Business Continuity and Disaster Recovery Applications

(Subset of Risk Management Industry)

Current State of Application

The business continuity industry has been servicing the needs of large Fortune 500 firms for decades. With the maturing Internet, services once reserved for large companies are now available to small and mid-sized businesses (SMBs). This segment of the market has not fully appreciated and implemented the new computer-based risk mitigation offerings available. This is in large part due to their limited access to high-speed broadband services.

When it comes to business continuity services, contingency service offerings are ideally located in remote, rural locations – not in the densely populated major metropolitan areas. Unfortunately, remote locations are still underserved by broadband. As a result, business continuity service providers are still mostly located in the metro area that they are serving. This does not result in the geographically dispersed solution needed for risk mitigation.

More and more legislation is being written mandating that business implement risk mitigation plans, specifically disaster recovery and business continuity plans. This trend is going to continue as business demonstrates that they can not always be counted on to do so with out the strong arm of the law. Regulations such as Sarbanes Oxley (SOX), Gramm Leach Bliley (GLB), the Health Information Portability and Accountability Act (HIPAA) and NASD 3510/NYSE 446 have been created in response to very high profile scandals including the Enron and WorldCom mismanagement cases. As a result, companies are being forced to seek out risk mitigation services to comply with these federal and industry mandates. Ultimately, each company will make a choice as to how well they are protected, but the decision shouldn’t be based on limited options and opportunities resulting from a lack of broadband connectivity.

Minimum Technology Requirements

There are many computer backup and replication technologies available today with varying dependencies on data transfer rates. As a rule of thumb, a minimum of DSL or high speed cable are required for SMB’s to benefit from these technologies (i.e. 256 kbps up to 1.5 mbps). Larger companies will require higher transfer rates due to their larger amounts of data needing to be backed-up and/or replicated.

Business Aspects

There are many hard and soft costs that can be avoided by implementing business continuity strategies. It is vital for many industries to remain operational during a business disaster for several reasons:

The integrity of our nation’s financial markets is at stake when considering the disaster recovery needs of Wall Street and its interdependent financial institutions.
Our nation’s security is at stake when evaluating the risks of our government agencies not having sufficient contingency plans.
Retail and service industries can come to a screeching halt if they no longer have access to basic payroll, accounts payable & receivable, and shipping logistical information.

Companies who have not implemented adequate contingency plans must assess what computer downtime costs them per hour, day, and week in the following areas:

Lost Productivity – Number of employees impacted X hours out
Lost Revenue – Direct loss, lost future revenue, billing losses, investment losses
Damaged Reputation – Customers, suppliers, business partners
Financial Performance – Credit rating, stock price, cash flow
Other expenses – Temporary employees, equipment rental, overtime costs

Obstacles or Barriers to Further Deployment

Telecommunication providers continue to hold in their hands the power to limit businesses that are dependent on broadband communications. Guaranteed revenue from an ongoing commitment to the use of their services is their primary motivator. There is little room in the business model for calculated, let alone speculative, growth. Providers must partner with economic development initiatives and business leaders to develop models that work for both parties.