It should take it account any business cycle that may be affected, the minimum level at which the activity needs to be performed on its resumption, the amount of time it takes within which usual levels of operation need to be resumed and identify any inter-dependent activities, assets, supporting infrastructure or resources that have also to be recovered over time (Davies 2008, p.109). In Virgin Trains’ operation, one of the most critical periods is when a train stop to function due to an accident. The consequences of this disruption are increased travel time for passengers, dissatisfied customers, and refunds if service is not resumed quickly. Considering the significant number of passengers aboard the train and millions of train riding public including the cost of repairs and other liabilities, Virgin Trains could not afford a longer disruption. For this reason, the company should have a clear recovery objective specifying the maximum tolerable period of disruption as shown below. This disruption may not affect the overall performance of the company but it can destroy their overall reputation if not recovery takes too long. 3. Recovery Time Objectives In a disruption, the specific time to resume operation and services is critical. By definition, RTO is the target time set for resumption of service delivery and for Virgin Trains, this is the specific time they should resume disrupted train operation. In other words, they should be doing this within the maximum tolerable period of disruption. This can be shown in time bucket as below: 4. Critical Dependencies As general requirements, the Virgin Trains should ensure that its Business Continuity Management is suitable to the nature, scale, complexity, geography and criticality of its business activities. It should also include consideration on its culture, dependencies, and operating environment (BSI 2006, p.18). For instance, the company should understand the inter-dependencies of its activities, stakeholder obligations, statutory duties, assets and resources, contractors and suppliers, and other entities and organisations. Along with these considerations, Virgin Trains should also consider the impact of such disruption and recovery measures to staff, the public, reputation, financial viability, service quality, and environment (BSI 2006, p.24). The table below list the critical activities of Virgin Trains and its dependencies. Critical Activities Critical Dependencies Train Operation Office Staff Onboard Staff Casual and other employees Customer/Passengers Suppliers Contractors Technology Station Operation Office Staff Station Staff Customer/Passengers Suppliers Contractors Technology The Virgin Trains’ depends on its 3, 115 strong staff and employees because of the reality that the company cannot operate efficiently without its staff doing their individual duties and responsibilities. Moreover, the day-to-day operations of passenger trains requires operators and onboard staff that would directly deal with customers and perform that best way they can to give customers high-quality travel experience. Staff and employees are images of the company and if these images perform badly, customer will not be satisfied and company reputation suffers along with financial viability. During disruption, employees and other staff play a very important role in ensuring fast recovery. The same employee will help the company fill the gap and ensure continuity of processes until such time the company is ready to resume normal operation. Similarly customers or passengers of Virgin Trains which according to their factsheet is more than 25 million strong are very important since the income of the company depends on them. In case of disruption, the well-being of customers should come first thus the company should ensure their safety and convenience throughout the disruption otherwise there will be customer dissatisfaction and loss of considerable income. The cooperation and understanding of these customers during the period of disruption is valuable since quality of service is temporarily affected. For this reason, the company should ensure that customers are well-aware of the situation and being served in the best way possible. Suppliers and contractors are both valuable since the company operation depends on the timely delivery and quality of supplies and performance of various contractors. For instance, the train operation largely depends on onboard supplies such as food, stationeries, cleaning materials, maintenance, and others. Similarly, train stations require maintenance, security, and other critical services that require well-experienced contractors. As discussed earlier, Virgin Trains introduced state-of-the-art services through modern and environmental friendly trains. Moreover, Virgin Trains onboard facilities have WI-FI facilities, CCTV, TV, mobile phones services, and other high-tech services. Clearly, aside from their offices and train stations, even the trains itself depends mostly on modern technology. For this reason, critical activities of the company can be affected by this equally critical technological dependency. Any major disruption in these technological marvels can greatly impact the operation. For instance, some passengers chose to ride a Virgin Train because they can operate their laptop while on board for work or for other personal use. Disruption in Wi-Fi services can greatly affect these users and may be frustrated by the fact that the company had spoiled their computer activities while on-board. A disruption, particularly a longer one in each high-tech amenities being offered by the train can affect the reputation of the company and probably its competitiveness in the future. Similarly, failures of technology in offices or train stations can impact the quality of services since most modern offices today depends on computers, printers, scanners, faxes, photocopy machines, Internet, and other critical communication equipments. 5. Strategies for Maintaining Critical Activities/Dependencies As discussed in the previous section, maintaining critical activities/dependencies is very important and for this reason, the strategy should consider all elements of the operation that include but not limited to people, premises, technology, information, supplies and stakeholders. A strategy to maintain critical activities that depends on people requires documentation of processes or how these people do things. The strategy may also consider hiring a multi-skilled workforce that can perform two or more task during a disruption of activities caused by absence or unexpected accident involving one or more employees. Succession planning may also help ensure continuity of critical activities because there is already pre-appointed successor to a particular person which makes succession more convenient and accurate to skills. If the company sees the need to use a third party to fill the gap in case of disruption such as those skilled workers under a contractor, the company may do so particularly in cases that additional manpower is actually required or a particular skill is not available within the company. A strategy to maintain critical activities dependent of premises or building may include having an alternative or