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Last week. one of our clients asked an important question that I felt everyone would benefit from hearing our response.  The question was "What would happen to our website if TOTECS went into liqudation?".  This question fundamentally relates to how we deal with risk. 

To answer this question, we must go back a step and answer what would trigger a liquidation?  

The first is obvious where TOTECS Pty Ltd runs out of cash.  Our new billing model is based on usage and has been designed so that the operating expenses (including systems infrastructure, core salaries, super, taxes owed and coverage of debt is at least 20% less than income even as utilisation of the platform grows.  The old billing model was starving the company of necessary funds to match increased utlisation which demans more server infrastructure, data consumption and personnel to support it.   

The second trigger would be a failure to invest into the evolution of TOTECS or fix critical errors promptly.  Part of the operating expenses is ongoing investment into RnD covering the platform itself, the n-scalable server architecture and the data centre deployment architecture covering bug fixes, new improvements, new features, integrations and ongoing upgrades.  This also includes documentation, release notes and over the phone instant access support from a trained help desk.  Our Service Agreement outlines our procedures for issue resolution.

The third major trigger is a failure of backup and redundancy and the associated workflows around it that may cause serious damage to our clients' businesses if data cannot be recovered quickly if a major failure event occurs.  If the data centre fails for whatever reason, our systems are setup such that a sequence of steps are followed so that clients understand what is happening and that failover mechanisms are employed by our team which may result in activating the backup data centre.  Preserving data integrity followed by recovering the systems is the most critical priority when a major failure occurs.

The fourth trigger is that the company ends up in a protracted legal battle that it cannot afford to defend. The TOTECS Service Agreement has clauses that limit our liability in case there is a breach and provides pathways to remedy breaches should they occur.  This is intended to ensure that due process is followed in order to remedy the situation and avoid legal disputes.  

The fifth trigger is that the projects side of the business dries up leaving overheads of surplus staff and other project related expenses.  The TOTECS Partner model addresses this risk through a consulting model that gives flexibility to both TOTECS and Partners.  More than 60% of project work is completed by qualified Partners and our clients win the benefit of their diverse range of the skills.

All that said, should TOTECS come under any critical threat of liquidation for whatever reason, our procedure is to immediately notify our clients of the threat and work with them to determine the most suitable outcome.  As a second tier of defense against an insolvency threat, the IP trust could revoke the rights for TOTECS PTY LTD to continue to hosting and develop the lP and appoint another service provider to take over the service.  Of course, this is an action of last resort.

Fundamentally, SWOT is part of our day to day company management. We are actively engaged in researching the market and applying lessons learned to boost our resistance to shocks.

In the next set of Real Talks, we are going to outline the list of Optional Features now offered under the new billing model and provide case studies for each.

Cheers
Glenn Drew

CEO