back-up premises owned and maintained by the organisation. For instance, in case of fire in a certain floor of the office building, the organisation may select other unaffected floor as an alternative office for those affected. If this is not possible, the organisation may also rent or lease another building where they can transfer all those affected so that they can continue their business activities. There are number of things that an organisation can do to ensure that critical business activities affected by the disruption can continue such as promoting home or remote working where employees can work at their homes remotely from the office. This strategy is actually much better and economically practical than renting another building. Particularly in the case of Virgin Trains, technology is a way of doing business thus disruption of these services affects the majority of critical activities. A strategy that deals with critical activities that are likely to be affected by technology should include external provisions that can provide the same output and efficiency. The organisation may in the very beginning chose to adopt best practices and create a policy for back-up systems. The back-up systems can speed-up recovery by restoring those that were lost and provide immediate continuity to a particular disrupted critical activity. Back-up system and remote access are related. An organisation can have a back-up system within the same building or in another location outside the building. The advantage of having the back-up system outside the building is the reality that it will not be affected by any accident occurring within the premises. In case of the disruption, the external back-up system can be remotely access and provide the same services as the affected system. Information is a valuable asset and a strategy that deals with critical activities that depend on information should ensure that they are intact and usable. This can be done producing multiple copies of the information. It can be either in hardcopy format or electronic such as those stored in back-up drives, disc, tapes, etc. However, the advantage of having an electronic back-up file is convenience and space. Hard copying large volume of documents looks impractical and costly than saving information on hard drive or disc. Moreover, scanning and saving information in electronic format is faster and easy to retrieve in the future. Lastly, strategies dealing with critical activities dependent of supplies and other stakeholders should consider increasing the number of suppliers to ensure continuity if one supplier fails. An organisation may also choose to demand that each supplier in their list should have a reliable BCP or to enter into service level and contractual agreements so that suppliers and contractors will have the responsibility to provide the products or services whatever happens. For supplies, the company could also reserve some stocks through stockpiling or maintain just in time stock levels. Overall, an organisation like the Virgin Trains must have documented and established procedures for managing and maintain stakeholder’s relationship to ensure that business continues even on disruption. CRITICAL ACTIVITIES/DEPENDENCIES 6. Critical Dependency Monitoring Arrangements Continuous monitoring of dependency is required and for this reason there should a monitoring arrangement such as availability of clear and well-defined roles, constant review of critical dependencies that may include assessments of their impact, and documentations. 7. Plan Invocation Arrangements Similar to monitoring, there should be a plan invocation arrangement that include well-documented procedures for invoking the plan on specific critical functions that are being threatened by disruption. For this reason, it is important for the company to have a specific arrangement and identify those that will responsible in deciding the existence of such emergency. The arrangement should also include clear and documented procedure that should be adopted in a certain emergency along with the list of authorised persons that should make decisions and the people that will execute that decision. PLAN INVOCATION 8. Generic Response Arrangements for Managing Disruption A plan to deal with the incident in terms of task tactics and strategy is an important part of the incident response structure. Since the Virgin Trains is basically a transport company, it should have the following arrangements as shown below. 9. Media Strategy for Internal and External Stakeholders Another important part of the incident response structure is strategies dealing with the media and stakeholders. The media liaison officer under the incident response commander should provide the necessary and accurate information to the media. This arrangement enables clear and accurate reporting of the incident and avoids confusion and panic. The media then will responsible for customer information and the rest of the public. On the other hand, the staff and management will be provided with information through reports coming from the incident team under the incident response commander. 10. Plan Development, Review and Training Arrangements The plan should include assigning specific responsibilities and promotion of business continuity concept within the organisation. The plan also requires constant review to ensure reliability and relevance. It should be audited and assessed regularly to ensure quality. After development, reviewing the plan requires various tasks such as reviewing personnel activities and responsibilities, organisational structure, roles and responsibilities of suppliers and contractors, risk assessments, and the business objectives. It is very important that those people involved in response knows exactly the content of the plan. For instance, they must be familiar with the role and responsibilities during the execution of the plan. For this reason, training should be provided regularly so that these people developed the skills and knowledge required during the response. 11. Arrangements for Embedding the Plan into the Day to Day Management Systems and Organisation Culture In order for the BCP to succeed, people in the organisation should familiar with it. For this reason, the plan must be part of the core values and regular working activities and processes. The management on the other hand must always consider the plan in their decision making and promote it throughout the organisation. It can be a part of human resources policy as requirements in evaluating or appraising staff performance. Moreover, it should be a part of all group activities such team briefings and other orientation processes. In general, the company should the plan a high profile to ensure awareness and compliance. REFERENCE LIST: BSI, 2006, Business Continuity Management, British Standard, UK Button K. 1993, Transport economics, Edward Elgar Publishing, UK Davis A. 2008, Workplace law handbook, Workplace Law Group, Dubai Groucutt J., Leadley P., & Forsyth P. 2004, Marketing: essential principles, new realities, Kogan Page Publishers, UK Virgin Trains Factsheet, 2009, Factsheet, Virgin Rail Group, UK Virgin Trains, 2010, On Our Way to Sustainability, Virgin Rail Group, UK Read More